The country’s readymade garments (RMG) entrepreneurs faced multiple challenges including labour unrest, dollar shortages, energy crisis, and supply chain disruption in 2024, now they fear compliance issues and challenges in 2025 as the country is going to graduate from Least developed countries (LDCs) in 2026.
They highlighted that compliance and sustainability demands from international buyers are becoming stricter. Brands are increasingly prioritizing eco-friendly production and ethical labour practices, requiring significant investments from manufacturers.
The exporters also claimed that political instability or unfavourable policy changes could further destabilize the sector in the coming days, and also high interest rates should be decreased to bring confidence in the business sector.
They also expressed optimism in 2025 as stability is coming in the economic situation there. So, they seek security, minimizing cost of doing business, and proper policy support from the government to harness this potential.
All three criteria are required to graduate from the LDC group. These are per capita gross national income (GNI), human assets index (HAI) and economic vulnerability (EVI) index. Now, if everything goes well, Bangladesh will graduate in 2026.
In conversation, former Senior Vice President of Bangladesh Garment Manufacturers and Exporters Association (BGMEA) and Team Group MD, Abdullah Hil Rakib said, “In 2024, one of the major challenges we faced was restoring stability in the apparel sector. There has been labour unrest in the sector since August 2024. Although the extent of the unrest has been declined but still the stability has not fully been restored.’
“I will expect in 2025 stability will prevail. Another major problem from which the industry suffered a lot in the year was the lack of uninterrupted gas supply to apparel and textile factories. So, in the coming years the government should focus on ensuring the energy security to sustain the business,” Rakib also Managing Director of Team Group highlighted.
He said,“If we can remove the uncertainties and establish the rule of law as well as fix the labor issues and ensure the business environment; there is a possibility of significant growth in Bangladesh’s apparel export in 2025,”
Rakib added that the reasons behind the potential growth opportunities are many. One of these is that business is moving away from China. Another is that the developed countries have recovered from the economic shock caused by the Covid-19. There has been a positive return in the USA since the US election; Stability is coming in the economic situation there. With this, the possibility of ending the Ukraine War has also been created. It will have a positive impact on European countries. So, positive aspects are evident in the global economy. We must work together to harness this potential.
Discrepancies in export data, 60% reduction in export incentives
BGMEA’s former director Mohiuddin Rubel said one year ago, as we looked toward 2024, our garment exports were a remarkable $47 billion. We were optimistic, setting our sights on reaching $50 billion in exports. However, discrepancies in export data led to substantial shifts in our calculations and projections. When we received the revised figures, we found that our garment exports from January to November 2024 had decreased to $34.71 billion, though this figure was still 6% higher than the revised numbers for 2023.
“As 2023 ended, we faced a climate filled with uncertainty. Challenges such as minimum wage protests and factory shutdowns in October 2023 loomed large. In response to these issues, we made the tough decision to raise the minimum wage by 56%, effective December 2023. While this was a difficult but necessary step for our industry, we held onto the hope that it would improve working conditions and that, with buyers’ support, increased productivity and enhanced value addition, we could navigate these turbulent waters. The beginning of the 2024 brought its own challenges as we implemented the new wage structure, all while uncertainty surrounded the 12th National Election,” he explained.
He added that in February, 2024 turned out to be particularly challenging; just a month after the national elections, we encountered a drastic 60% reduction in export incentives. This sudden decision, made without adequate consultation or preparation, plunged our already struggling industry into a deeper crisis.
On top of these domestic issues, global conflicts, economic instability, and fluctuations in the oil market exerted continuous pressure on buyers and consumers throughout 2024. Although inflation began to decline towards the end of the year, reduced purchasing power affected buyers’ ability to purchase fashion items in the international marketplace.
Alongside wages, other production costs surged due to increasing prices for gas, electricity, and transportation, coupled with rising bank interest rates, which now hover between 14% and 15%. Many small and medium-sized enterprises (SMEs) faced significant losses, leading to closures across the industry throughout the year.
According to the Export Promotion Bureau (EPB), Bangladesh received $37.71 billion from January to November in 2024, marking a 6.23-percent growth. In comparison, export earnings from the sector were $32.64 billion during the corresponding period of 2023, EPB revised data showed.
2025 will be most challenging
Director of Evince Group Shah Rayeed Chowdhury said the key word for 2025 would be optimizing rather than survival. I think optimize is the right word. Optimize is in terms of technology, new machineries, not diversification but focus on specialization.
“Whatever, we are doing now, better to improve on that. Whatever, we are making products, better to fine wages. We should think how to improve our efficiency, how to train our manpower to gain more skills for better performs. We should reduce our mistakes,” he highlighted.
Rayeed claimed that 2024 was not challenges enough. I don’t know what is waiting for 2025. It is supposed to be in my last one decade in the industry, I am sure the 2025 will be the most challenging year. So, we have to be prepared to overcome the challenges.
More than 40 lakh workers directly engaged in the sector where over 2000 exporters lead the second largest industry in the globe.
Research and Policy Integration for Development (RAPID) Chairman Dr M A Razzaque said Bangladesh met all three criteria like gross national income (GNI), human assets index (HAI) and economic vulnerability (EVI) index from UN to graduate from the LDC group. If everything goes well, Bangladesh will graduate 24 November 2026.
“After LDC graduation, Bangladesh will face a 20% increase in export duties to markets like Japan and India, which requires immediate reforms in labour standards, environmental compliance and governance,” Dr Razzak also said.
Entrepreneurs want govt support to overcome industrial challenges
Chairman of Stylish Garments Ltd said M Salauddin Chowdhury, said it has been a very difficult year in the history of our RMG sector. At the beginning of the 2024, we had faced huge labour unrest due to salary increases. Also, we had to face banking problems, e,g. dollar shortages, liquidity crisis etc. We had to face opening LCs continuously.
“Due to the continuous labour unrest, many factories had been shut down and many workers have lost their jobs. Energy crisis has been a huge hindrance for the development of the sector. After August 5, security issues have been a major factor in the sector. Many factors have closed down and still many are considering closing down .Though the new government has assured some reduction of energy prices, we are still facing challenges getting adequate supply of energy,” he claimed.
The businesses must need government support to survive. Enough security, adequate energy supply, full banking support, special assistance to the sick factories, exit policy etc mandatory for the survival in the 2025, he also said.
“We need to ensure transparency and accountability from the government agencies related to the business activities. One stop service is the mandatory requirement. We still face lots of problems having dealing with the government authority for paying taxes or renewing licenses,” he also said.
Bangladesh’s RMG sector has built its global reputation on affordable labor, back-to-back LC facilities, bonded warehouse systems, and steady government support. However, as we approach 2025, new challenges demand proactive solutions to sustain this success.
Md. Salauddin, Head of Operations at Bunon Garments and textiles knowledge sharing platform and Director of Reaz Garments Ltd., aptly highlights key areas of concern: rising competition from Vietnam, Cambodia, and African nations, stricter compliance and sustainability demands, and the global shift toward automation. These factors, coupled with currency volatility and high inflation, pose serious risks to the sector’s growth.
To navigate these challenges, it is essential to prioritize technological upgrades, workforce reskilling, and sustainability initiatives. Diversifying export markets beyond traditional regions is equally important to mitigate risks and capitalize on emerging opportunities.
Most importantly, RMG leaders must engage with policymakers, including the NBR, bankers, and the Ministry of Textiles, to create a comprehensive long-term policy framework. Such a framework should guide new entrepreneurs and strengthen collaboration between the industry and academia, ensuring a steady flow of talent and innovation.
With strategic planning, government support, and the resilience of our entrepreneurs, Bangladesh’s RMG sector can overcome these challenges and continue to lead the global apparel industry.
