By Rehnuma Karim, PhD
Mr. Anwarul Alam Chowdhury Parvez is a visionary entrepreneur who possesses a well-rounded global perspective with scholarly insight on Bangladesh’s business and economy. He is the founder and Managing Director of Evince Group, which has become the country’s one of most diversified manufacturing conglomerates in the apparel and textile industry. Under his leadership, Evince group evolved through investing in the latest technology and motivating people, which undoubtedly are two major cornerstones of any successful business that has to compete in the global arena. One element that makes Mr. Chowdhury stands out is his genuine respect and care for his employee, which makes him a true empathetic leader who knows a business can only thrive when people are valued. Colors sat down with the prominent industrialist to get his perspective on Bangladesh’s progress and the impact of the global crisis particularly in the Ready-Made Garment industry.
Bangladesh is the second-largest ready-made garment (RMG) manufacturer and exporter in the world and has become one of the fastest-growing industries globally since the 1990s. This sector has been and still is the main source of foreign earnings, but now experiencing a setback due to the pandemic and the Russia-Ukraine war. Based on this persisting scenario, Colors started the interview by asking Mr. Chowdhury to provide his take on how the devaluation of taka against US dollar can impact the Bangladesh manufacturing industry.
Impact of rising inflation on Ready-made Garments Industry
Mr. Chowdhury Parvez showed his concern on the rising inflation rate, which reached almost 7.5% in July. This phenomenon will impact the economy in manifold effecting wages, prices of LNG and petrol. The import is also becoming expensive as the raw materials and accessories such as cotton, fabrics and other imported products become costlier as taka depreciates further against US dollar. Bangladesh’s foreign reserve also fell below $40 billion which forced the Govt to take contractionary policy. He explained, Ready-made Garment sector of Bangladesh is the highest contributor to the growth of our GDP and if this situation continues, it can hamper the overall growth.
He further added comparing to other countries such as our South Asian neighboring nations, Bangladesh is remarkably doing better. Undeniably, according to Mr. Chowdhury, the credit must be given to our Prime Minister’s charismatic leadership and far-sightedness on finding solutions.
Mr. Anwar applauded her effort of providing stimulus package even before she was consulted by the businesses. This was a big support that helped our economy during the covid times. Just when Bangladesh was buffering the effects from Covid, the unexpected Ukraine-Russia war happened that started to have its direct and indirect effect on the industries. But the crisis is not singular to Bangladesh but effecting industries world-wide. He mentioned USA’s experience with the war that pushed them to increase interest for the third time moving closer towards recession, which they might be already in and not announcing. Europe too according to him is in the same boat.
With depreciating value of Taka, although the export scenario can show positive signs, but the expensive import pricing could increase the trade deficit. But Mr. Anwar was proud to say that Bangladesh is flaring better than many other countries due to gaining self-sufficiency in food production which slowed down the price hike of food grain.
Bangladesh according to his opinion needs to depend on export now more than ever before taking somewhat advantage on the depreciating currency and especially when we are short in foreign reserve while foreign remittances also going down.
It is a good sign that the government did realize the urgency and prepared to support the export industry placing high priority to this sector to increase the overall basket of export. Industries still have not yet reached an alarming state as government is supporting the industries with energy despite the country wide staggering energy crisis. It is also a good sign that the price of raw cotton and oil also went down a bit. He also mentioned the import seemed to be slowing down as well, which was indicated in the month of July to be dropping more than $2b. These indicators made Mr. Chowdhury hopeful that if the currency stays within the control —- the existing problem can ebb down to reach a steady state.
Regarding employment during the inflationary state, he stated that one of the biggest challenges the country needs to face now is to control the rate of inflation and maintain employment. When asked whether the Ukraine-Russia war is going to impact the steady growth of Bangladesh’s economy, he again mentioned how proud he is for our agricultural sector that has placed the country in a better state than many other nations. According to him, Bangladesh has not yet experienced high level of inflation which is being faced by Europe and America and one of the reasons might be due to the self-sufficiency in food. This is a result from the combined effort of both Bangladesh Government’s initiatives and the hard work of the dedicated farmers. But this condition can change if the war persists as no country can escape from the lingering negative effects of war.
Need to be vigilant to meet the uncertainties from global crisis
He also highlighted the issue of supply chain, which has been interrupted during the pandemic and not yet has been solved. This too is not a problem for only one country but everyone at the global level in trade has been affected. This caused lengthening delivery time and increased cost. He provided an example saying, “The cost of per container vessel that would have been $1200 earlier, now has increased to 7000$ or 8000$. So, if the war continues nobody can tell how the situation will turn out.” He mentioned that Bangladesh received subsidies from many developed countries before the pandemic, but when the recession hits then the developed country defer the payment and when it is the time for the industries to pay back, the markup will be raised. Unfortunately, when all these elements start to add up, the product price along with labor cost too will increase. He thinks if we are unable to adjust the situation immediately, the whole process to climb out of the debilitating condition may take at least 4 to 5 years. He said that we need to consider the geo-political scenario. At present, Sri Lanka, Egypt, Syria, Argentina and Brazil are buried in foreign debt and some of the economies is and will be in the brink of failure. When this happen, Bangladesh should be prepared to face restrictions by international agencies such as World Bank and IMF as they might prioritize those other countries over us. If this happen, it is the consumers of our country who will be suffering as they will have to bear all the cost.
Future projection on coping with the removal of preferential treatments
Mr. Chowdhury provided a positive outlook when asked about how we as a nation can prepare to cope with the removal of preferential treatments in trade as Bangladesh graduate to a middle-income country. He knows this will be a big challenge, but his analysis of our overall strength gave a hopeful view into the future. He said, “our export basket did cross 50 billion dollars and the largest contributor to the basket is our ready-made garments which accounts for 84% of the total exports. And if we add home textile and specialized textile … it becomes 86%. This 86% won’t be impacted even when the preferential treatment is lifted because no other competing countries have such a large, dedicated amount in the RMG sector.” He also said that Bangladesh has experienced unexpected growth in this sector and is still growing. Based on the geo-political scenario, China is focusing on building domestic purchasing power since the waning relationship with USA and Europe. Usually, garments industry is the lowest paid wage industry, and this is why, China is focusing on the domestic industries that are capable to pay better wages which mostly are in electronics, automobile manufacturing, e-commerce, and service industries. Garments is the lowest paid wage industry globally. China’s contribution in this sector to America is now close to 33% and 40% in the rest of the world. As China shifts more towards engineering sectors, Bangladesh even if it gets only 10% or 15% from that global share, it will add almost 15 billion dollars more. If we check in with Vietnam as our competitor, we see that only 10% of their total export is garments and have a Free Trade Agreement with Europe. Vietnam too is exporting electronic equipment to Europe and the wage paying sector for them is also trickling down. Now according to Mr. Chowdhury, if we consider Sri Lanka, and Myanmar—- they all have political crisis which tend to discourage investors and foreign importers to conduct business with them. So according to him, Bangladesh still has an advantageous position with a proven track record to keep growing in the Ready-made Garments sector.
Therefore, when other countries are emphasizing on high wage industries and shifting away from a low wage industry such as garments, Bangladesh will be the only viable option to meet the global demand of ready-made garments. This is the reason why Mr. Chowdhury believes that despite the removal of preferential trade agreement, Bangladesh will not experience much problem competing in this sector.
Investing on up-skilling work force
He pointed out his disappointed as a Bangladeshi entrepreneur to see that our nation is still taking the back seat in investing into heavy industrial sector and creating workforce with right expertise. He said, “We are still lagging in skill and professional development. We are not yet there providing the right education to meet the need for the future.” He added, “I feel it’s high time for us to move to the second phase as the 4th Industrial revolution is knocking at the door and we have to focus on big chemical, machinery, and engineering industries.”
Our priority should have been our education sector. The present government is trying but still the course Curriculum is not catered to meet the emerging need and fill in the deficiencies. As a person who feel strongly about the country’s progress, Mr. Chowdhury seemed to be saddened by the lack of professional teachers who are yet to be developed. He showed his urgency on developing the quality of teachers and professionals who can help the country move forward matching with the global trend. Along this line, he mentioned that this is one of the major reasons why industries such as his most of the time are required to hire experts from abroad to fill in the gap. But he mentioned how he is conscious about developing our Bangladeshi experts who are learning from the best foreign experts in the job. There are 10 people learning from 1 expert that is creating value for the industry.
Mr. Chowdhury explained that as the ready-made garment industry experienced unexpected growth. This growth compelled the sector to meet the growing demand by hiring experts from abroad as a huge gap remains to fill in the requirements. Although BGMEA’s institute, the BGMEA University of Fashion & Technology (BUFT) is dedicated to develop the professionals and experts for this sector, but the supply of graduates are not sufficient. Secondly, he found the level of education and know-how that is needed is not yet up to the global standard. He says, “Today the experts we are bringing in from Sri Lanka have already been trained and reached the highest standards as Sri Lanka planned long time ahead to develop the workforce for this sector 25 years ago. Sri Lanka collaborated with British fashion institute and set things up bringing in professional, courses and teachers to develop experts to serve this garments industry efficiently.” He strongly felt that these are the initiatives that Bangladesh needs to undertake. Mr. Anwar -Ul-Alam also pointed out how we are still struggling to find the proper CFO, an efficient and knowledgeable company secretary, proper electrician, and accounts people. There is a need to motivate our able graduates not to migrate to other countries but find ways to make them stay back and contribute to building our nation, so we do not need to rely on foreign experts. He also emphasized on developing work ethic and sense of respect for the company by our Bangladeshi graduates. But he said that he cannot only blame the students who are graduating for their lack of interest to learn and function at professional level. He thinks that both private and government sector should jointly work to create an effective educational curriculum and develop certified short professional courses providing the students scopes to have experiential and applied learning.
Industrial Zoning for efficiency
Mr. Chowdhury also gave his view on the need to decentralize industrial operations across the country especially now as Bangladesh government made remarkable progress connecting our great divides with Padma and Jamuna bridges. He also presented a paper recently at the Ministry of Industry regarding this issue. He proposed effective geographical mapping and zoning to optimize our land area. He strongly believes that the country should plan to establish industries with specific needs and capacities to be placed in geographical locations that serves them best. Also, he would love to see initiatives taken to build townships around those industries with proper schools, hospitals, malls, and recreational facilities so locals are no longer tempted to move to Dhaka city but can enjoy life being close to their home. This can also contribute to lower living cost as people can work in their own back yard. The established economic zones in Bangladesh can become the support zones with careful planning.
Women empowerment is the key to development
Mr. Chowdhury is also a strong proponent and supporter of women empowerment. And this is reflected through his conscious efforts to integrate female workforce into his industries at different leadership roles. He understands how important it is to invest on his female employees as they contribute to provide higher return. He said, “In spinning wheel sections of our garment manufacturing, many think it should be men who are equipped to perform the job. But in my spinning wheel 65% are women and we are targeting to raise the number to 80%.”
The insightful conversation with Mr. Chowdhury did shed informative light into how Bangladesh can thrive despite the economic winter that is happening across the world. With concerted effort, focus and intentional strategies Bangladesh surely can continue to weave the story of progress as we stepped into an era being hopeful instead of being disheartened.