Apparel Export Faces New Challenge

Bangladeshi apparel export loses market share, Exposing weakness that labor query just lays bare.

Data divulged by WTO revealed that Bangladesh gains little in RMG export from the tariff debate. Bangladesh registered a growth of only 0.89% in apparel export in 2025. Vietnam registered 10.53% growth. While Cambodia posted a growth of 16.88%, Pakistan, Indonesia and India recorded growth of 6.83%, 5.79% and 5.47% respectively (see "Bangladesh posts 0.89% apparel export growth in 2025, lowest among Asian rivals: WTO", The Business Standard,July 13,2026,https://www.tbsnews.net/economy/rmg/bangladesh-posts-089-apparel-export-growth-2025-lowest-among-asian-rivals-wto-1487416).

China's market share of global apparel exports fell from 31.71% to 27.35% since 2021. The country is subject [to] severe tariff from the Trump administration. Bangladesh's total RMG export stood at $38.82 billion in 2025. Despite the fact that Bangladesh retains 2nd position in the US market, Bangladesh ceded market share to rivals like Vietnam and Cambodia. This is an worrying development.

Recently, USTR opens an investigation on 60 economies in the issue of forced labor. Traces of forced labor could land Bangladesh facing tariff up to 12.5% (see "US announces new tariffs over forced labour concerns",Mitchell Labiak,BBC News,3 June 2026,https://www.bbc.com/news/articles/cq6pe7nvldmo). Bangladesh is still reeling from the reciprocal tariff (19% for Bangladesh) while the forced labor related punitive tariff has the potential to augment the tariff burden.

If this punitive tariff really comes into effect, Bangladesh's apparel market share may further shrink. In addition, erosion of export earning resulting from the punitive tariff may worsen the current account balance. Any export loss amid austerity measures will pose severe challenges to macroeconomy including pressure on the exchange rate of Taka.

One of the domestic way to confront this challenge is to depreciate the currency. But look at the sheer size of the tariff, 12.5%. Depreciation of this magnitude will not pose serious problem to the economy but could aggravate the inflationary pressure by increasing the prices of imported goods, which is not a priority for the govt. So depreciation of Taka by 12.5% is not compatible with the economic priorities of the govt. However, a 2% or 3% depreciation will not bring that much pressure.

Forced labor related tariff already casts shadow over govt's employment creation goals. Govt envisages to create 2.5 million jobs through the central bank led stimulus package. At the heart of this stimulus is reopening of [closed] garment factories. Many of which are small in size and survive on subcontracting. Further labor related compliance will strain the production cost of the factories and many simply cannot comply with the new standards. Moreover, punitive tariff may shrink work order and thereby shrink future subcontracting opportunities for these factories.

While Bangladesh is still coping with the ensuing situation from reciprocal tariff, forced labor related investigation puts its apparel export share into precarious situation. This new challenge even threatens govt's job creation goal. Depreciation of Taka, to some extent, may mitigate the adverse effects.

Key To Face 35% Tariff Challenge

Bangladesh faces higher tariff in the US market, Negotiations is on to reach a deal perfect.

Bangladesh has been given a revised tariff of 35% in the US market. 2% reduction is nothing compared to what its competitors face now: Vietnam 20% and Indonesia 32%. Luckily, Bangladesh still has room for negotiations till August 1. If both parties agree on terms and conditions ,this tariff may be farther lowered. Protecting this $8 billion market is crucial for Bangladesh. Otherwise, any shrink to market share will cast shadow over the current account balance.

Now it is not clear whether the total tariff to the US market is 35% or 50%. But I think the total tariff is 35%. Previously Bangladesh paid around 15% taxes to the US on exports.(But I think Bangladesh even paid more than that in earlier years). And Bangladesh maybe the only country in the South and Southeast Asia that pays a higher tax than other countries. Given the total tariff is 35%, it means Bangladesh has to depreciate its currency by 20% to retain its prevailing market.

There are many other ways to lower the production cost apart from depreciation. Introducing new technology is costly and requires investment and time. Another way is to provide extended credit (say for 5/7 years) to invest in new technology or to cope up the challenges emanating from the new tariff rate. However, depreciation is itself an incentive to the exporter.

Now the question is can Bangladesh afford a 20% depreciation? The latest BBS inflation data put a question mark on its credibility. Food prices and cost of living index did not register such a decline that translated into a 8.78% inflation rate. It maybe a deliberate move to lower the policy rate to get credit from banks that are still suffering from piling up of huge credit. If oil price is low and overall macroeconomic management such as tighter fiscal policy is maintained, then 20% or 15% depreciation may not pose serious inflationary risk.

A policy mix like extended credit , cheap electricity, introduction of new technology and depreciation could be the key. It will help us to chart the course to get rid of difficult situation if 35% tariff indeed stays forever.

Bangladesh still faces lots of hurdle in Chinese market with over $28 billion trade deficit. There is hardly any chance that the country will become an $8 billion export market in the next 4/5 years. The Chinese ambassador said to open China's market for Bangladeshi workers. But its labor market is not so open for allies like Cambodia, Vietnam , Laos,Myanmar ,Pakistan and other African countries. Why will it be an exception for Bangladesh? China could easily buy Bangladeshi knit items where Bangladesh has huge value addition. So far it shows less interest in it.

Pakistan itself is suffering from huge macroeconomic crisis. Chinese banks owe huge money to Pakistan. I watched a news report on NDTV two years ago that shows protesting Chinese workers protest over due pay in front of a bank that put itself into trouble after lending Pakistan money following govt's instruction. So it is the Chinese interest that led to the picture session of this Sino-Pak-Bangladesh formation which has very little materialistic reason to take off. Apart from Bangladesh, both the economies are command and control economy where govt decisions hardly reflect market reality. Interestingly, with both the countries Bangladesh sustains huge trade deficits. Is it the case that Bangladesh will suffer economic hardship where the two will continue to enjoy trade surplus? Economic reality should dictate over any political or strategic consideration.

There is another pitch from Chinese investors for more Chinese investments in the infrastructure sector. Pakistan has yet to reap the benefits from Gwadar investment and sustains macroeconomic crisis. We should remember it before accepting fresh Chinese investment in infrastructure project.

Retaining the US market and maintaining good relations with the West should be priority focus area of our international relations. If the West leaves us, China ,Russia and others will not be that cooperative with us.

On the flip side of this higher 35% tariff , there is something good too! It will thwart any move from other countries and vested quarter that will try to reexport items using made-in-Bangladesh tag.

There maybe some unease for one year but it will be okay if we go for 20% depreciation amid 35% tariff. We endure the pain of pass through effect from 40% depreciation for two years. Our sufferings may be prolonged for one more year. But we have to do it for the sake of the economy if the last round of talks yield no improvement.

Demise Of A Goose

Lights go off in an RMG factory,
Leaving jobless and worry for industry.
Reasons unearthed for its demise,
Miss out the one,unpleasant to surmise.

Closure of one of Bangladesh's biggest RMG units augurs ill to the golden goose of Bangladesh economy. Already reeling from safety and poor conditions of work issues at the factory,Corona served further blow to the ailing industry that accounts two-third of the exports of the country. Following the repeated pleas from the exporters, government announced soft credit packages to get rid of Corona related difficulties. However,the assistance did little to help as many misused it by paying back old loans or laundering money abroad. Gravity of the matter even prompted Central Bank to warn the banks about misuse of Covid assistance package.

During the pandemic,one after another major brands in the West shut down their operations.Closure of Opex added another bad news. In its successful years,annual turnover reached $500 million. One of its factories is located at the neighbourhood I grew up and live. I witnessed first hand how such factories helped local economy. House rent ,grocery business and thriving kitchen market swelled the local economy. Nowadays, the brand made lots of headlines for workers' agitation. Angry workers often blocked the key Dhaka-Chattogram highway,lifeline of Bangladesh's economy. Many put forward the reasons behind the closure as housing the 45,000 workers at one place,successor issue,loosing orders,mismanagement etc. But it once again reveals the ugly truth that our conglomerates cannot stay long in the business. Lifespan of most of our conglomerates does not last long.

Few years ago I read a feature that revealed the top 10 companies of Bangladesh in each of the 4 decades. I discovered that companies dominated in a decade or better to say under a regime did not manage to continue the domination in the subsequent decades. Many just shrunk or wound down businesses in the face of odds. This shed some light on the prevailing business environment in Bangladesh.

Most of businesses started their journey under a favorable regime. In addition,the era of permit raj,quota,licence etc that involve lots of bureaucratic operations witnessed the crony businesses to grow. Later many of the groups splintered or dropped from the race when the tide turned against them.

Opex started its journey back in 1984.A former military officer hailing from a family that has a firm footing in myriad sectors set up the conglomerate. As it was the trend then many members of the family became MPs and ministers, and obviously the group gained a lot from the influences of the power grab. Quota was still in play and certain ministries were responsible for its distribution. And those close to the power corridors grabbed the opportunity.

I find some of the reasons put forward hard to swallow. Adverse situations that it faced over the last 10 years could also be a reason for its demise. Recurrence of workers agitation at factory premises that had reputation for clearing payments in line with the image of a top conglomerate not only hampered the operations of the factory but also strangulated Dhaka-Chattogram highway,lifeline of Bangladesh economy.

Furthermore, it is not clear whether it received ample government assistance to keep the factory floating. Many upstart and fake factory received assistance with little effort since this government assumed power. According to a news report,banks discontinue back-to-back LC facility sensing its troubles. A company with $500 million turnover a decade ago ended up in such a sorry state.

Look at the banks that invested here. A bad patch on a good company,once shined under a favorable regime, rendered their money bad. And closure of factory means wiping out of 45,000 jobs. Another example of what crony capitalism does to an economy.

Fate of Citycell,Opex is the inevitable flaws in industrialization and doing business in Bangladesh,pretty common where governance is weak,rule of law is subjective and business is mingled with politics. It is dead wrong to put forward only business and economic reasons as sole factors for demise of a factory.

Notes And References:

1 “Opex:Businesses Will Think Twice Before Building Such Large Factory Units”,Saddam Hossain, Dhaka Tribune,October 28,2021Link here

Video Did Not Kill The Radio Star

Recent manifestation of some laid off RMG workers at some pockets of Dhaka and neighbouring districts brought forth a debate that was already settled. It is all about whether automation kills jobs.

Bangladeshi RMG industry in recent years inclined towards automation that requires less operators or workers at various stages of a production process. Some factories reintroduced the laid off workers to other section while the rest continue to terminate them without paying dues. Many of these angry workers descended on the streets and protested for their dues.

I once caught myself in one of these unrests in Mirpur that literally stopped the vehicular movement for half a day.

Many here tried to blame automation for this lay off and unrest.

The RMG industry and Textiles sector itself shows how hollow the argument is. From handloom to powerloom to sophisticated machineries, bevy of equipments have been introduced to this strategically crucial sector since this sector started to fetch forex for the country. Have you seen any decline in recruitment? No. What changes did unfold before us? We started to produce woven shirts, sweaters, denim pants etc that we had not produced before. Previously we were only good at producing couple of knit items. Now our knit garments industry produces highly value added items. Moreover, productivity has also increased.

With adoption of new machinery, our RMG and Textiles industry now produces more technically challenging items that bring more revenues. As revenues from manufacturing traditional item do not cease to come, exporters invested more in production of value added items. For instance, many knit exporters invested heavily on knit items that require embroidery work. To produce these high value items, they invested in embroidery machines and to train operators so that the embroidered work reflects the finest quality of craftsmanship.

It is pretty obvious from this example that sophisticated machinery not only relieves the abundant labours from producing traditional items, it also reemploys some of them on production of more high value items.

One may argue that one or two initiatives cannot be presented as examples. But five years down the line more firms will follow the successful initiatives as automation overwhelms the present production process. Automation in RMG is not a job killing process, rather it is a stage reducing process. More jobs will be created at a later date.

Pertinent would be to cite the example of industrial revolution. Similar argument was floated back then. It was widely viewed as a process to kill jobs at agricultural sector. However, industrial revolution brought the rural peasants to cities and offered them jobs at new industries. A new relationship between recruiter and employee was developed through the instrument of job contract. The rural peasants earned more by working in the industry and mechanization also revolutionized the agricultural sector in general.More environment friendly and cost effective production process was developed and introduced. Innovation in the processing and preservation and introduction of supply chain management system also made agriculture a lucrative business in the post industrial phase.


So new ideas and technologies are not job killing process but open up new alleys of opportunities in general.

Another wrong perception about automation is that it will lower wages at a certain industry. It is perhaps not the case. Wages may vary across the industry, but introduction of new technology will not drive the wages to such a low level that workers refuse to work. Wages are based on a worker's decision to buy a bucket of goods and services that are quintessential to survive at a certain point of time.Prices of goods and services go up over the years due to inflation. This must reflect on bare minimum wages, below which a worker refuses to work. As long as inflation does its work, wages are supposed to increase.

Moreover, adoption of new technology often leads to higher productivity and more revenue. This higher productivity also plays a role to raise wages of employees of all levels.

If we take a close look at the informal sector, we will see wages of rickshaw pullers and construction workers rose significantly over the years.Please note the two sectors also witnessed tremendous boom in technology in recent years.Battery-run rickshaws augmented earnings of rickshaw pullers and increasing use of machinery did not lower the wages of construction worker.

Battery-run rickshaws literally increased the wages of whole rickshaw industry, including the tri-cycle rickshaws. Meanwhile, rising food prices and higher wages in other sectors did not cause the rickshaw fare to fall in spite of the fact that overwhelming number of rickshaws ply over the streets.

In construction industry of Dhaka, inflation coupled with use of machinery and higher wages in other sectors also raised the  wages in this industry.

In a nutshell, argument floated in favour of automation kills jobs sounds hollow at the end of the day. The Buggles back in late '70s composed a popular song on the wake of  arrival of VCR called " Video killed the radio star". In the course of time, title of the song was proved wrong. Radio Stars were temporarily went off the radars of people's memory. But internet and mobile phone, dotted with FM radio, resurrected those Radio Stars.Now we have more FM radio stations and radio jockeys. Sometimes we watch live some radio programmes on social media or TV and simultaneously listen to the programmes on Radio. Technology is the healer, not the killer.

La Semaine Dernière A Mes Yeux

 (24 mai --- 31 mai)

Selon un reportage, la Banque centrale a alerté toutes les banques  à portable au propos de virement clandestin  depuis l’étranger à la veille de la fête religieuse.  Dans le mois de jeûne, les migrants bangladais virent d’argent depuis l’étranger sur les comptes de leurs proches. De plus en plus de Bangladais préfèrent les banques à portable  puisque ça fait moins de temps. Il se peut qu’ils fassent des virements  clandestins . Donc, le renseignement de Bangladesh Bank a demandé aux banques à portable d’identifier les comptes quit font virement clandestin.

Selon un reportage, American Apparel And Footwear Association dans un communiqué a conseillé à Premier Ministre bangladais de retirer les plaintes contre les dirigeants d’ouvrier de la confection et de recruter encore les ouvriers licenciés pour avoir participé dans la protestation en janvier cette année.

Selon un reportage, une nouvelle organization des droits de l’homme s’est dit que les forces de sécurité avaient extrajudiciarement tué 118 personnes de janvier à avril. Pendant la période 354 femmes et 234 enfants ont été violés.

Selon un reportage, police dans son enquête n’a pas trouvé que le conseiller de Teknaf et dirigeant du parti en exercice  était  tué par les feux croisés entre deux bandes de trafiquants de drogue. RAB dans sa plainte s’est dit qu’il était pris entre deux feux par les trafiquants.

Selon un reportage, Daech a revendiqué une tentative d’attaque contre une camionette de Police à Malibagh. Dimanche soir, Daech  a fait exploser une bombe dans une camionette qui appartient à renseinement policier, blessant un agent de Police. 

Selon un reportage, police a préparé procès-verbal contre 16 culpables pour avoir participé à la tuerie d’une étudiante de l’école religieuse.

Selon un reportage, le renseignement policier a accusé 125 personnes dont des dirigeants de la filiale du parti en exercice pour avoir distribué les questions pour argent à la veille des examens publics.

Selon un reportage, une organization des droits de l’homme a demandé explication pour les morts mystérieuses de deux personnes dans la prison. Le mecredi un tueur a été tué par un autre détenu qui y avait envoyé six heurs avant. A la fin d’Avril, un avocet a été succombé à ses brûlures après des gens lui ont mis à feu dans la prison de Panchagarh.