Besides many ups and downs, the GDP of Bangladesh is growing impressively. The RMG exports provided 83% of the country's foreign exchange earnings in the fiscal year 2019–2020(BGMEA 2020) which clearly shows that the apparel industry is the heart of our economy and contributes the lion's share in the country's exports earnings.
With a meager wage and a huge number of people in this sector, Bangladesh has competitive advantage over other countries. But how long can our economy keep growing depending on this industry? What would happen if automation replaces the human capital, and we no longer have this competitive advantage? Isn't it the high time we focus on diversifying our RMG industry and looking for different industries?
According to the statistics of 2011-21, the global market share of MMF (man-made fibre) is about 72.7% and expected to be much more in the upcoming years. Countries like India and Turkey have stepped forward and are focusing on shifting some of their fiber industry to the MMF industry and trying to grab the RMG sector.
The apparel industry of Bangladesh is mainly based on natural fiber due to its availability and favorable tropical weather, but the lack of production of cotton and the rise in its price makes it harder to grab global customers. On the other hand, the availability of raw materials to produce MMF (man-made fiber) is expected to be available on an unlimited basis and cost significantly less than natural fibres.
Moreover, consumers' preference is moving from cotton to man-made fibres due to its better physical properties, durability, and versatility. All these provide a distinctive set of advantages over the natural fibers. So, focusing on the MMF industry can give us a potential advantage in the near future.
We can also focus on alternate industries that can increase the demand of the existing MMFs and force them to develop the MMFs industry. The existing and new industries that use MMFs as raw materials will receive fruitful advantage on the global market through this.
One such industry can be the sports goods manufacturing industry which will produce professional sports equipment and gears such as training equipment, match balls, sports apparels, off-field apparels (polo shirts, caps, jackets etc.), sports shoes, cleats, and accessories (Sunglasses, bags, water bottles, protective gears etc.). The industry mostly uses MMFs as raw materials.
In Bangladesh, we have seen massive growth in the country's sports sector in the last decade due to the increasing rate of sports enthusiasts and professional players. But the national involvement in the sports gear manufacturing industry is very low. From 2017, Among the 170 start-ups funded by start-up Bangladesh, only one start-up was sports-related.
Due to the increasing demands of sports equipment, some global sports brands have already opened their retail stores in Bangladesh, like Decathlon (French) and Puma (German). However, most of the production of these brands do not take place in Bangladesh. Hence, this could be a great opportunity for domestic companies to enter this industry as the industry has a promising future growth.
The establishment of domestic sports goods manufacturing companies in this industry can create employment and reduce the dependency on global sports brands. Moreover, establishing many domestic sports brands would encourage the production of these MMFs because it will create high demand within the country. Therefore, many small plants of the MMFs will grow up even though the plants' start-up costs are high.
Bangladesh has approximately 300 recycling plants throughout the country and most of them are in Dhaka. But the number of dedicated MMFs production plants are really negligible compared to the recycling plants.
Bangladesh exports a considerable amount of plastic flakes in India, Thailand, Vietnam, Austria, Ukraine, Philippines, Taiwan and to some of European countries. Currently, India and some European nations are the prime importers of Bangladeshi plastic flakes. These countries use plastic flakes to produce diversified products which have high demand globally.
On the other hand, our RMG sector imports a high amount of MMFs every year to sustain in the global market. However, we are exporting the prime ingredients of the MMFs rather than producing the fibers in the country. The main reasons for this scenario are high start-up cost and low domestic demand of the MMFs industry.
In conclusion, the introduction of domestic and global sports-gear manufacturing plants will increase the demand of the man-made fibers which can eventually boost MMFs industry growth. In this way, the development of the MMF industry will eventually help the RMG sector to secure a strong position in the global market in the long run.
The authors are students of Department of Marketing at Jahangirnagar University