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Bangladesh Told to Move from “Cheap Labor” to High-End to Sustain RMG Growth

Low-cost labor may not be the way for Bangladesh to sustain growth in its garment sector moving forward, and the country may look toward high-end products to reach its goal of $50 billion in exports by 2021.

At a session titled, “Reinventing the Apparel Model – The Race to Responsible Buying & Productivity Enhancement” at the Dhaka Apparel Summit held from Dec. 7-9, Richard P. Appelbaum, a professor at University of California at Santa Barbara and a session speaker, said competing with cheap labor won’t be a good thing for the industry in the future, and that Bangladesh should opt to make high-end products.

According to the Bangladesh Garment Manufacturers and Exporters Association’s (BGMEA) recap of the session, during his research on the apparel industry from 1989 to 2010, Applebaum found that labor rights declined on par with the decline of apparel prices.

Gunelie Winum, CEO of Sustainable Trade in Norway added that one reason the country is paid the lower prices is that suppliers lack the capacity to convince buyers about the direct and indirect costs of labor, the true costs of production.

Suppliers have the responsibility to estimate the cost and communicate it properly to buyers, Tyler Gillard head of sector projects for the responsible business conduct unit at the Organization for Economic Cooperation and Development (OECD) said.

Bangladesh’s State Minister of Foreign Affairs, Shahriar Alam, said that over the last 10 years, apparel prices have gone down by 10 percent in the U.S. and by 25 percent in the E.U., concurrently with the growth of Bangladesh’s apparel sector.

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Apart from reevaluating pricing, the Summit provided a platform for discussing other steps Bangladesh much take in order to reach its goal of doubling exports by 2021.

Better infrastructure, availability of power and gas and access to low-rate funding for factory relocation were identified as top priorities necessary for advancing the sector, but increased productivity and responsible sourcing were also cited as key. According to the BGMEA, Alam stressed that responsible sourcing stems from better relationships between buyers and suppliers, and recommended one unified compliance audit by all buyers.

To get to its export aim, Bangladesh is also seeking partnership from the media. According to the Daily Star, media played a critical role in shaping the perception of Bangladesh’s apparel sector.

Garment entrepreneur Fazlul Azim, said, “There might be some lapses on our part — we are not perfect. But sometimes, we are not treated fairly.”?He added, “Sometimes, we are painted as villains, although the entrepreneurs have worked really hard over the past three decades to get the sector where it is today.” The sector is seeking support from both local and international media to share only “fact-based journalism” rather than perceptions.