Kamruzzaman Bablu
Economic Reporter, The New Nation :
Despite political instability, month-long student protests, transport disruptions, and delays in policy decisions creating logistical bottlenecks, Bangladesh’s textile and apparel sector has demonstrated impressive resilience in 2024. Despite challenges like leadership changes, energy crises, worker unrest, and evolving global market dynamics, the industry has managed to navigate through a turbulent year.
According to Mohammad Hatem, President of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), despite facing significant crises, the sector has shown a positive export growth trend, increased sustainability efforts, and notable improvements in labour practices. He also pointed out that if the government addresses issues such as the new non-performing loan (NPL) policy, the ongoing gas crisis, and power shortages, Bangladesh’s textile industry would perform even better in the future.
The global trade landscape, particularly tensions between the U.S. and China, has created new opportunities for Bangladeshi exports. However, competition from emerging players like Vietnam and Ethiopia remains intense. Hatem emphasised that Bangladesh must strengthen its brand as a compliant, sustainable, and innovative sourcing hub to maintain its competitive edge.
Export Fluctuations and Growth
In 2024, Bangladesh’s garment exports saw significant fluctuations. In the first quarter, exports dropped by 3 per cent year-on-year due to global economic uncertainties and inflationary pressures in major markets like the U.S. and Europe. However, the situation improved in the third quarter, with exports rising by 5 per cent as global supply chains recovered. Overall, the country’s garment export growth for the year is expected to be around 4 per cent, with export values projected to reach nearly $45 billion by December, despite strong competition from neighbouring countries.
Energy Crisis: A Lingering Challenge
The energy crisis remains a significant hurdle for the sector in 2024. Power outages and fuel shortages have disrupted production schedules, pushing operational costs higher. Manufacturers have faced a 15-20 per cent increase in energy costs due to reliance on expensive alternative sources such as diesel. This has eroded profit margins, which have shrunk by approximately 2-3 per cent over the past year. While some factories have adopted renewable energy solutions, such as solar power, the lack of a stable energy supply continues to hamper the sector’s growth potential.
Sustainability Gains
In terms of sustainability, Bangladesh has made significant strides. By 2024, the country leads globally in LEED-certified green factories, with 230 LEED-certified factories in total, including 92 with Platinum ratings and 124 with Gold certifications. Over 300 factories have also earned Global Organic Textile Standard (GOTS) certification, reflecting a broader push towards greener production. Nearly 10 per cent of Bangladesh’s garment production now uses sustainable practices, up from just 3 per cent in 2020, and over $200 million has been invested in green technologies, including water recycling and energy-efficient machinery.
Political Instability and Labour Unrest
In July and August 2024, a large-scale uprising and political instability led to factory shutdowns, port closures, and halted exports, disrupting the economy and supply chains. Protests demanding higher wages and better working conditions further exacerbated the sector’s challenges. However, the resolution of the labour dispute and the reopening of factories and ports allowed the industry to regain its footing, showcasing Bangladesh’s resilience in the face of political instability.
Leadership Changes in Trade Bodies
2024 also saw significant leadership changes in key trade bodies. SM Mannan Kochi, the newly appointed president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), resigned shortly after taking office, leading to the appointment of Anwar Hossain as the BGMEA Administrator. In the knitwear sector, Mohammad Hatem replaced AKM Selim Osman as president of the BKMEA after 14 years of leadership. The Bangladesh Textile Mills Association (BTMA) also saw leadership changes, with Shawkat Aziz Russell becoming the new president following the resignation of Mohammad Ali Khokon.
Growing Competition from Neighbours
While Bangladesh’s textile sector remains competitive, neighbouring countries such as Vietnam and India have become formidable rivals. Vietnam’s garment exports grew by 7 per cent in 2024, and India’s exports increased by 5 per cent, capitalising on Bangladesh’s energy and labour cost challenges.
Labour Rights and Export Growth
Labour rights remained a key issue in 2024. Protests in July led to a deal between unions and manufacturers, resulting in wage hikes of up to 25 per cent. While this deal caused some disruptions, it improved the industry’s global image regarding worker welfare. By the year’s end, exports surged by 7 per cent in the final quarter, with total export value forecasted to reach around $45 billion, up from $43 billion in 2023.
Global Shifts and Trade Relations
The global political landscape has added complexity for Bangladesh’s RMG sector in 2024. The U.S. presidential election could potentially impact trade policies, and new European Union regulations on due diligence for labour practices and sustainability have forced manufacturers to adopt stricter standards. As a result, Bangladesh’s ability to meet these global standards will be crucial to maintaining its strong presence in European markets, which account for around 40 per cent of its garment exports.
Despite facing political instability, energy challenges, and growing competition, Bangladesh’s textile and apparel sector has demonstrated remarkable resilience in 2024. The industry’s focus on sustainability, labour rights, and its ability to adapt to global shifts will play a pivotal role in securing its long-term success.
