Bangladesh’s involvement in global value chains is currently limited and primarily focused on low-value segments. A recent report titled “Global Value Chains and Inclusive Development: Asian Development Policy Report” highlights that while the country’s garment industry has provided employment, exports, and stability, its current level of participation may not be sufficient for sustained growth in productivity, quality jobs, technological advancement, and export resilience. Although Bangladesh plays a significant role in the apparel supply chain, particularly in basic processes like cutting, making, trimming, and shipping, the majority of value creation occurs outside the country in areas such as fiber development, design, branding, logistics, and retail strategies. Despite being deeply integrated into the garment chain, Bangladesh has limited influence over its organization.
The traditional factors contributing to Bangladesh’s competitiveness, such as low wages, scale, and preferential market access, are diminishing. Wages are increasing, preferential margins will decrease following the country’s graduation from Least Developed Country status, and rival countries like Vietnam, India, Cambodia, and Indonesia are swiftly advancing. Buyers now demand quicker turnaround times, traceability, environmental compliance, smaller production runs, and adaptability. The conventional approach of focusing on low-cost, high-volume production may not be sustainable for the industry’s future growth. While the Ready-Made Garment (RMG) sector remains a crucial industrial platform for Bangladesh, the challenge lies in leveraging this foundation to transition into higher-value activities and diversify the industrial landscape.
To enhance value within the garment sector, Bangladesh must first address its reliance on imported textiles and inputs. The country predominantly imports woven fabrics, synthetic fibers, chemicals, dyes, and machinery, affecting lead times, flexibility, and bargaining power in the woven garment segment. To compete in higher-value apparel, Bangladesh needs to develop expertise in fabric production, synthetic fibers, technical textiles, design services, modern dyeing, and finishing techniques. Environmental sustainability, including energy efficiency, water conservation, and wastewater treatment, should also be integrated into the industry’s upgrading efforts. Furthermore, there is a growing demand for more sophisticated products like sportswear, outerwear, medical textiles, and eco-friendly clothing, requiring enhanced technical skills, digital planning capabilities, design proficiency, quality assurance standards, and improved communication with buyers.
In addition to industry-specific challenges, Bangladesh faces institutional constraints that hinder overall industrial development. The country lacks a robust ecosystem connecting factories, engineers, designers, testing facilities, logistics providers, universities, and regulators. Training programs are often disconnected from industry requirements, and research and development initiatives are underprioritized. While many factories operate efficiently internally, they encounter obstacles such as congested ports, unpredictable customs procedures, fragmented regulations, and high trade costs externally. Diversification beyond the garment sector is crucial for Bangladesh’s sustained economic growth. Although the country has identified potential growth areas like pharmaceuticals, agro-processing, leather goods, footwear, and renewable energy components, the policy framework has not consistently supported these sectors as it has the RMG industry. Addressing the uneven support system is essential to enable non-RMG sectors to compete effectively in the global market.
To achieve comprehensive industrial development, Bangladesh needs a holistic industrial policy that fosters capabilities across various sectors. This entails tariff reforms, access to global-priced inputs, export financing, technological advancements, infrastructure development, standardization institutions, logistics improvements, skills enhancement, and support for small and medium enterprises (SMEs). The country must nurture industries oriented toward the domestic market to cultivate future exporters gradually. Moreover, industrial diversification requires a supportive ecosystem comprising reliable energy sources, land services, streamlined customs procedures, effective regulations, patient financing options, and institutions capable of addressing coordination challenges. Bangladesh must shift from a sector-specific approach that primarily benefits RMG to a more inclusive industrial strategy that facilitates learning and growth across multiple sectors.
Establishing regional production networks is another critical aspect for Bangladesh’s industrial advancement. Unlike regions like East and Southeast Asia, South Asia lacks robust cross-border production collaborations due to political tensions, high tariffs, inadequate transport links, and cumbersome border procedures. Strengthening ties with neighboring countries in South Asia, ASEAN, Japan, Korea, and China can offer Bangladesh access to specialized inputs, technologies, and markets, enabling SMEs to engage in supply chains beyond their individual capacities.
As Bangladesh transitions towards higher value-added activities, addressing labor challenges becomes imperative. While the initial success in exports relied on low-skilled labor, the next phase demands more skilled workers proficient in machine maintenance, quality control, digital inventory management, compliance procedures, merchandising, and production analytics. Policies should ensure that automation and industry upgrades do not lead to job displacements without adequate support. Enhancing technical and vocational education with industry collaboration, particularly focusing on empowering female workers for higher-skilled roles, is crucial for sustainable industrial growth.
The escalating focus on sustainability, evidenced by EU regulations on due diligence, carbon reporting requirements, waste management standards, and circular fashion initiatives, underscores the urgency for Bangladesh to align
