Garment accessories move from 100% import-dependency to near self-reliance
The garment accessories sector developed in the country alongside the flourishment of readymade garment industry. In 1989, only 23 companies whose main product was packaging formed the Bangladesh Corrugated Carton Manufacturers and Exporters Association. With the passage of time, the number of members of this organisation increased and some of them started producing accessories in addition to cartons. The readymade garment manufacturers benefitted from buying the locally produced accessories as lead time was reduced and prices were comparatively lower. As a result, the demand for locally produced accessories started to grow, paving the way for the development of the accessories industry.
There were only 17 companies in this sector during the early '90s, which has increased to 1833 at present. On an average, 59 new companies join this sector every year. In the '80s, 100% accessories of the garment industry were imported while almost 100% accessories are now supplied by domestic manufacturers.
At present, the manpower working in this sector is seven lakh and 10% of them are women. The garment accessories sector now thrives with Tk35,000 crore investments and its export volume has reached $7 billion. In the 84% contribution of garment industry to national exports, the accessories and packaging sector has about 15%-18% share. In addition to deemed exports, the garments accessories sector is directly exporting around Tk1 billion.
China, Italy, Germany, Vietnam and Chinese Taipei are the world's top five exporters of garments accessories. The production of accessories of all these countries is by no means higher than that of Bangladesh. They are able to export accessories due to low domestic demand. With the growth rate of this sector, we estimate that the export volume of the sector will increase in the near future. At present, our products are exported to several countries including Turkey, the Netherlands, South Africa, Pakistan, Middle Eastern countries, Ethiopia, Indonesia and Sri Lanka.
If we succeed to incorporate the advanced technology, the potential of this sector will increase a lot. At present, we meet the packaging demand of all export-oriented sectors of the country. Hopefully, the growth of the packaging sector will continue in the future also as the demand for packaged goods is increasing day by day everywhere.
At present, getting a fair price is the biggest challenge for the sector. The prices of raw materials have skyrocketed as an impact of the ongoing Covid-19 pandemic. But the garment industry is not getting the expected price from the buyers accordingly. As a result, the RMG industry is not giving a fair price to the accessories sector either. The capital crisis of the companies financially affected by the pandemic is also a problem. Although the government has provided various incentives, the incentives given to this sector under the SME category have not been very useful as the conditions for incentives are not easy. As a result, many companies failed to resume production. Moreover, it is very difficult to get the price of the products supplied by the companies in this sector in time. The buyers often delay to pay the prices due to the lack of specific government obligations. The productivity of this sector is comparatively less due to the lack of skilled manpower. There is also a lack of laboratories to test the quality of the products. Establishing laboratories and creating skilled manpower through proper training is also a big challenge for the sector.
For the development of the sector we have a set of demands to the government. These are provision of loans on easy terms at an interest rate of not more than 4%; issuance of rules for domestic buyers to pay the prices of products in due time; providing opportunity through Export Promotion Bureau to participate in foreign fairs on a complimentary basis to capture the international market; providing export incentives in accordance with the share of this sector in export earnings; reduction of corporate tax from 30% to 10-12% like garment sector; providing continuous bond facility including inter-bond transfer; and establishing national Institute of Packaging and Accessories in a joint venture between the government and the association in order to create skilled manpower and test the quality of manufactured products.
We also want to be sure that all the facilities offered to this sector by National Industrial Policy, Textile Policy and Export Policy are provided accordingly. Instead of annual basis, we urge the government to arrange the issuance/renewal of necessary documents for conducting business such as trade license, bond license, IRC, ERC and fire license on a three-year basis.
[The write-up is based on conversation of BGAPMEA president with The Business Standard's Senior Staff Correspond Reyad Hossain over phone]