The World Bank (WB) suggested that Bangladesh should attach priority to diversification, aggressive marketing and pursuing new markets for the Readymade Garments (RMG) to remain competitive in the international market. "In order to forge a 'competitive edge', Bangladesh could diversify into a new range of higher-value products, aside from the traditional T-shirts, shirts, trousers, sweaters and jackets which make up 60 per cent of the RMG export," the WB said in a study-'End of MFA Quotas: Key Issues and Strategic Options for Bangladesh Readymade Garment Industry. "In order to prevent such losses and remain a notable player in the apparel market, Bangladesh must devise a strategy to improve its overall competitiveness and that of the RMG sector," the study said. The study explores the factors that have brought success to Bangladesh's RMG industry and examines the likely threats and key constraints in the post-MFA era. It also sets out a number of strategic options for the sector to pursue, building on past achievements and competitive advantages, in order to enhance Bangladesh's export competitiveness in the global marketplace. With neighbouring countries, such as India and China, building ever-more formidable RMG industries, a substantial part of Bangladesh's RMG workforce could be at risk of job loss if the industry fails to stay competitive, not to mention considerable losses in foreign exchange earnings, it added. Appreciating the government for removing the ban on importing yarn from India via land routes, the study said this should be followed up with other logistics and infrastructural reforms, such as modernising Chittagong Port and addressing inadequate power supply, which act as major constraints on efficiency. The WB in the study said a dual approach-a focused strategy for strengthening the competitiveness of the RMG industry and a diversification strategy to reduce Bangladesh's vulnerability from export concentration in RMG-would allow Bangladesh to compete efficiently. Reducing lead time has emerged as an important issue in the global market and retailers value those manufacturers who can respond quickly to orders, it said adding that Bangladesh currently has the longest lead time among its competitors and it needs to find a way to reduce lead time if it is to maintain international competitiveness. It suggested improving the domestic and regional supply chain to reduce lead time. The problem of long lead time could be solved through establishing a central bonded warehouse (CBW) to stock duty-free imported inputs, it added. "A CBW could be set up by any firm and its duty-free imports would not be subject to conditions, unlike individual bonded warehouses. The CBW operator could be permitted to stock a whole range of T & C inputs, such as finished and gray fabric, accessories, dyes and chemicals, yarn, RMG and textile machinery and spare parts in amounts determined by expected demand," it added. RMG and textile manufacturers could then purchase these inputs duty-free from the CBW directly as export orders are received and save on the shipping time required for importing inputs. It also suggested reducing import duties to trim down the cost of production that would increase profit margins of manufacturers. Simplifying the cumbersome import regime as a whole could make export diversification a reality, it added.
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