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Bangladesh’s Apparel Sector in Post-MFA Period : A Benchmarking Study on the Ongoing Restructuring Process

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Author Info

  • Mustafizur Rahman

    (CPD - Centre for Policy Dialogue)

  • Debapriya Bhattacharya
  • Khondaker Golam Moazzem

Abstract

The phase-out of the Multi-Fibre Arrangement (MFA) on 31 December, 2004 has important implications for all agents in the value chain including apparel manufacturers, exporters, importers, retailers and consumers. This has made possible for apparel manufacturing and exporting countries to operate without the restrictions of the quota; has provided importers an opportunity for open sourcing and retailers to take advantage of competitively priced supply; and provided broader choices and lower prices to consumers. As a result global export of textile and apparels has substantially increased in 2005 (US$275.6 billion with a growth rate of 6.4 per cent) However, the MFA phase out has not been an unmixed blessings for all apparel producing countries of Asia. There are some apparel exporting countries such as China and India which achieved higher level of growth (44 per cent and 32 per cent respectively); at the same time there are countries such as Cambodia, Indonesia which achieved moderate level of growth (11 per cent and 10 per cent respectively) and even countries such as Nepal have negative growth. Bangladesh, surprisingly with all the apprehension of losing its market share to major players, has been able to not only increase its export but also been able to sustain it-- from US$6.4 billion in FY2005 to US$7.9 billion in FY2006 and US$9.2 billion in FY2007. Nevertheless, Bangladesh is still faced with some challenges such as competition with China especially after lifting out safeguard against Chinese apparels in 2008, poor compliance standard etc. The sector has weaknesses in some areas such as lack of diversity in export market, high concentration in few products, and long lead-time etc. Besides, entrepreneurs have to take into account some recent trends in the global apparel market following the MFA phase out, especially in case of buyers’ sourcing patterns (concentrated to few sources), consumers’ choice (relatively more frequent changes in fashion and compared to earlier periods) and marketing techniques (lean retailing), etc. and make necessary adjustment.

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Bibliographic Info

Paper provided by East Asian Bureau of Economic Research in its series Trade Working Papers with number 23152.

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Date of creation: Feb 2012
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Handle: RePEc:eab:tradew:23152

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Keywords: Bangladesh; Apparel; Multi Fibre Arrangement;

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