[🇧🇩] Textile & RMG Industry of Bangladesh

[Saif]

Christmas apparel shipments slow on weak demand

Christmas apparel shipments from Bangladesh to major Western markets have slowed this season as weak consumer demand abroad and energy shortages at home disrupt factory production.

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Christmas apparel shipments slow on weak demand

Refayet Ullah Mirdha

Christmas apparel shipments from Bangladesh to major Western markets have slowed this season as weak consumer demand abroad and energy shortages at home disrupt factory production.

The slowdown comes as garment exports to both Europe and the United States continue to decline.

Christmas shipments are at least 10 percent lower than during the same period last year, according to a local exporter that mainly supplies the US market.

The Christmas season is one of the busiest periods for the country’s readymade garment industry, with more than 60 percent of annual apparel exports shipped between August and the first week of December.

Exporters said high inflation in Western markets, fuelled by energy shocks linked to the Middle East conflict, has weakened consumer demand. They also blamed the export slowdown on excess inventories held by major international buyers.

At home, low gas pressure and frequent power outages are reducing production. The long-running gas shortage worsened after an accident at a floating LNG terminal in Cox’s Bazar. The disruption became so severe that many factories across the Gazipur garment belt sent workers on a four-day leave last week, as gas supply was expected to improve around Monday.

Anwar-Ul Alam Chowdhury Parvez, chairman and managing director of Evince Group, said the industry has been struggling with low gas pressure and the energy crisis for several months, severely affecting factory production.

Major international buyers and retail clients of Evince include Levi’s, Armani, Zara, H&M and C&A.

Parvez, a former president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), said buyers “were a bit cautious in placing the work orders as it happens in times of general elections in any country”.

Bangladesh held its national election in February. Official data show exports to both the European Union, Bangladesh’s largest export market, and the United States, its largest single-country market, recorded negative growth during the January-May period.

Eurostat data showed Bangladesh’s garment exports to the EU fell 18.89 percent year-on-year to €7.28 billion in January-May.

For the fiscal year 2025-26, apparel exports to the EU declined 3.31 percent to $19.06 billion, according to the Export Promotion Bureau (EPB).

The US market also showed a downward trend.

Garment exports to the United States fell 5.75 percent year-on-year to $4.01 billion during January-June, according to the US Office of Textiles and Apparel (OTEXA). However, exports to the US rose 5.74 percent year-on-year to $763.57 million in June alone.

Kutubuddin Ahmed, chairman of Envoy Legacy and Sheltech Group, said the slowdown is affecting all major garment-exporting countries because demand in Western markets has weakened.

“Because of the slowdown in export trend, the Christmas shipment will also be low this season to some extent,” he said.

Sharif Zahir, chairman of Ananta Group, said shipments of woven garments are normal this season, but demand for knitwear is lower.

Ramzul Seraj, managing director of Elite Garments Ltd, which exports to the United States, said his company has been facing at least 10 percent lower exports this season than during the same period last year because buyers delayed placing work orders.

BGMEA President Mahmud Hasan Khan said he expects exports by the end of the current fiscal year to match or slightly exceed last year’s level, although shipments have slowed in recent months.

“Because it is expected that the gas supply situation will improve soon. And the factories will be able to go into production in full swing as the government has been taking measures. The government’s stimulus package will also play a positive role in the business,” said Mahmud.

Photo: star/file

Requesting anonymity, a major European buyer recently suggested Bangladesh shift from producing basic garments to higher-value products and diversify its product range.

The buyer said Bangladesh’s top five products, including T-shirts, trousers, formal shirts, sweaters and underwear, account for 78 percent of the country’s garment exports.

Md Fazlul Hoque, managing director of Plummy Fashions Ltd, said, “Following the Trump tariff, competition in the global supply chain has become more intense as all the major global players such as China, Vietnam, Indian and Pakistan are sending the same goods to the same markets.”

Mostafa Q Sobhan Rubel, chief executive officer of Dragon Group, said shipments to North American markets, including the United States and Canada, are normal, but exports to Europe have slowed this season.​

 

[Saif]

RMG exports to US: China rapidly losing market share, Bangladesh unable to capitalise

The reciprocal tariffs imposed by US President Donald Trump were declared illegal by the US Supreme Court in February this year. Following that ruling, Trump announced a new 10 per cent tariff on products from all countries under the Trade Act of 1974. The law allows such tariffs to remain in...

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RMG exports to US: China rapidly losing market share, Bangladesh unable to capitalise

Shuvongkor Karmakar
Dhaka

Workers at a readymade garment factory Prothom Alo file photo

China lost nearly $2 billion worth of readymade garment exports to the United States in the first six months of this year (January–June) compared with the same period last year.

However, Bangladesh failed to capture a significant portion of that lost market. Instead, competitors such as Vietnam, Cambodia and Indonesia increased their exports and took advantage of the opportunity.

According to data from the US Office of Textiles and Apparel (OTEXA), the United States imported readymade garments (RMG) worth $35.09 billion during the first half of the year, down 8 per cent from the same period last year.

Although overall US garment imports declined, Bangladesh's exports fell by a comparatively smaller 5.75 per cent. Imports from China, India, Mexico, Pakistan and Honduras also declined during the same period. In contrast, imports from Vietnam, Indonesia and Cambodia increased.

Local entrepreneurs in Bangladesh's garment industry say demand for apparel in the US has been slowing since reciprocal tariffs came into effect last year.

According to them, while purchase orders have been shifting rapidly away from China, a large share has gone to Vietnam, with Indonesia and Cambodia also benefiting.

They said Bangladesh has received comparatively fewer orders because much of the business moving out of China consists of man-made fibre garments, an area where Bangladesh's capacity remains relatively limited. In addition, Bangladesh continues to lag behind in fast-fashion orders due to its longer lead times.

Bangladesh's exports decline

The United States is the single largest export market for Bangladeshi readymade garments. In February this year, Bangladesh overtook China to become the second-largest apparel exporter to the US market. Although it retained that position at the end of June, exports during the January–June period fell by 5.75 per cent.

Bangladesh exported RMG worth $4.01 billion to the United States during the six-month period.

Fazlee Shamim Ehsan, executive president of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), told Prothom Alo that Bangladesh's capability in non-cotton garments remains relatively weak. As a result, the country is not buyers' first choice for such products.

He also said Vietnam and Indonesia are able to deliver products with lead times of around one month. Bangladesh's exports have declined mainly because of weaker sourcing and logistics, he added.

Last year, however, Bangladesh's readymade garment exports to the US market grew by nearly 10.5 per cent to reach $8.2 billion.

Who is taking over China's lost market?

The US-China trade war began before the Covid-19 pandemic. Since then, China's garment exports to the US market have been declining. The decline accelerated further after the United States imposed retaliatory tariffs last year.

During the first half of this year, China exported RMG worth $3.57 billion to the United States, a decline of 37.69 per cent compared with the same period last year. In the first half of last year, China exported garments worth $5.73 billion. That means China's exports declined by $2.16 billion in just one year.

Most of China's lost market has been captured by Vietnam, Indonesia and Cambodia. During the first half of this year, Vietnam exported RMG worth $7.85 billion to the United States, posting growth of 1 per cent. Indonesia exported $2.33 billion worth of garments and Cambodia exported $2.13 billion. Their export growth rates were 3 per cent and 12 per cent respectively.

Entrepreneurs see opportunities ahead

The reciprocal tariffs imposed by US President Donald Trump were declared illegal by the US Supreme Court in February this year. Following that ruling, Trump announced a new 10 per cent tariff on products from all countries under the Trade Act of 1974. The law allows such tariffs to remain in effect for 150 days, and that period expired last month.

Last month, the Trump administration imposed additional tariffs of 10 per cent and 12.5 per cent on products from 60 countries, including Bangladesh, alleging they had failed to adequately enforce restrictions on goods produced through forced labour.

A 10 per cent tariff has been imposed on products from Bangladesh, Cambodia, Honduras, Indonesia, Mexico, Pakistan and Sri Lanka, while products from Vietnam, Turkey and China face a 12.5 per cent tariff. As a result, Bangladesh now enjoys a lower tariff rate than several competing countries.

Shovon Islam, managing director of Sparrow Group of Industries, told Prothom Alo, "We now have a 2.5 percentage-point tariff advantage. So although we performed poorly in the first half of the year, there is a good possibility of doing better in the coming months. We have already received two major purchase orders from US buyers. Both orders are shifting to Bangladesh from Vietnam. Many other manufacturers like us may also receive similar orders."

However, Shovon Islam expressed concern over the energy crisis.

"If the energy crisis remains at a tolerable level, it will not create major problems. But production has already started to be disrupted, and foreign buyers have also expressed concern over the situation," he said.​

 

[Saif]

Garment industry running out of time to go green: CPD

Bangladesh’s garment industry must accelerate its shift to cleaner energy as rising power costs, dwindling gas supplies and tougher climate rules increasingly threaten the sector’s competitiveness, according to a new study by the Centre for Policy Dialogue (CPD).

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Garment industry running out of time to go green: CPD

Star Business Report

Bangladesh’s garment industry must accelerate its shift to cleaner energy as rising power costs, dwindling gas supplies and tougher climate rules increasingly threaten the sector’s competitiveness, according to a new study by the Centre for Policy Dialogue (CPD).

Greater use of renewable energy and more efficient machinery could help factories cut energy costs while meeting growing environmental requirements in key export markets, the study found. The findings were presented yesterday at a national dialogue on industrial decarbonisation at BRAC Centre Inn in Dhaka.

The study drew on data from 350 RMG factories and 65 types of machinery across eight production categories.

It identified rooftop solar as a clear opportunity, which can potentially lower electricity costs and reduce factories’ exposure to volatile fossil fuel prices.

Average monthly energy expenditure among surveyed factories stood at Tk 9.98 lakh. Meeting 30 percent of energy needs through solar could cut costs to Tk 8.46 lakh, a 15.7 percent saving, the study found.

Machinery upgrades offer another opportunity, it noted. Cutting machines represent only 5.5 percent of installed capacity but could generate 27 percent of potential replacement savings. Sewing machines account for about 85 percent of machine stock but offer less than 3 percent savings potential. Smaller factories, however, face financing constraints and older machinery.

Speaking at the event, Asif Shahriar, assistant vice-president of Infrastructure Development Company Ltd (IDCOL), said limited financing capacity, a shortage of capable renewable energy service companies and the absence of standardised investment assessments are holding back industrial adoption.

Smaller factories often struggle to access financing because individual projects are too small for conventional financing models. He suggested grouping several small projects and financing them together.

Asif also backed operating expense, or OPEX-based, models in which third parties install and operate renewable energy systems while factories pay for the service, reducing the need for large upfront investments.

Fazle Shamim Ehsan, executive president of the Bangladesh Knitwear Manufacturers and Exporters Association, said European decarbonisation requirements leave Bangladesh with little room for delay.

He noted that Bangladesh is already behind several competing garment-producing countries in renewable energy use.

He said incentives often look better on paper than they work in practice. Even his LEED-certified platinum factory has not received the full benefit of a promised tax incentive because of how income tax is collected and adjusted.

“If the incentive does not reduce the actual tax burden, then what is the point of giving it?” he asked.

He also cautioned against assuming every industrial process can simply be electrified. New industrial zones should instead be planned around shared energy infrastructure, including steam generated as a by-product of power plants.

For existing factories, rooftop solar and efficient machinery offer quicker options, but both require financing and regulatory changes. “Funds are available, but they are not accessible enough,” Fazle Shamim said.

Mostafa Al Mahmud, president of the Bangladesh Solar and Renewable Energy Association, also criticised taxes on solar panels, batteries and other equipment.

Bangladesh now needs an emergency response in the energy sector, said Khondaker Golam Moazzem, research director at CPD.

Gas reserves are nearing depletion, while new exploration has not kept pace with demand. Industries will therefore need alternatives for gas-dependent boilers, diesel-based transport and irrigation.

The challenge extends beyond factories and financiers, pointed out Shamim Munir Uddin, director of the Ethical Trading Initiative.

Workers should also be involved in improving energy and resource efficiency through training and greater awareness at the factory level, he said, calling for closer scrutiny of how automation is affecting energy consumption.

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Policy remains a critical piece of the puzzle. Shamim Munir Uddin pointed out that factories importing renewable energy equipment are subject to around 15 percent VAT and 2 percent advance tax, creating a combined burden of roughly 17 percent.

Such measures can work against the government’s own renewable energy goals, he said.

Vidiya Amrit Khan, vice-president of BGMEA, said Bangladesh’s garment industry risks losing competitiveness if it fails to become more sustainable.

European regulations increasingly require detailed reporting on carbon emissions, energy use, water consumption and chemical discharge. Such requirements are expected to become more consequential for exporters by 2030, she said.

The biggest obstacle may be policy rather than technology, Vidiya said, with high financing costs, collateral requirements and proposed charges on open-access renewable power potentially making clean energy more expensive than conventional power. That could discourage investment, she added.​

 

[Saif]

Bangladesh, Netherlands sign MoU to advance circular economy in textile sector

Bangladesh and the Netherlands have signed a memorandum of understanding (MoU) to strengthen cooperation on the circular economy, with a focus on promoting sustainable production, efficient resource use and green transition in the apparel and textile sector. The agreement is expected to expand coo

thefinancialexpress.com.bd

Bangladesh, Netherlands sign MoU to advance circular economy in textile sector

Bangladesh and the Netherlands have signed a memorandum of understanding (MoU) to strengthen cooperation on the circular economy, with a focus on promoting sustainable production, efficient resource use and green transition in the apparel and textile sector.

The agreement is expected to expand cooperation between the two countries in areas including resource efficiency across the textile value chain, waste reduction, recycling, sustainable production systems and green industrialisation.

The MoU was signed at a ceremony titled “MoU Signing on Cooperation in the Field of Circular Economy” held at the Ministry of Commerce on Monday.

Commerce Minister Khandaker Abdul Muktadir said adopting sustainable production systems and circular economy practices in the global textile industry had become an urgent necessity.

“As Bangladesh’s apparel and textile supply chain is deeply integrated with the global market, international cooperation in this sector needs to be further strengthened,” he said.

He said Bangladesh and the Netherlands had long been working as partners based on mutual trust, shared values and strong economic cooperation.

The Netherlands is one of Bangladesh’s important development and trade partners in areas including water management, agriculture, logistics and sustainable industrial development, he said.

“This MoU is an important milestone in taking our partnership towards a greener, more resilient and future-oriented economy,” the commerce minister said.

“Circular economy is not merely about environmental protection. It is directly linked to strengthening the long-term competitiveness of Bangladesh’s export sector, ensuring optimum use of resources, attracting sustainable investment, creating green jobs and responding to emerging demands in international markets,” he said.

The minister said Bangladesh was on the path to graduating from the least developed country (LDC) category.

Against this backdrop, strengthening industrial sustainability, adopting environmentally friendly production systems and complying with international standards would help enhance Bangladesh’s competitiveness in global trade, he said.

Khandaker Abdul Muktadir said the transition to a circular economy could not be achieved by any single stakeholder.

“It requires coordinated efforts involving the government, industries, financial institutions, development partners, research institutions and consumers,” he said.

The MoU places emphasis on multi-stakeholder cooperation and knowledge sharing, which would help bring about the structural changes required in the textile sector, he added.

The minister expressed gratitude for the Netherlands government’s continued support and constructive engagement, saying the partnership could become a successful example of international cooperation for sustainable industrial development and climate action.

The MoU was signed between Bangladesh’s Ministry of Commerce and the Netherlands’ Ministry of Economic Affairs and Climate Policy.

Khandaker Abdul Muktadir signed the agreement on behalf of Bangladesh, while Stientje van Veldhoven, the Netherlands’ Minister for Climate and Green Growth, signed on behalf of her country.

The two ministers joined the ceremony virtually and signed the agreement on behalf of their respective governments.

Stientje van Veldhoven said expanding the circular economy had become increasingly important, but no country could complete the transition on its own.

“International cooperation, commercial partnerships and coordinated initiatives are required across the entire supply chain,” she said.

She said officials from the two countries had already discussed priority areas for action and stressed the need to translate those discussions into concrete measures quickly.

She also expressed interest in Bangladesh and the Netherlands working together at international forums alongside bilateral cooperation, while voicing hope that collaboration between the two countries would become more effective and result-oriented.

Commerce Ministry Secretary Md Ataur Rahman Khan, Bangladesh Ambassador to the Netherlands Faiyaz Murshid Kazi and Dutch Ambassador to Bangladesh Joris van Bommel were present at the ceremony.

The MoU is expected to create new opportunities for adopting green technologies, promoting innovation and sustainable production, and enhancing the competitiveness of Bangladesh’s textile and apparel sector in international markets.

It is also expected to contribute to making Bangladesh’s industrial sector more climate-resilient and better prepared for the evolving global trading environment.​

 

[Saif]

Bangladesh's RMG slowdown

This piece offers a complementary perspective on the Financial Express July 7 report, “RMG exports to US fall 5.58 pc as regional rivals gain,” which presents a sobering picture of Bangladesh’s position in the American apparel market. During the first half of 2026, Bangladesh&rsqu

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Bangladesh's RMG slowdown

A complementary perspective on the competitiveness challenge

Workers at a clothing factory unit in Dhaka —Agency Photo

This piece offers a complementary perspective on the Financial Express July 7 report, “RMG exports to US fall 5.58 pc as regional rivals gain,” which presents a sobering picture of Bangladesh’s position in the American apparel market. During the first half of 2026, Bangladesh’s readymade garment exports to the United States declined by 5.58 per cent to about $4.01 billion. At first glance, the decline might appear to be largely the consequence of weakening demand in the United States (US), especially since overall American apparel imports also fell during the period.

That explanation, however, is only part of the story.

Vietnam, Cambodia and Indonesia managed to increase their apparel exports to the US even while the overall market was contracting. Vietnam exported about $7.85 billion, Cambodia $2.13 billion and Indonesia $2.33 billion during the same six-month period. Cambodia’s exports reportedly grew by more than 12 percent, while Vietnam and Indonesia also recorded positive growth. Bangladesh, by contrast, lost ground.

The contrasting performance raises a more important question than whether US demand weakened: why were some competing exporters able to grow in a shrinking market while Bangladesh was not? The answer points toward a structural competitiveness problem that Bangladesh has postponed confronting for too long.

For several decades, the country’s RMG success has rested on a remarkably effective but relatively narrow formula: abundant labor, competitive wages, large-scale production of basic garments and preferential access to major markets. That model transformed Bangladesh into one of the world’s largest apparel exporters and created millions of jobs, especially for women. It remains one of the most consequential economic achievements in the country’s history. But yesterday’s comparative advantage does not automatically become tomorrow’s competitive advantage.

The global apparel industry is changing. Buyers increasingly demand shorter delivery times, diversified fabrics, synthetic and man-made fibers, sophisticated design capability, environmental compliance, supply-chain transparency and greater flexibility in responding to fashion cycles. Price remains important, but price alone is no longer sufficient.

Vietnam illustrates the transition particularly well. Its apparel industry benefits from deeper integration with regional supply chains, substantial foreign investment and easier access to textile and manufacturing inputs from China and other East Asian economies. Cambodia has also become increasingly integrated into regional production networks. Indonesia possesses stronger capabilities in synthetic and man-made-fiber garments, an area in which global demand has been expanding. Bangladesh remains heavily concentrated in cotton-based and relatively basic garment products. Such specialization was once a source of strength. Increasingly, it risks becoming a constraint. The scale of this structural shift is striking: synthetic fibers accounted for 69 percent of global fiber production in 2024, with polyester alone representing 59 percent, compared with only 19 percent for cotton, according to Textile Exchange. This is where the Dynamic Smile Curve becomes relevant.

As the accompanying curve illustrates, garment assembly occupies the relatively low-value middle of the global value chain (manufacturing segment of the curve), while greater value tends to be captured at the two ends: before production through research, textile development, design and product innovation, and after production through branding, marketing, logistics and distribution. Bangladesh entered the global apparel industry primarily through the middle of this curve and became extraordinarily successful there. The challenge now is to move progressively toward its higher value ends without abandoning the manufacturing base that created that success.

Bangladesh must continue producing garments efficiently while simultaneously building capabilities in textiles, synthetic fibers, design, product development, logistics, branding and other higher-value activities. Without such movement, increases in wages, energy prices, financing costs and compliance — inevitably squeeze manufacturers because productivity and value addition fail to rise sufficiently to compensate.

The recent US export figures should therefore be interpreted as more than a temporary fluctuation. They may be an early warning about the limits of an export strategy built overwhelmingly around volume rather than value.

The problem becomes clearer when viewed through the broader, all-encompassing Matrix Paradigm perspective rather than through export statistics alone. Competitiveness is produced by the interaction of energy, finance, logistics, infrastructure, technology, investment policy, workforce capability, and institutional reliability. Weakness in one dimension can affect every other dimension.

Viewed through the lens of the Matrix Paradigm, these interconnections become clear: An unreliable gas supply raises production costs. Electricity disruptions delay shipments. High interest rates increase working-capital expenses. Port congestion lengthens delivery times. Slow customs procedures weaken supply-chain responsiveness. Policy uncertainty discourages foreign investment. Limited domestic production of man-made fibers restricts product diversification. These are not separate problems; they are interconnected components of a single competitiveness system.

For that reason, simply asking garment manufacturers to become more productive cannot solve the problem. Productivity depends partly on decisions made inside factories, but competitiveness also depends heavily on the environment surrounding those factories. A highly efficient manufacturer cannot fully compensate for unreliable energy, inefficient ports or expensive financing.

Bangladesh also faces a strategic investment challenge. One reason Vietnam has moved rapidly into more sophisticated manufacturing is that foreign investment has helped connect the country with regional supply chains, technology and production networks. Bangladesh has repeatedly expressed an ambition to attract comparable investment, yet investors evaluate more than labor costs. They examine infrastructure, energy reliability, policy predictability, customs procedures, logistics and the ability to repatriate profits. Foreign investment therefore cannot be attracted sustainably through promotional conferences alone. The domestic economic environment itself must become the advertisement.

There is another lesson in the US figures. The dramatic decline of Chinese apparel exports creates opportunities, but opportunities do not automatically migrate to Bangladesh. When buyers diversify away from China, competing countries simultaneously seek those orders. Vietnam, Cambodia, Indonesia, India and others are not passive observers. The relevant question is therefore not whether orders are leaving China. It is where those orders are going and why.

If buyers prioritise short lead times, synthetic fabrics, supply-chain integration and production flexibility, Bangladesh must compete on those dimensions. Otherwise, the relocation of global sourcing may benefit neighbouring Asian economies more than Bangladesh.

None of this diminishes the extraordinary achievements of the country’s garment industry. On the contrary, the sector has repeatedly demonstrated its capacity to adapt—from the elimination of textile quotas to factory-safety reforms and increasingly demanding environmental standards. Bangladesh now hosts some of the world’s most highly rated green garment factories. That adaptability offers grounds for confidence.

But the next stage requires a different kind of transformation. The first generation of RMG growth was driven largely by labour-cost advantage and production scale. The next generation must increasingly depend on productivity, technology, skills, product diversification and higher value addition.

The distinction matters because Bangladesh is approaching a stage of development in which wages should rise. Attempting indefinitely to preserve competitiveness through low wages would be neither economically sustainable nor socially desirable. The objective should instead be to make workers sufficiently productive that higher wages coexist with competitive production costs. The Financial Express report should therefore be read not simply as bad news about six months of exports, but as a useful diagnostic signal.

Bangladesh remains a formidable apparel producer. Its scale, entrepreneurial experience, workforce and established relationships with global buyers constitute substantial advantages. Yet those advantages should not create complacency. Competitors are improving, supply chains are shifting, product composition is changing and buyers are becoming more demanding. The strategic choice is consequently not between garments and diversification. Bangladesh needs both: diversification beyond garments and diversification within garments.

Within the RMG industry, that means moving toward man-made fibres, technical textiles, higher-value fashion products, faster production cycles, stronger backward linkages and greater participation in design and product development. Beyond RMG, it means creating additional export engines so that the economy is not excessively dependent on a single sector. Two immediate priorities could be streamlining and digitising customs and bonded-warehouse procedures, while providing time-bound, performance-linked fiscal incentives for investment in domestic MMF spinning and fabric production.

Bangladesh’s garment industry once demonstrated how a country with limited capital and industrial experience could enter global manufacturing and transform its economy. The challenge now is different but no less consequential: transforming an enormously successful export industry before the foundations of its earlier success begins to erode.

The 5.58 per cent decline in exports to the US is therefore not the most important number in the Financial Express report. The more revealing fact is that several competitors grew while Bangladesh declined.

That divergence is the message policymakers should not ignore. The future of Bangladesh’s RMG industry will depend less on producing more of what it already produces and increasingly on moving from comparative advantage to dynamic competitive advantage—and from the middle of the global value chain toward its higher-value frontiers.

Dr Abdullah A Dewan is a former physicist and nuclear engineer at the BAEC and professor emeritus of economics at Eastern Michigan University, USA.​

 

[Saif]

Is Bangladesh’s garment industry ready for the next shock?

Bangladesh’s RMG sector remains highly vulnerable to global economic shocks, such as US trade tariffs, demanding diversification.

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Is Bangladesh’s garment industry ready for the next shock?

Aminul Huda Aman, Laura Boudreau, Rachel Heath


Bangladesh's ready-made garment (RMG) sector employs over four million workers and generates over 80% of the country's export earnings. That concentration has powered decades of growth. It also means that whenever a shock hits — a global recession, a pandemic, a change in a foreign government's trade policy — it lands on nearly the entire export economy at once. And these shocks are coming more often: the 2008–09 financial crisis, COVID-19, and in 2025, the Trump administration's “Liberation Day” tariffs. Climate disruptions to cotton supply chains and shipping routes loom as the next in line.

On 2 April 2025, President Trump announced a 37% “reciprocal” tariff on Bangladeshi exports to the US — more than double the country's prior average rate of 15.7% — as part of a sweeping overhaul of US trade policy. The US buys about one-fifth of Bangladesh's garment exports, so the announcement mattered enormously for an export sector this concentrated, and it offered a real-time test of whether the sector could absorb and respond to a shock swiftly.

It could not — at least not yet. We surveyed 1,146 senior managers, 1,304 HR managers, and 2,849 workers across major garment-manufacturing hubs (Gazipur, Narayanganj, Savar) in August–September 2025, extending an ongoing panel study. The results are a warning that the sector is ill-prepared to weather the next shock, whatever form it takes.

Without knowing their employer is exposed to a foreign policy shock, workers cannot take precautionary steps, such as saving more or looking for other work, that will cushion them if the shock materialises.

Beginning with workers, more than 80% did not know which country their factory's products were sold to. Only around 30% were aware of the US tariff change at all — including workers at factories that export directly to the US. Without knowing their employer is exposed to a foreign policy shock, workers cannot take precautionary steps, such as saving more or looking for other work, that will cushion them if the shock materialises.

Managers were far more likely to eventually learn of the change, but the diffusion was strikingly slow. About 70% of managers only learned of the tariffs in June 2025 or later — more than two months after the announcement. Even among managers at US-exposed factories, who had the most at stake, only 32% knew before June (Figure 1). Social media was the most common channel through which managers learned about the changes.

Figure 1: Timing of when managers learned about US tariff changes

Notes: The figure groups manufacturers shipping to the US (and possibly other) markets, EU but not US market, neither market, or to an unknown destination prior to 2025. Among respondents who reported being aware of the tariffs prior to our survey, the figure plots the percent of respondents within each exposure group answering a given month to the question, “When did you find out?”


Slow information was compounded by confused information. The US policy evolved significantly between April and September 2025 — a 37% proposal, a 90-day pause, a reduction to 35%, a negotiated 20% — and most managers, even at US-exposed firms, could not correctly say whether tariffs on Bangladesh were going up or down. A fast-moving, complicated policy left the people meant to respond to it uncertain about its basic direction.

Buyers did not wait for that clarity to arrive. By September 2025, 28% of manufacturers with active US buyers reported that at least one (of their two largest) buyer had renegotiated or cancelled an order, mostly through downsizing, price cuts, or rushed delivery deadlines. Buyers, in other words, were already adjusting while much of the sector was still catching up on the news.

Reflecting the high level of uncertainty about future US policy changes, there was substantial dispersion of beliefs about what would come next. Asked how tariffs would affect their factory's production over the coming year, managers' and workers' answers were scattered across “no effect,” “increase,” and “decrease” — with little consensus even within the US exposure group (Figure 2). Workers across all exposure groups predominantly expected tariffs to either increase or not affect their factory’s production and employment, consistent with limited understanding of the economics of tariff increases on export demand. This uncertainty may contribute to “wait-and-see” behaviour by firms, contributing to the lack of responsiveness to the US policy announcement and possibly causing them to delay investments.

Figure 2: Expectations for how US tariffs will impact factory’s production

(a) Managers

(b) Workers

Notes: The figure plots the percent of respondents within each exposure group reporting a given answer for the question, “How do you think that the US’s new tariff rates will impact the total production of your current factory for the next year?”
To its credit, the sector weathered this particular shock without a detectable employment downturn — at least through the end of our dataset in September 2025. But the underlying vulnerability is structural: a heavily concentrated export sector, with slow and highly uneven information diffusion, is not equipped to respond quickly to whatever the next shock turns out to be.

Without knowing their employer is exposed to a foreign policy shock, workers cannot take precautionary steps, such as saving more or looking for other work, that will cushion them if the shock materialises. Photo: Anisur Rahman/ Star
A key implication is to strengthen how quickly and reliably trade information reaches both managers and workers, via timely, visible communication by government agencies such as the Ministry of Commerce and the Ministry of Labour and Employment and trade associations such as the BGMEA and BKMEA, and via the deepening of traditional media markets. In the longer term, Bangladesh needs to diversify the jobs available outside garments. These measures would leave Bangladesh better placed the next time the ground shifts.

Aminul Huda Aman is Country Economist at the International Growth Centre (IGC)-Bangladesh; Laura Boudreau is Associate Professor of Economics at Columbia Business School, Columbia University; and Rachel Heath is Professor of Economics at the University of Washington.​