Meeting $100b garment export target by 2030 tough, but feasible

Bangladesh's ambitious $100 billion garment export target by 2030 is currently facing a number of challenges both at home and abroad, but local manufacturers and business leaders are still optimistic about achieving the goal.

To meet the target, readymade garment exporters seek government policy support, a stable political environment and overall security for their production units.

In fiscal year 2023-24, Bangladesh, the second largest apparel exporter of the world, shipped readymade garments worth over $36 billion.

Now domestic challenges facing manufacturers include a poor business and investment climate, disruptions to production and shipments and shortages of gas and power for production lines.

These issues are compounded by global inflationary pressures and declining prices for apparel items in key markets.

Moreover, the country's scheduled graduation from the least developed country club in 2026 will strip away preferential market access facilities for Bangladeshi RMG items, estimated at $7.77 billion by the World Trade Organization (WTO).

"Buyers are returning to Bangladesh. Therefore, achieving the target is possible if the government can improve gas and power supply," said Faruque Hassan, former president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA).

During his tenure at the BGMEA, Hassan set the export target in 2022. To achieve this goal, the BGMEA then identified adequate gas and power supply, new investment, product and market diversification and investment in man-made fibre products as crucial factors.

However, current political uncertainties have compounded the existing energy situation and increased production costs.

Hassan said that with adequate gas and electricity supply, fresh investment would flow into the sector and many entrepreneurs would invest or expand their operations in high-value-added garment items like man-made fibre garments, jackets, activewear, jerseys, skiwear and sports items.

This value addition, he said, would fetch higher prices compared to traditional basic item exports.

On an optimistic note, he said Bangladesh's exports to non-traditional markets such as Japan, India, Russia, South Korea, South Africa and Australia appear promising.

"If exports continue at the current pace to these markets, along with traditional markets like the USA, Canada and the European Union (EU), it is possible to achieve the target," added Hassan, also the managing director of Giant Group.

The former BGMEA president also said that international retailers and brands have solid confidence in Bangladesh due to improvements in workplace safety and labour rights after the Rana Plaza garment collapse in 2013.

Moreover, he mentioned that China has been losing its global market share. Consequently, apparel work orders are coming to Bangladesh not only from China but also from Pakistan, Myanmar, Ethiopia and Sri Lanka due to political tensions in those countries.

Similar to Hassan, Kalpan Hossain, managing director of Dekko Legacy Group, said non-traditional markets, along with traditional ones, will be key drivers in achieving the target. Besides, he said Latin American countries could be excellent destinations for Bangladesh's apparel shipments.

"Achieving the target will be challenging, but it is still possible," said Hossain. "We have the potential and we must utilise it."

Shams Mahmud, managing director of Shasha Denims, said the country's garment exports have steadily increased over the past decade.

"Therefore, garment exports may grow at an even higher rate in the next six years, provided the sector gets adequate gas supply, financial support, government policy support, political stability and industrial security," he said.

Khandoker Rafiqul Islam, president of the now-dissolved board of directors of BGMEA, also sounded confident in achieving the $100 billion garment export target by 2030, provided all necessary facilities are in place.

With adequate gas supply, he said many companies would expand or invest in new ventures.

However, Mohammad Abdur Razzaque, chairman of the Research and Policy Integration for Development (RAPID), expressed a different view on achieving the target on time.

"When the target was set, the country's business environment was different and it has now changed," Razzaque said. "With the current business environment, achieving $100 billion might be challenging, but the country may reach $70 billion-$80 billion if a better business environment is ensured."

He added that a global slump in demand for clothing items, coupled with domestic challenges, is making the target difficult.

Razzaque also talked about the possibility of higher tariffs on Chinese items imposed by the USA if the Republican Party wins the next election. He believes this could divert massive work orders to Bangladesh from China.