Garment exports from Bangladesh have been growing at an impressive rate in recent years. In 2007/08 alone, they increased by 16% to reach US$10.7 billion -- a record level for the sixth consecutive year – following a 17% rise in 2006/07. Further strong growth seems assured as foreign buyers look for a low cost alternative to China.

Together, the textile and garment sector in Bangladesh fulfils a crucial role in the country’s economy. It accounts for over 75% of the country’s total exports. Also, it provides jobs for almost 5 million people, accounts for over 10% of the country’s GDP, and contributes around 40% of its manufacturing output.

Given its importance to the national economy, the sector will continue to be supported by government policies aimed at assisting enterprises and attracting foreign investment. Wage and electricity costs are low and child labour has been eradicated -- a vital step for future competitiveness in view of growing public concern about working conditions and corporate social responsibility.

Looking ahead, Bangladesh has an excellent opportunity to boost exports of garments to the USA and EU countries where demand for low cost apparel is increasing. As well as low costs, exporters benefit from duty-free access to the EU market under the Generalised System of Preferences (GSP) -- subject to certain conditions relating to the origin of the materials used in the manufacture of the garment.

However, significant obstacles need to be overcome if the industry is to reach its full potential.

Worker unrest over employment conditions has hindered export growth in the past and this could continue to impede progress in the future.

Export markets face the immediate threat of a slowdown in consumer spending in response to economic difficulties in the USA and Western Europe.

The garment industry needs to source more of its yarn and fabric requirements at home in order to be able to offer quick response to customers’ needs. Official figures show that the textile industry is gearing up to produce 4.78 billion metres of fabrics during 2008/09 but garment manufacturers will require 8.52 billion metres to accommodate their production plans. Closing the gap will require substantial investment and modernisation of the textile industry over several years.

Moreover, in Bangladesh as a whole, considerable investment will be needed to improve, update and extend the infrastructure to ensure that goods reach customers quickly and on time.