The industry needs better trade agreements, smoother customs processing, infrastructure improvements, and incentives for sustainability investments, writes Asif Hossain
THE ready-made garments sector has been the backbone of Bangladesh鈥檚 economy for decades, transforming the country into a global hub for apparel manufacturing. From its humble beginnings in the late 1970s, the industry has grown to become the second-largest apparel exporter in the world, contributing over 80 per cent of Bangladesh鈥檚 total exports and employing more than four million workers, the majority of whom are women.
In 2024, Bangladesh鈥檚 RMG exports experienced a 7.23 per cent growth, reaching $38.48 billion, up from $35.89 billion in 2023. This growth significantly contributed to the country鈥檚 total exports hitting $50 billion. Notably, exports to non-traditional markets reached $6.33 billion, reflecting efforts to reduce dependency on the US and European markets. Despite these achievements, the industry faces major challenges in an increasingly competitive and evolving global trade environment.
With rising labour costs, changing consumer preferences, sustainability concerns, and stiff competition from emerging players, Bangladesh鈥檚 RMG sector must innovate, adapt, and diversify to sustain its growth and relevance. The sector, once lauded for its low production costs, can no longer rely solely on cheap labour to remain competitive. It is imperative to shift towards value-added production and improved working conditions to ensure long-term sustainability.
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Roots of garment industry
THE journey of Bangladesh鈥檚 RMG industry began in the late 1970s, when a few pioneering entrepreneurs recognised the potential of export-orientated garment manufacturing. One of the first major players in the industry was Desh Garments, which collaborated with South Korean firm Daewoo to train Bangladeshi workers in modern apparel production techniques. This knowledge transfer laid the foundation for the rapid expansion of the sector.
In the 1980s and 1990s, the industry experienced exponential growth, largely driven by low labour costs, duty-free access to European markets under the generalised system of preferences, and an abundance of skilled yet affordable workers. Foreign buyers, particularly from the US and Europe, turned to Bangladesh as a preferred sourcing destination due to its competitive pricing.
The multi-fibre arrangement, which regulated global textile and apparel trade through a quota system, further boosted Bangladesh鈥檚 RMG sector. However, when the multi-fibre arrangement was phased out in 2005, many feared that Bangladesh鈥檚 apparel industry would collapse. Instead, it proved its resilience, continuing to expand due to its well-established supply chain, growing workforce, and strong relationships with international buyers.
Tragedies like the Rana Plaza collapse in 2013, however, exposed the vulnerabilities of the industry 鈥� particularly concerning worker safety and factory compliance. This led to global pressure for better labour rights, workplace safety, and sustainability standards. Since then, Bangladesh has made some progress in improving factory conditions with the introduction of accord and alliance safety measures.
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Emerging challenges
DESPITE its historical success, Bangladesh鈥檚 garment sector now faces several challenges. First, global competition is fiercer than ever. Countries like Vietnam, India, and Ethiopia are emerging as strong alternatives for international buyers. Vietnam in particular benefits from free trade agreements with the European Union and other key markets, while Bangladesh still faces tariffs on many exports. Without new trade agreements, Bangladeshi manufacturers risk losing their competitive edge.
Second, sustainability and compliance pressures are increasing. Global brands are prioritising eco-friendly production, ethical labour practices, and transparency. Buyers now demand not only low-cost production but also assurances that garments are made in socially responsible and environmentally sustainable ways. Bangladesh has made strides in this area, with the highest number of LEED-certified green factories in the world, but more needs to be done to maintain buyer confidence.
Third, economic slowdowns in western markets pose a significant threat. Inflation, economic downturns, and shifting consumer habits in Europe and the US have led to reduced orders for Bangladeshi factories. Over-reliance on these markets makes the industry vulnerable to global financial fluctuations. Expanding into new markets, such as Africa, Latin America, and the Middle East, could help diversify risk and create new opportunities.
Fourth, infrastructure and logistics remain major obstacles. High lead times, port delays, energy shortages, and inefficiencies in supply chain management continue to put Bangladesh at a disadvantage compared to competitors. In an era where fast delivery is crucial for global brands, improving logistics and transportation networks is essential.
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Roadmap ahead
DESPITE these challenges, Bangladesh can secure its future in the global apparel trade by taking key strategic steps.
The industry must move up the value chain by investing in high-value garments such as sportswear, technical textiles and fashion innovation. The demand for functional and performance wear is growing worldwide, and Bangladesh can tap into this market by focusing on research, product development, and skilled labour.
Sustainable manufacturing should be a top priority. Bangladesh鈥檚 green factories have already set a global benchmark, but the industry must further reduce waste, adopt circular fashion techniques, and implement advanced water and energy-saving technologies to meet global sustainability standards.
Market diversification is crucial. Expanding into Africa, Latin America, and the Middle East will reduce dependence on traditional buyers and create new growth opportunities. Exploring regional trade agreements can also open doors to new export markets.
Investment in automation and digital transformation is essential. While Bangladesh remains a labour-intensive manufacturing hub, the future of the industry will depend on smart factories, artificial intelligence-driven supply chains, and digital technologies. Competitor nations are already moving in this direction, and Bangladesh must train its workforce and upgrade its manufacturing capabilities to keep pace.
Government policy support will be key in this transformation. The industry needs better trade agreements, smoother customs processing, infrastructure improvements, and incentives for sustainability investments. Public-private collaboration will play a crucial role in ensuring that the RMG sector remains resilient in the face of global disruptions.
Bangladesh鈥檚 RMG industry has come a long way, but its future depends on adaptation and innovation. The challenges are real, but so are the opportunities. By investing in sustainability, diversifying markets, embracing technology, and improving efficiency, the sector can not only survive but thrive in the ever-evolving global apparel trade. The world is changing 鈥� Bangladesh must change with it.
The time to act is now.
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Asif Hossain is a merchandiser at Urmi Group.