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RMG needs better climate to compete China: WB

BSS, Dhaka
The World Bank has said unless Bangladesh addresses deficiencies in its investment climate immediately, the country's garment sector will lose competitiveness with China while the competition will be greater in post Multifibre Arrangement (MFA) era.
In a study on improving the investment climate in Bangladesh the bank pointed out some major issues which, it considered, were responsible for the loss of Bangladesh against China in global competition.
It observed that a typical Chinese garment factory use much more capital per worker and pays
higher wages than its Bangladesh counterpart.
The study said the annual value addition per worker in a Bangladesh factory was 2.5 thousand dollars while it was nearly seven thousand dollars for Chinese factory. In regard to annual average capital intensity Bangladesh factories spend 1.5 thousand dollars capital per worker while it was four thousand in the case of Chinese factories.
It said Bangladesh factories spend one thousand dollars as average annual wages only as against two thousand dollars of Chinese factories.
The study said the Chinese factories have far higher labour
productivity than the Bangladeshi one. So, even after the higher wages and greater capital use are taken into account a typical Chinese factory is much more profitable.
It said Chinese factories are much more efficient in respect of average productivity capital intensity and wages because they could count on more reliable power supply, easier access to phone lines and other infrastructure and more efficient ports and customs.
The WB study pointed out that Bangladesh was one of the pioneers in globe in taking the advantage of its high quality but low cost labour force. And it has shown
willingness to make changes to meet compliance, norms and standards set by buyers in the United States and Europe. Bangladesh was the first developing country to sign an agreement to eliminate child labour from the garment factories.
It said despite these advantages, the Bangladesh garment sector has been losing its competitiveness with China in recent years because of the deficiency in investment climate.
The study said the looming end of the MFA makes it even more imperative for Bangladesh to address deficiencies in its investment climate.