Starting commercial operation in 2007, Arman Textiles became listed in Dhaka & Chittagong Stock Exchange as a Public Limited Company in 2012. The very first textile in Bangladesh to use rope dyeing technology, Arman Textiles has a production capacity of 50 million yards per annum. Awarded with the National Export trophy by Bangladesh Government for consecutive years, Arman Textiles Limited, is considered as one of the largest denim manufacturing facilities in Bangladesh at present.
Maintaining standards such as GOTS 5.0, OCS 2.0, GRS 4.0, RCS 2.0, BCI, CmIA, Cotton USA, ISO 14001:2015, PaCT, HiGG, etc, Envoy Textiles is focused on production of Sustainable Products for the world apparel market.
Bangladesh’s exports shipment of sweater picked up by 18.57% to $2.93 billion in the July-January period of the current fiscal year.
According to Export Promotion Bureau (EPB) data, in July- January period of the fiscal year 2018-19, Bangladesh earned $2.93 billion exporting sweaters, which is 18.57% higher compared to $2.47 billion in the same period last year.
Talking to Textile Today, Bangladesh Garment Manufacturers and Exporters Association (BGMEA) Vice President Mohammed Nasir attributed extended winter season and quality of the product for the Sharp rise in export earnings from the sweater sector.
In addition, the manufacturers also have upgraded the technology in meeting the global demands and to improve the quality of goods, which attracted the buyers’ attention and they placed more orders, said Nasir.
Bangladesh’s Sweater Export to the world: Value in billion USD
In the current year, we are hoping to register over 20% growth as the industry is now one of the safest in the world and buyers are placing more work orders, said the business leader.
But the government has to provide policy support and gas and electricity connection to the new entrepreneurs so that we can increase our capacity to lead the global export market, he added.
manufacturers also have upgraded the technology in meeting the global demands and to improve the quality of goods, which attracted the buyers’ attention and they placed more orders.
MOHAMMED NASIR, VICE PRESIDENT, BGMEA
Meanwhile, the trade analysts termed the growth as a good sign for the Bangladesh economy as it would help to enlarge the export earnings and help the diversification of products.
“Right now, Bangladesh is taking the lead in the global export market in apparel goods, where sweater products are contributing over $3.50 billion. So, the sharp rise in export earnings from the sector will be a blessing for Bangladesh to reach the export target of $50 billion by 2021,” former Finance Advisor to Bangladesh caretaker government AB Mirza Azizul Islam told the Textile Today.
In maintaining the growth, manufacturers have to move for diversifying goods as well as to explore new markets. In addition, the government has to play an important role in availing duty-free market access where there is an opportunity to grow, said Islam.
However, the manufacturers urged the global retailers and brands to increase prices of goods as the production cost has gone up sharply due to expenses of safety improvement.
In the last few years, the production cost of apparel goods went up by over 15% as the manufacturers have to bear the expenses of safety equipment to ensure a safe workplace for the workers, said Nasir.
While the implementation of the new wage structure is another burden for the owners but the brands are not increasing prices of goods, said Nasir urging to consider the price issue.
On the other hand, in order to grab a larger market share, Bangladesh has to increase port capacity to reduce lead-time, while inefficiency of infrastructure is another impediment that needs to be addressed.
Bangladeshi sweater manufacturers import spin from China and it takes eight to ten days to reach Chattogram port, from where it takes 16 days to reach factory premises from the port. It should be a six-hour journey from Dhaka to Chattogram when carrying finished goods for shipment, but it takes up to 24 hours to reach the port city.
According to the National Board of Revenue (NBR), the reduced tax at source for the export-oriented RMG industries has become effective from January 3 this year. The revenue board issued the order to clarify the date actually when the reduced tax would be effective.
The Tax Administration at the very beginning of the year issued a Statutory Regulatory Order (SRO) reducing the tax at source at 0.25% for the hundred% export-oriented RMG industries, BSS reported.
However, the circular did not clarify from when this reduced rate of tax at source would become effective, causing confusion. In this regard, the revenue board issued the order clarifying that the reduced rate of tax at source would become effective from January 3.
A senior official of the income tax department said, “Since the banks wanted to know from us from when the reduced rate would become effective, we’ve verbally informed them to make effective this rate from January 3. We’ll issue letters in this regard to the banks concerned very soon.”
Earlier on January 3 this year, the tax at source in the export-oriented RMG sector was reduced at 0.25% from the previous 0.6% in a bid to enhancing the competitive edge of the RMG sector.
With the latest reduction, the tax at source for exports in the RMG sector has been reduced for the 2nd time in the current fiscal year. The tax at source for exports in the RMG was reduced at 0.6% from 1.0% earlier on September 5 last year.
Bangladesh’s exports earnings from the apparel sector will increase by $200 million additionally in the next two years if the international trade conflicts escalate, said Asian Development Bank (ADB).
In addition, the additional export earnings from the apparel sector will help to grow Bangladesh Gross Domestic Products (GDP) by 0.086% in the next two years.
Meanwhile, the overall exports of Bangladesh will fetch an additional $400 million under the escalation of trade conflicts and the GDP will grow by 0.19% in the same period.
Yasuyuki Sawada, chief Economist of ADB came up with the observation while talking at a Seminar on “Impact of Emerging International Trade Relations on Bangladesh” in Dhaka on Monday.
“US is imposing 25% tariff on $200 billion imports from China, while China is imposing trade measures on $100 billion imports from the US,” said Yasuyuki Sawada.
Under the current scenario, China’s export to the US will go down as it will lose competitiveness and the supply chain will be affected, said Sawada.
“THE EMERGING TRADE RELATIONS COULD OFFER AN OPPORTUNITY FOR BANGLADESH TO INCREASE ITS EXPORT AND CAPTURE GREATER SPACE IN THE GLOBAL VALUE CHAIN.”
MANMOHAN PARKASH, COUNTRY DIRECTOR, ADB
As a result, China sees the huge direct and indirect effect on trade, whereas other Asian countries including Bangladesh seems to gain out of trade redirection, he added.
In the given situation, China to lose the business of $126.4 billion and GDP can be fall by 1.03%. while Bangladesh exports to increase by $400 million and the GDP to grow by 0.19%, said Sawada in his presentation adding that Bangladesh also can gain from the regional trade, Sawada.
Of the $400 million additional export earnings, $200 million will come from the textile and garment sector, said the regional lender.
According to the research of ADB, the apparel sector is the most potential sector to be benefited from the trade tariff tension. While the leather and leather goods and ICT sector have also prospected.
“Being a garment businessman, I have realized that despite having trade barriers, the trade conflicts between the United States and China will benefit Bangladesh apparel production and exports,” Commerce Minister Tipu Munshi said. He was present as Chief Guest.
China is the largest exporter of apparel goods but I can assure that Bangladesh’s exports especially ready-made garment products will grow further, said the minister.
While lots of business can relocate to Bangladesh and other Asian countries. And for the last few months, new export orders are coming. But we shall have to follow the development in the global trade, said Tipu.
According to Otexa data, Bangladesh’s export to the US market stood at $5.20 billion, up by 5.72% in January-November of 2018. While apparel export to the US market has seen a 6% jump to $5 billion in the same period.
However, experts called for steps in tapping the opportunity from the trade tension as there are other countries, who can attract the buyer’s attention.
“The emerging trade relations could offer an opportunity for Bangladesh to increase its export and capture greater space in the global value chain. Given the demographic dividend Bangladesh enjoys, this could emerge as a sustained contributor towards creating new job opportunity for the youth, said ADB country director Manmohan Parkash.
However, this may not be easy and simple. It will hinge Bangladesh ability to align its trade investment and infrastructure with the operative principle of the global value chain, said Prakash.
A number of policy actions, incentives, and structural reforms may be needed for manufacturers to relocate in Bangladesh, he added.
The regional lender stressed on making the trade policy coherent with the value chain led to trade and providing an enabling trade infrastructure and trade regulatory framework could help.
Similarly, investing in good infrastructure, providing good logistic and easy facilitation can help develop an efficient global value chain and thereby attract global companies to move their productions centers to Bangladesh, it added.
Bangladesh textile and RMG sector has a target of taking RMG export to 50 billion USD by 2021 set by Bangladesh Garments Manufacturing and Exporters Association (BGMEA) and the government in 2014, which seemed feasible when the target was set. However, at this stage, it seems quite impossible where in 2016-17 fiscal year apparel export was 28.15 billion USD with only 0.2 percent growth from previous year. So the Bangladeshi textile leaders and owners are continuously discussing, thinking and trying to find out the possible way out over the problem. With this continuity, Bangladesh Textile Today organized country’s first ever “Textile Youth Leadership Summit-2018” where textile leaders, young engineers and up-coming engineers gathered under the same roof. The summit adorned with four segments including opening session and in this article, the “Transformation” session is depicted.
ATM Mahbubul Alam Milton, Executive Director(ED) of Masco Group was the keynote speaker of the session. The article has been written based on his presentation and the speeches of other panel members.
Prof. Dr. AyubNabi Khan, Pro-VC of BGMEA University of Fashion & Technology was the moderator and the panelists were Prof. Sayed Fakhrul Hassan Murad, Chairman, Dept. of Textile Engineering, Southeast University; Mohim Hassan, CEO & Managing Director of Northern Tosrifa Group; M R Jamil Tipu, Executive Director of Akij Group; Mohammed Shohel Ahmed, Head of Manufacturing Excellence-BD, QA services Hong Kong Limited (Lidl), Bangladesh Liaison Office; Nure. A. Khan, Head of Laundry Industries Ltd. Envoy Group; Gulshan Ara Munni, Product Manager, Home Supply Chain, BD Region, PULS TRADING FAR EAST LTD. (H&M Bangladesh Liaison Office) and Reajul Hasan, PhD candidate in Textile Technology Management, NC State University, USA.
ATM Mahbubul Alam Milton said, “Textile sector is our growth engine and today it is providing us 28 billion USD export but we want to take it to 50 billion USD. For this, right now we need some transformations to make the target happened. Mckinsey reported in 2011 that Bangladesh was declared as the next hot spot for sourcing in the RMG market next to China. If we want to make transformation, we have to think across.”
The global market trends
“For the transformation, it is needed to know about global market and in 2015 total market size was 450 billion USD, in 2016 it decreased to 444 billion USD and in 2020 the expected growth will be 650 billion US,” ATM Mahbubul Alam gave these data and said in his keynote speech that the opportunity for Bangladesh is not only 50 billion it even could be bigger. However there potential challenges which he depicted to move forward. He stressed on the importance of understanding the changes in the global fashion trends. He showed how economies are changing and how consumers and their choices are shifting. ATM Mahbubul Alam Milton said, “Today’s global economy is predictably unpredictable because of global politics and many other causes. Only 21% people who are consumer have positive expedition. Consumer behavior is also shifting; for example, Americans used to prefer the products produced in USA or in the American regional countries over the products coming from other countries. But now, this attitude has been decreased for globalization.”
“Customers are shifting in many ways like many companies are now giving customized service and making products as per customer requirements. “Need to you”, “need for you” and many other concepts are coming day by day,” he said.
He pointed out another form that is online-based sale, it has seen in a report that in South Asia, the people who spend about 8 hours in online they like to buy their products from online shop and pay their payments in online too. It is predicted that about 20% super malls in USA will shut down and they will go in online based systems. Many companies are employing artificial intelligence instead of salesman for selling like “Sophia” is introduced in Bangladesh few days back in a restaurant.
He said that many companies are making supply chain of a product open for the customer for being more trustworthy. Off price deception is another way to take attention of the consumer. By ‘start up thinking’ and ‘generating new ideas’, many old brand may shut down by new thinking and strategy, Mr. Milton depicted.
Mr. Milton stressed on the importance of the Asia and other emerging markets. He depicted that more growth and opportunities will come from countries like China, Russia and India.
The most important phenomena highlighted in the keynote is ‘the speed’. Mr. Milton showcased lead time will drastically go down in coming days. The speed of working in the fashion industry will increase significantly, whoever will be able run with that speed will succeed.
Transformation in textiles and apparel industry
Before proposing the transformation model Bangladesh should follow, Mr. Milton explained the current position of the country in traditional transformation model of apparel indsutry. He said that Transformation has three phases: ‘T-shirt Phase’, ‘Race to the Top’ and ‘High End of the Spectrum’. T-shirt phase means at the beginning of a country it starts low wage business like textile and buyers keep giving low price. But after time passes, the entrepreneurs can’t accommodate the price and they go for value added products where skilled manpower are needed and this phase is called ‘Race to the Top’. When this is also being matured, then the country starts assembling business or electronic company and this phase is ‘High End of the Spectrum’. In 19th century, America went to ‘High End of the Spectrum’ from ‘Race to the Top’, now China is in between ‘Race to the Top’ and ‘High End of the Spectrum’ and Bangladesh is in between ‘T-shirt Phase’ to ‘Race to the Top’.
The keynote summarized that Bangladesh has all sort of potentials to move further forward attaining the transformation towards ‘Race to the Top’ to ‘High End of the Spectrum’.
Transforming major challenges into opportunities
In Mckinsey report, they mentioned five challenges: infrastructure, compliance, skilled manpower, raw materials and economical and political stability for Bangladesh in gaining the expected transformation. Bangladesh’s infrastructure is improving over the days. Our ports have 0.8 million PUS garments handling capacity, if the capacity of ports get double then it will be 1.3 PUS but the target capacity is 1.6 PUS and the shortage is 0.3 PUS. Government is taking initiatives about it, Mr. Milton said.
He also said, “There are also utility problems specially gas problem. By this year, there will be alternative LNG gas for resolving the gas problem. Regarding compliance, there is a significant achievement for Bangladesh that among top 10 ranked LEED certified factories in the world, 7 factories are Bangladeshi.”
It gives Bangladesh a new branding image and Mr. Milton said that it is the time to say “The Incredible Bangladesh”. He also thanked Bangladeshi entrepreneurs for such a quick investment and acceptance of ACCORD and ALLIANCE.
The ‘Transformation’ model for Bangladesh
For textile and apparel industry transformation, he suggested some solutions like innovation, agility, collaboration, visionary, integrity and impactful.
He said, “For transformation, we need innovative processes, methods, products etc. Agility of work also needed for country like Bangladesh. Collaboration is another important tool for transformation among entrepreneurs.”
Mr. Milton told that individually our entrepreneurs have everything which may costs much but if we make an industry zone and work together by business collaboration, and then a big transformation might come. For this, he added, we need visionary people in positive mindset and concept. For long term success, integrity is a must, because without fundamental basics, any success is short term. For those entire things, someone has to be impactful and thus transformation will occur.
“The solutions will come by the hand of the young’s who have leadership mind. The main leadership attribute is the pro-activeness. Someone may be called pro-active who take responsibilities and initiatives willingly to make something happened. Reactive peoples are those who fear to be changed and wait for others to make the environment suitable. Pro-active people always makes reference which followed by others. If an organization has a group of pro-active people then it will have sustainable growth and transformation will be happened”, he added with informing that Masco group aligned all of its stuff to its goal for transformation and team building culture.
He informed that for process transformation, KAIZEN tools are used. KAIZEN is a continuous improvement process. In China, about 7 million KAIZEN teams are working, in India 55 thousand KAIZEN teams are working, in Japan 52 thousand teams are working but in Bangladesh there is no registered KAIZEN team. In Bangladesh, our garments sector has only 10% value addition activities, but if it increases to 20 percent by KAIZEN, huge transformation is possible here. Value addition in product is another way of transformation.
Panelist Mr. Sayed Fakhrul Hassan also emphasized on value addition of product for transformation. Mohim Hassan said, “Habit of reading is needed for transformation. It is for better understanding and collaboration which helps in transformation.” He also said that companies should be focused on new ideas for transformation.
M R Jamil Tipu said that government should have policies for new industries. “There are no private economic zone for textile industry which is really frustrating. Power problem is acute in Bangladesh mostly electricity and gas problem”, he added. He noted that Bangladesh should have more spinning mills for transformation and government should give subsidies for spinning sector.
Gulshun Ara Munni said, “We should be boosted up and should be innovative, creative and do more research for transformation.” She marked the point that we should be disciplined with time, which will help in real transformation.
Mohammed Shohel Ahmed said, “We are not utilizing our experience which is a great resource for transformation.” He said the young generation has to take responsibility with integrity. Mr. Nure A. Khan said, “We should be resourceful for transformation” and gave consent to Mr. Milton’s suggestion.
Rejaul Hasan said, “Give lesser focus and do hard work for transformation.”