Study Reveals More Than 60% Skills Gap in BD’s RMG Sector

DBL Group, a prominent textile and apparel exporter, is grappling with increased monthly gas bills, which have tripled from Tk 25 crore to Tk 75 crore due to recent energy price hikes. Despite the government's justification that liquefied natural gas (LNG) imports would boost gas pressure, factory owners claim they are yet to experience any benefits. The surge in gas expenses has raised DBL Group's production costs by up to 30%, while buyers refuse to accept price increases amidst the global economic crisis.

The Bangladesh government is exploring the possibility of exempting the 7.5% value-added tax (VAT) on textile waste collection by spinning mills to encourage garment manufacturing from recycled fibres. The move aligns with the global concept of circular fashion and aims to save foreign exchange spent on yarn and fabrics. Experts believe that the exemption will lead to substantial savings and boost the recycling industry as a backward linkage of the garment sector.

Despite the ongoing Russia-Ukraine war and declining export earnings, Bangladeshi exporters, particularly in the ready-made garment (RMG) industry, are considering Russia as a potential market once again. The resolution of the crisis over inter-banking transactions has played a significant role in this shift. The Bangladesh Bank's decision to allow foreign trade in Yuan and the use of Chinese and other Russian allies' shipping lines have facilitated direct shipments of clothes to Russia.

Bangladesh's apparel export to the European Union (EU) has demonstrated positive growth during the January-March period of 2023. The value-wise growth reached 3.9%, amounting to $5.6 billion compared to $5.4 billion in the same period of 2022. With a 24.07% share of the EU's total ready-made garment (RMG) import in terms of dollar value, Bangladesh remains the second-largest apparel import source for the EU, just behind China, which holds a 24.55% share.

The government of Bangladesh is implementing changes to limit cash incentives for textile and apparel exports. The Bangladesh Bank will issue a new circular, removing freight costs, foreign currency commissions, and insurance costs from the cash incentives provided to these sectors. Currently, the cut, make, and trim (CMT) manufacturing sector receives cash incentives, where buyers handle pre- and post-production processes.

Vietnam has surpassed Bangladesh as the second-largest apparel exporter to Canada in 2022, benefiting from the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). Bangladesh's apparel exports to Canada reached $1.73 billion, a 35.2% increase compared to the previous year, while Vietnam's exports rose by 46.35% to $1.75 billion. The CPTPP provided Vietnam with duty-free access to the Canadian market, leading to its increased market share.