STAR BUSINESS REPORT

Bangladesh’s readymade garment (RMG) industry must urgently diversify its markets, upgrade production, and resolve energy bottlenecks to counter growing global trade risks, experts said yesterday.

Speaking at a meeting titled “Bangladesh’s RMG Sector: The Way Forward” organised by AmCham at Sheraton Dhaka, they warned that heavy reliance on a few markets leaves the country vulnerable to shocks.

Garments account for 81.5 percent of the country’s total exports and 11 percent of the GDP, said Syed Ershad Ahmed, president of the American Chamber of Commerce in Bangladesh (AmCham).

The European Union and US together account for nearly 58 percent of Bangladesh’s exports, 40 percent and 17.6 percent respectively, far higher than India or Vietnam’s dependence on these markets, he added.

Citing Asian Development Bank and World Bank estimates, he warned that a rise in US tariffs could shave 1 to 2 percentage points off GDP growth, while heightened protectionism and trade uncertainty would hit investment and financial stability.

“A 1 percent tariff increase can reduce global trade by 0.5–1 percent,” he said, calling for diversification and proactive policies to build resilience.

AHM Ahsan, chairperson of Bangladesh Competition Commission, urged vertical diversification within the RMG sector, moving from low-value to high-value products.

Mentioning the US tariff hikes and Bangladesh’s upcoming graduation from the least developed country status, he described the current scenario as a “wake-up call” to enhance productivity, competitiveness, and export resilience.

Mahmud Hasan Khan, president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), said energy shortages remain a key growth constraint, particularly for gas-dependent backward linkage industries.

He also laid emphasis on coming to the aid of some factories running small and medium scale operations, as many of them lacked basic productivity metrics, which lead to closures and unrest.

“With fewer than 3,000 of BGMEA’s 7,100 members still exporting goods, the association is stepping up support to boost efficiency and ensure sector resilience,” he said.

Md Anwar Hossain, vice-chairman of Export Promotion Bureau (EPB), proposed some reforms, including a bank-backed bond facility for exporters to enable duty-free imports under bank guarantees.

He said stronger Bangladesh-US ties present new export opportunities, while a proposed “$100 Billion RMG Export Cell” would coordinate on energy, banking, and tax issues with BGMEA and other stakeholders.

Participants also cited the absence of major global sportswear brands, weak backward linkages, and high production costs as hurdles to growth.

They called for policy coherence, automation, green manufacturing, investment in solar energy, and logistics upgrades.

Pointing at tight liquidity and weak risk governance, they stressed the need for collaboration, skills development, and an actionable roadmap to sustain growth beyond RMG.