Bangladesh, the Best Alternative in Sourcing RMG to China.
Choose the best option for your garments business.
Undoubtedly, China the largest garments exporter in the world, yet losing its export volume because of high production costs and shortage of skilled manpower. Also, the ongoing trade war between China and the US has led to a higher price for many businesses.
Given the high production cost and its complex economic relationship with the west, many business owners are seeking an alternative in order to continue their business. If your business regarding textile and garments, Bangladesh is your best alternative to china.
Why Bangladesh???
Bangladesh is the most densely populated country in the world with a total workforce of 74 million. The country is one of the best places for textiles and garments due to the availability of skilled labor at relatively low wages. Minimum wages in Bangladesh is $ 68 where China is $ 155, Cambodia $ 140, India $ 137, Vietnam $ 107 (Source: University of Delaware, USA)
According to the World Tread Organization, Bangladesh is the second-largest apparel supplier globally. The country has emerged as a powerful garment manufacturing country in the past decade with remarkable 44.63 percent year-on-year growth.
Currently, it has over 5,000 RMG factories actively working with 3.6 million workers. The country targeted expending RMG export into 50 billion USD by 2021, Though the ongoing pandemic has added a negative point in its export value.
In terms of quality, the country maintains a great reputation worldwide. Almost all top clothing brands and retailers like M&S, H&M, C&A, Hugo Boss, Inditex, Zara, Uniqlo, The Gap, PVH, JC Penney, Tesco, Walmart, and Adidas have been sourcing billions worth of garment items from Bangladesh every year.
There is no doubt that factories are the key contributors in putting the earth’s biodiversity in grave danger. Air pollution, toxic waste, and water contamination have become common phenomena in many factories. In fact, they are actually responsible for two-thirds of greenhouse emissions.
To setup a suitable work environment, Bangladeshi garment factory owners have established an eco-friendly production, particularly after Tajreen and Rana Plaza incident.
Today Bangladesh has taken the leading position in sustainable green industrialization with 67 LEED (Leadership in Energy and Environmental Design) green factories certified by USGBC, while more than 280 factories are registered with USGBC for LEED certification. Bangladesh Garment Manufacturers and Exporters Association (BGMEA) in association with USGBC and GBCI launched ‘LEED Green Factory Award’ in order to ensure the sustainability of the green factory initiative.
Bangladesh offers one of the most liberal and investment-friendly milieus in South Asia, with generally no prior approval requirements for issues of shares and no limitation pertaining to foreign equity participation. Also, foreign investors or companies can have full working loans from local banks.
Interests of foreign investors are well protected by the Foreign Private Investment (Promotion and Protection) Act, 1980 which ensures legal protection to foreign investment in Bangladesh against nationalization and expropriation. It also guarantees equal treatment between foreign and local investment and repatriation of proceeds from sales of shares and profit.
The country has concluded bilateral agreements for the avoidance of double taxation and investment treaties for promotion and protection of investment with 28 countries.
In addition, Bangladesh is a signatory to MIGA (Multilateral Investment Guarantee Agency), OPIC (Overseas Private Investment Corporation) of USA, ICSID (International Centre for Settlement of Investment Disputes), and a member of the WIPO (World Intellectual Property Organization) permanent committee on development co-operation related to industrial property.
Other facilities include tax holiday for several years, duty-free access for importing capital machinery, 100% foreign ownership with unrestricted exit policy, 100% profit repatriation, reinvestment of profit or dividend as FDI, multiple entry visa, work permit to foreign executives, Permanent resident permits on investing USD 75,000 and citizenship on investing USD 500,000.
RMG(Readymade Garments) industry occupies a unique position in the Bangladesh economy. 30 new economic zones have been created to attract more foreign investments with various opportunities.
The country is one of the fastest-growing economies with above 5 percent GDP rates. Given its year-on-year economic growth, the country is going to be one of the rising stars in Asia for foreign investment.