President, Dutch Bangla Chamber of Commerce & Industry (DBCCI) &
Managing Director, Giant Group
When it comes to the economic growth of nations, especially a least developed country such as Bangladesh, international trade plays a critical role that can easily tip the balance for or against the country’s favor. According to reports by the Export Promotion Bureau, Bangladesh reported close to $37 million in exports for the 2017-2018 fiscal year alone, with a 6.94% change of export performance over the export target. With the majority of exports consisting of ready-made garments, a staggering 83% of export revenue earned is credited to the RMG sector. Despite some of the challenges and shortcomings that have crippled the industry in the past, experts believe the textile sector, as well as bilateral trade, is still poised for growth.
“Bangladesh has incredible potential, especially when it comes to the global apparel market,” says Faruque Hassan, Senior Vice President of Bangladesh Garment Manufacturers & Exporters Association (BGMEA). Beginning his career in the garment industry in 1984, Faruque is a man who wears many hats, having greatly contributed to the RMG sector. As President of Dutch Bangla Chamber of Commerce & Industry (DBCCI), the first bilateral chamber in Bangladesh, Faruque has extensive experience serving as the Vice President of the French Chamber, alongside being involved in the German and Switzerland Chamber in Bangladesh. Recently, he was also appointed by the Greek government as the Honorary Consul General of Greece in Dhaka, Bangladesh, a prestigious position only awarded to those that have the technical expertise to globally represent the country and contribute to its strategic stability.
“Our main aim is to make our industry more competitive and sustainable so that we can compete with any other country, on every front – not just the RMG sector,” he explains. “It comes down to building a skilled workforce while operating an energy efficient, environmentally friendly and cost-effective model.” As a Founding Member of the Board of Trustees of BGMEA University of Fashion and Technology (BUFT) and Vice President in the Board of Centre of Excellence for Bangladesh Apparel Industry (CEBAI), Faruque has always believed in the potential of the RMG sector, but also placed strong value on the importance of training the workforce. Not only did he open several training centers, but he also introduced and help set up the first fashion Institute,BGMEA Institute of Fashion and Technology (BIFT), in 2001 which later became a full-fledged university, BGMEA University of Fashion and Technology (BUFT) in the year 2012. With the aim of providing technically skilled human resources that strengthen the country’s export-oriented RMG, BUFT is an international standard institute of apparel, fashion design, apparel merchandising, textile technology Industrial Engineering and other complementary courses such as leather and accessories design, fashion modeling, fashion photography and fashion marketing.
Bangladesh’s RMG sector has experienced consistent growth, especially in the past decade. Between the years of 2007 to 2016, the country cited the average yearly growth of 12.84%, a clear indication of the immense potential of the sector, as quoted in a 2017 report published on Textile Today. With the intention to tap into this potential, Faruque wanted to build a skilled workforce that can compete with that of international competitors. “To really add value to the production cycle, we want to make sure students are able to develop their knowledge in everything from merchandising to fashion designing. Training, coupled with government support in the textile industry can eventually allow us to also engage in country branding as well,” he added.
A New Identity
“In terms of overall bilateral trade,” Faruque shares, “the country is set to make the move from being an LDC country to a middle-income nation and although that’s a great accolade, it’s not our main focus.” Currently a Least Developed Country (LDC), Bangladesh is set to graduate to become a middle-income country. Over the years, merely five countries were able to make that transition, including Equatorial Guinea, Cape Verde, Botswana, Maldives, and Samoa. This time around, Bangladesh is the only country that met all three criteria for graduation which includes GNI per capita, Human Assets Index, and Economic Vulnerability Index.
“I believe the graduation will take time but I’m confident that we will make it,” an optimistic Faruque shares. Although graduation from the LDC group is almost certain, the transition won’t take place until 2024, that too, only if they meet all the technical requirements. “We have another 8 to 9 years to prepare for this new journey and I feel that we are taking ample measures to make sure it’s a smooth transition.” Currently, Hassan’s concerns or focus isn’t on graduating, rather, it’s on taking smaller, every day steps to improve the industry as a whole. From introducing training centers to build the workforce to initiating programs that promote sustainability, alongside working with the government to undertake more research and development, his goals spread out far and wide.
GSP Status Concern
One concern, however, is of the Generalized System of Preferences (GSP) status that Bangladesh now has, which they will lose post-graduation, around the year 2027. GSP, a preferential tariff system which provides for a formal system of exemption from the more general rules of the World Trade Organization (WTO). Reports from the Centre for Policy Dialogue suggest that the country may not enjoy the zero-duty benefit under the EU’s everything but arms (EBA) program.
“We understand that after 2027 we may not be able to avail this duty-free status so we are taking precautionary measures to upgrade our machine, our production process alongside reducing wastage, increasing efficiency and creating a more skilled workforce.”
The Indo-China-Bangladesh Bilateral Triangle
In recent times, India increased its import tax by 20%, in efforts to curtail import from China. Bangladesh, on the other hand, processes, and ships Chinese fiber to India with zero duty. From a bilateral perspective, what does this bode for the China-Bangladesh trade relationship? According to Hassan, Bangladesh remains in an advantageous position regardless. “India has doubled its tax impositions and if I am not wrong then India has imported almost US$ 3 billion worth of textile, including apparel and clothing. We can easily benefit from this arrangement,” he begins to explain. “Although Bangladesh uses and requires a lot of Chinese raw materials, we also have our own that we can easily bank on. We don’t need to compete with India, in fact, we can complement each other.” India being a leading producer and exporter of cotton created a win-win situation for all parties involved. More RMG export from Bangladesh would equate to more exports for India as well, conveniently accommodating the trade needs of each nation.
Challenges that Lie Ahead
With neighboring nations such as Cambodia and Vietnam showing promising prospects in apparel trade, BGMEA has strong competition that it must take in its stride. “Bangladesh need not worry about losing business to other countries because the industry itself is massive, with room for everyone,” Faruque tells me. Bangladesh has a market share of merely 6.46% while China has a whopping 35%, if not more. “We have the opportunity and scope to beat the competition, mainly because our demographic is favorable. Over 70% of our population is below the age of 40; over 60% is below 30 years of age and over 50% is below 25 years of age. This makes for a young, energetic workforce – something other nations lack since most of them has an aging population. Our main challenge is to ensure that we equip them with the right skill set and training so they can make the most of their potential.”
When asked about the leadership of BGMEA and how it’s shaping the way the RMG sector operates and grows, Faruque tells us that he is most hopeful. “10 years ago you wouldn’t see too many people from the second generation try to join this industry since they felt intimidated by how difficult and complex it is. Today, times have changed. More youngsters are coming forward to try their hand in the textile industry. It’s a great addition because, in an export-import industry, our ultimate customer is the western world, so when we have more of today’s youth, especially those that have been educated in universities abroad join the business, they are already equipped to meet the demands of this sector.”
Although Bangladesh is experiencing improved trade flows and has been pursuing a growing number of bilateral deals, more focus should be allocated to the domestic front, and to positively branding the country. “We cannot and should not be known for producing low-end products or cheap goods, we should strive to create our own identity – becoming a well-known name for producing all kinds of high-end apparel, fabric, and accessories. We need to brand our capabilities and our positive side consistently and we must couple that with strong, visionary leadership to pave the way to success.”
Alongside being actively involved in the bilateral trade sphere, Faruque also takes an avid interest in promoting CSR practices across the textile sector. He is a Member of Shafiuddin Ahmed Foundation and Manabik Shahajya Sangstha (MSS). CSR is often wrongly considered to only consist of charity, Faruque tells me. “Entrepreneurs and factory owners must realize that CSR goes beyond charity. It starts at home – with your own company and employees. If your employees are motivated and happy, productivity improves, your company is benefitted and so is your business.” As a member of the Board of Trustees of BUFT, Faruque made it mandatory to include a course on CSR in the university curriculum to ensure that students realize the importance of corporate social responsibility.
A Personal Legacy
As a visionary and enterprising businessman and someone who leads multiple different organizations, Faruque believes his success in managing it all can only be attributed to a life of discipline – one that he has led in the same fashion for as long as he can remember. “For all of my life, I have worked 24/7. I work every single day, taking no holidays for myself. I’ve always tried to follow my father and brother’s footsteps, concentrated on business from the very offset. Something that I believe has led me to the place I stand today is the fact that I’ve never tried to hold on to trade secrets or even my knowledge of the industry. I am privileged to have been able to visit many countries, learning how the trade business works around the world. I’ve made it a point to always try to share this knowledge – and that’s the only way one should go about it,” he concludes.