The apex Bangladesh Garment Manufacturers and Exporters Association (BGMEA) will develop a virtual platform tailored for the country’s textiles and apparel sector.
- The BGMEA had earlier commissioned LightCastle Partners to conduct a comprehensive feasibility study as a precursor to building this platform.
The context: The readymade garments (RMG) sector of Bangladesh is now firmly established as the second-largest apparel exporter globally.
- The sector, however, faces challenges due to global geopolitical tensions, exchange rate fluctuations, the dollar crisis and a surge in cotton price, aggravated by intense competition from low-cost nations.
- BGMEA sees digital transformation as pivotal enabler in the context.
- Nevertheless, limitations arising from the regulatory framework, particularly in the realm of cross-border transactions and foreign currency policies, serve as an impediment for the domestic apparel industry to tap into the global burgeoning e-commerce market.
The study: The findings of the study were officially unveiled at the BGMEA headquarters in Dhaka on 25 January.
- The study was funded by IFC’s Partnership for Cleaner Textile (PaCT II) programme, and supported by the government of Denmark through the Danish International Development Agency (DANIDA).
The findings: The report identified market potential and sector readiness to digitise the apparel sector of Bangladesh. It also proposed sustainable business models along with policy gaps, and necessary requisite strategies essential for the successful implementation of the marketplace.
The new marketplace: The primary objective of the virtual marketplace is to integrate the local textiles industry into global value chains and capitalise on the shift towards online purchasing.
- The report emphasised two critical strategic approaches for the sustained success of the apparel sector: (1) Expansion of current Business-to-Business (B2B) activities into emerging markets like Asia and Middle East; and (2) Creation of additional value by establishing direct connections between Bangladeshi manufacturers and end customers (B2C), thereby achieving superior profit margins and increased volume of business.
- The platforms will operate as independent private entities, incorporating features such as logistical assistance, design consultation services, secure payment systems, and spare capacity matching, among others.
- Right now, in contrast to the National Digital Commerce Policy of 2018 governing the domestic market, there is no explicit policy framework addressing international e-commerce.
- The report also underscores the virtual marketplace's potential to serve as a central hub for stock lots, streamlining connections among local producers, traders, and international buyers in emerging markets.
What they said:
If we want to maintain our position in the global competition ahead, we need to develop a comprehensive business model. This report, I believe, will not only facilitate the expansion of our presence in the digital realm but also serve as a guiding framework for our future business expansion endeavours.
— Faruque Hassan
President
Bangladesh Garment Manufacturers and Exporters Association
