Energy crisis to be RMG's biggest hurdle post-LDC

Highlights

• 55% respondents see no job cuts from tech innovations
• Factories fast adopting green practices
• EU due diligence law seen as a major post-LDC threat
• Vietnam, India seen as top competitors

The readymade garment (RMG) industry leaders in a survey anticipate that energy crisis is going to be the biggest hurdle ahead for business in 3 years ahead of the country's expected LDC graduation in November 2026.

Meanwhile, today's biggest issue for business is reportedly customs hassles and high prices of gas, electricity and water, adding to their financial woes.

Where utility costs are expected to ease over the years, low pricing from global fashion brands compared to competitors is also a key concern for entrepreneurs in the post-LDC period.

The findings of the survey have been featured in the fourth edition of the Economic Intelligence Bangladesh (EIB), a publication of TBS in collaboration with research firm DataSense, shedding light on the competitive and changing RMG business landscape.

The survey was carried out in June this year.

Titled "Weaving the Future of Bangladesh Apparel", the survey showcases the perspective of 20 leading RMG enterprises of Bangladesh collectively employing 2.5 lakh workers, half of which are female.

Notably, the RMG industry seems to be active in two important areas of development: Adopting AI and automation technology, and environmental sustainability.

This falls in line with the growing trend of factories adopting green practices, as 220 RMG factories of Bangladesh have achieved the recognition of the LEED certification since June 2024 according to the BGMEA.

In terms of competition, local RMG leaders think Vietnam and India are their biggest threats.

Respondents believe that shorter lead times and their responsiveness to global fashion trends are what keep them ahead of Bangladeshi exporters in the global RMG race.

Aside from the upcoming LDC graduation pipeline challenges, the EU due diligence law is another global concern that local leaders are having to comply with.

To promote RMG's future success, 60% of respondents believe that tax breaks and subsidies for the adoption of new technology would be the best supports to move forward.

In the sea of current and upcoming obstacles, enhanced productivity and a shift towards automation and higher-value products are the keys to success according to most survey respondents.

As Bangladesh's RMG industry evolves and more automation is implemented, more than half (55%) of the respondents agree that tech innovations will not replace labour needs.

To access the latest issue of Economic Intelligence Bangladesh, visit: https://intel.tbsnews.net/4th-issue/