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The Textile Magazine
MARCH 2012
While Bangladesh represents
some very promising advantages
in certain dimensions, a number
of challenges could create hurdles
for companies seeking to source
from the country. For all busi-
ness stakeholders, infrastructure
(transport and utilities supply) is
the single largest issue hampering
Bangladesh’s RMG industry. The
power supply issue seems more
likely solvable within the next two
or three years, although 90 per cent
of local suppliers rate the current
energy supply as very poor or poor.
Some 93 per cent of the Euro-
pean and US CPOs interviewed
agreed that the compliance stand-
ard in Bangladesh has somewhat
improved (67 per cent) or strongly
improved (26 per cent) within the
last five years. However, gaps exist
and new risks may be emerging.
A gap between customer require-
ments and supplier capabilities or
investment plans is emerging, as
currently only 50 to 100 local gar-
ment manufacturers are able to pro-
duce at an advanced level in terms
of product categories, productivity,
services and compliance.
Apart from a lack of investment
in new machinery and technolo-
gies, the current insufficient size of
skilled workforce also impedes an
increase in productivity and a move
towards more sophisticated prod-
ucts.
Experts estimate that there is
currently a 25 per cent shortage of
skilled workers in Bangladesh’s
RMG industry.
Also, existing challenges will
multiply if suppliers are not able
to fill higher-skill middle manage-
ment positions, according to McK-
insey.
The European and US CPOs say
economy and political stability are
one of the key areas of risk when
sourcing in Bangladesh. About half
of them said they would reduce the
value of their sourcing in the coun-
try if political stability were to de-
crease. A majority of them see cor-
ruption as a major hurdle for doing
business in Bangladesh. Further,
productivity needs to improve to
close the existing productivity gap
in comparison to other sourcing
countries.
The McKinsey study further
said the potential for Bangladesh’s
RMG growth can be realised only
if the challenges in areas of infra-
structure, compliance, supplier per-
formance and workforce supply,
raw materials, and economic and
political stability are tackled. The
three main stakeholders – the Gov-
ernment, suppliers and buyers – can
accomplish the development poten-
tial and solve Bangladesh’s RMG
growth formula. “Only if whole-
hearted efforts are led by all stake-
holders together, will the stage be
set to support a future ‘rebranding’
of Bangladesh.”
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