Overreliance on RMG puts economy at risk

Bangladesh’s heavy reliance on a single export sector — ready-made garments — poses significant economic risks, the Asian Development Bank’s (ADB) chief economist warned on Wednesday.

Speaking on the sidelines of the 59th Annual Meeting of the Board of Governors of the ADB in Samarkand, Uzbekistan, Albert Park said the country must explore opportunities to move up the value chain and diversify its export base.

He made the remarks at a media briefing held to unveil the Asian Development Policy Report on Global Value Chains and Inclusive Development at the event.

Presenting the report’s key findings, Neil Foster-McGregor noted that, despite recent global tensions, value chains remain resilient, with developing Asia and the Pacific assuming an increasingly prominent role.

“The benefits from global value chains are real but uneven — driving growth and poverty reduction, but not equally across economies, firms and workers,” he said.

He added that gains are becoming increasingly concentrated in large firms and in capital-intensive, higher value-added activities, reflecting persistent capability gaps.

“As global value chains reconfigure, competitiveness will depend on resilience, sustainability and firm capabilities, not merely on low labour costs,” Foster-McGregor observed.

Park acknowledged Bangladesh’s strong performance in the garments sector but cautioned that it remains largely labour-intensive, with limited progress in moving into higher value-added activities.

“For Bangladesh, the concentration in a single export sector is, in my view, very risky for the economy if an unexpected shock were to significantly disrupt that sector, as has occurred in the past,” he said.

He stressed the importance of diversification, urging policymakers to open up other sectors by allowing duty-free import of inputs, similar to the facilities enjoyed by the ready-made garments industry.

“Extending comparable support to other sectors would help broaden opportunities,” Park said, adding, “At the same time, Bangladesh should focus on upgrading within the value chain.”