The government has formed a high-powered panel to identify the bottlenecks of the RMG accessories and packaging sector and suggest remedial measures to help increase the export earnings from the sector, sources said.
The Ministry of Commerce (MoC) has assigned the seven-member body to submit its recommendations within the next couple of months. The government aims to remove the roadblocks as the readymade garment (RMG) sub-sector has high export potentials in the near future, said a senior official at the MoC. Necessary efforts in this regard are being made also to mitigate possible shocks after the country’s LDC graduation, he added. He pointed out that Bangladesh is now taking preparations ahead of graduation from the least developed country (LDC) status in 2026. There is a growing need to diversify its economy and find new sources of accelerating growth to face possible challenges after graduation, he added.
Currently, with the surplus production capacities of garment accessories and packaging products, Bangladesh is making efforts to explore export potentials of such items worldwide. Already, the commerce ministry has asked the country’s 18 missions abroad to explore potentials to increase earnings from the subsector that mainly supplies to local readymade garments factories as deemed exporters, and has recently started exporting directly to the RMG factories in other countries.
The Tk 350 billion packaging and accessories sector’s value addition is around 40 percent, according to Bangladesh Garments Accessories & Packaging Manufacturers & Exporters Association (BGAPMEA).
The sector insiders said the government should take steps to remove the existing problems from the accessories and packaging sector to help boost export earnings. They also stressed the need for bonded warehouse facilities to facilitate exports.
The commerce ministry has also recently written to the finance ministry for providing a cash incentive facility to continue the present export trend of the country’s RMG sector, sources said. Some 43 sectors are enjoying the government’s cash incentive or subsidy, ranging from 1.0 percent to 20 percent, against their export earnings in the current FY 2023-24.
Textile fabrics and accessories are two major raw materials of the RMG industry. Some 1,900 accessories and packaging makers under the BGAPMEA act as the backward linkage industries of the RMG sector and meet almost its total demand, industry insiders said.
The RMG sector enjoys bonded warehouse and cash incentive facilities. But the accessories and packaging industries do not get any cash benefit despite their hefty export earnings. Currently, some 15 accessories and packaging products are exported to 21 countries and regions, including the Netherlands, South Africa, Pakistan, India, Middle-East, Ethiopia, Indonesia, Italy, Sri Lanka, Turkmenistan, Germany, Austria, etc.
The sector earned about US$ 7.67 billion (deemed and direct export) for the country in FY 2021-22, of which about $ 1.0 billion was direct export. The association has set an export target of $12 billion by the end of 2025. More than 0.7 million employees are working in the sector, including 20 percent women, according to the association. According to the BGAPMEA data, the global packaging market size is around $ 700 billion at present.
