Bangladesh garment export development “facing challenges”

Bangladesh must address a number of challenges if it is to continue current strong development in garment exports, according to a new report from The World Bank.

Shortcoming in trade logistics, skill shortage and the require to fulfill with government labor standards could all hamper future development in garment exports from the Asian country, says the report, 'Consolidating and Accelerating Exports in Bangladesh.'

It suggests that better export diversification beyond clothing is needed – garments account for more than 75% of Bangladesh’s exports – but adds that, still in the garment industry, export increase is not to be taken from established.

Bangladesh is deeply dependent on exports make driving in the manufacturing division, to afford high efficiency and high-income jobs – all envisioned in the country’s Sixth Five-Year preparation.

Lead country economist at The World Bank, Sanjay Kathuria said: “While China’s wage growth presents main opportunities for countries with less costly labor, Bangladesh will need to beat significant bottlenecks to make sure that its exports keep on to grow at the pace seen over FY05-10, when dollar exports almost doubled,” 

The World Bank said the sooner export increase would be “critical” to Bangladesh achieving the rank of growth required to reach its ambitious goal of appropriate a middle-income country by 2021.

“The garments sector of Bangladesh has grown-up remarkably and captured a rising share of the world market,” The World Bank said.

“But development in exports cannot be taken for granted. Second only to China, Bangladesh’s garment exporting sector will need to participate with the impact of an already huge base and major market share in key markets.”

Exports can grow quickly, the report suggests, but only if “critical bottlenecks” are addressed – the first of which is the provision of successful trade logistics.

Improvements in this region would give the country a “competitive frame”, ensuring that exports and imported input goods are shipped on time, economically and reliably.

Better connections, enhanced customs dealings, better air shipment ability and better rail services could reduce lead times to complete an order by up to 21 days, the report estimates, still if raw materials are sourced from out of the country.

In the meantime, it warns that Bangladesh’s skills gap is “increasingly visible in all manufacturing sectors, and maybe more so in the garment sector”, where it reports a high refusal rate for final goods.

Finally, the details highlight the importance of industry complying with the Bangladeshi government’s labor and building standard – an ever further main issue as the country attempts to move into higher-value garment exports.

Investigate the need for the government to work closely & directly with industry to make sure standards are correctly implemented, The World Bank said firms might also require support to rearrange factories out of residential areas and into purpose-built facilities with safer working environment.