The readymade garment (RMG) sector's impact on Bangladesh's economy is undeniable. In FY23, it contributed 10.35 percent to the country's GDP, a testament to its substantial role in driving economic growth. RMG export earnings for FY23 amounted to $46,991 million, with a 10.27 percent growth compared to the previous fiscal year, and a contribution of 84.58 percent to the country's total export earnings.

Despite its impressive growth, the apparel sector has been facing various disruptions for several years, such as geopolitical tensions, price fluctuations, and supply chain disruptions. The inherent and long-run challenges faced by the sector have exacerbated the impact of external disruptions and raised concerns about the sector's ability to adapt and thrive in the face of global challenges.

The sector continues to depend heavily on imported raw materials and this makes this sector even more vulnerable to external supply chain disruptions. A lack of product diversification also stands out as one of those critical inherent challenges. With specialisation in a limited range of garment items, Bangladesh's ability to effectively negotiate and compete in the international arena is constrained. Though this constraint has been evident for over a decade, the need for diversification has become increasingly necessary in recent years.

In 2021, 43 percent of the total global apparel trade was based on manmade fibre (MMF). However, Bangladesh had only 22 percent of MMF-based apparel in its export basket. To address the challenge, Bangladesh can forge strategic partnerships with countries that possess expertise in MMF production. These collaborations would not only enhance Bangladesh's capabilities in MMF-based products but also attract foreign direct investment. Diversifying into MMF-based products would broaden Bangladesh's product range, strengthen its negotiating position, and boost global competitiveness.

Another defining factor that is changing the apparel landscape is automation, going beyond the production floor, and streamlining packaging and logistics processes. While it offers promising benefits, including improved efficiency, cost reduction, and quality enhancement, the automation of routine and manual tasks raises concerns about potential job losses, especially for low-skilled workers. In its study on future skills, the a2i identified RMG to be the most affected sector by Industry 4.0-led automation.

However, automation also creates opportunities for workers with technical skills to operate and maintain automated systems. Therefore, Bangladesh needs to make significant investments in education and skill development to equip its labour population to meet the demands of the growing apparel sector to close the skills gap.

International buyers are increasingly demanding more fashionable, sophisticated, high-value, and high-quality garments from Bangladesh. To meet these evolving requirements, RMG manufacturers must continuously upgrade their capabilities in product design, product categories, product quality, productivity, services, and compliance.

With stakeholders -- consumers, investors, and governments -- putting pressure on businesses to meet targets around GHG emissions, chemical discharge, water usage, solid waste management, worker safety, living wages, and inclusive workforce, sustainability has transcended mere differentiation to become an essential prerequisite for business success.

The apparel sector stands at a pivotal crossroads, confronting a convergence of external disruptions and inherent challenges. A concerted effort to address the skills gap and acceptable compliance with labour standards and infrastructure upgrades combined with further investment in research and innovation will be instrumental in propelling the apparel sector towards a future of sustainable growth and global leadership.

A multifaceted strategy comprising cooperation between the private sector and the government can firmly establish Bangladesh as a leader in the ever-evolving world of the apparel sector.

The author is an economic analyst