Mohammad Nurul Alam
The global packaging market size is around $ 700 billion:
After China, Bangladesh is the second largest apparel exporter globally, but the sector is still not able to earn revenue inline with the apparel business due to some unavoidable situation. Apparel exporters are still purchasing accessories mainly from China or Hong Kong. The reason is though some local accessories company started their business but very few accessories manufacturers are able to get brand nominations globally. On the other hand, the sub-sector industries have numerous opportunities to boost the business and thus it could be an unbeatable sector to compete with any other business if the accumulated efforts can be made by entrepreneurs and government.
Current Accessories business status:
According to Bangladesh Garments Accessories & Packaging Manufacturers & Exporters Association (BGAPMEA) the value addition is around 40% that amounted 350 billion of taka by the packaging and accessories sector. The sector earned about US$ 7.67 billion (deemed and direct export) for the country in FY 2021-22, of which about $ 1.0 billion was direct export. BGAPMEA has set an export target of $12 billion by the end of 2025. The global packaging market size is around $ 700 billion at present mentions BGAPMEA.
Mid-1990s to 2000 and the growing period of the sector :
During the growing period of the Accessories and Packing sector in the mid-1990s to 2000, the RMG sector was heavily dependent on imports for the items. Importers were spending as much as 80% to 90% of the export value to purchase them. But today accessories sector is a developing and promising to expand in business locally and internationally with the foreign competitors.
Mahbubul Alam Shohag, Director (Marketing), Dody Trims Ltd. Said, “Today Bangladesh RMG sector is collecting 60-70% of accessories and packing items from local sources and 30-40% materials we still need to collect from abroad. Some accessories like fancy buttons, Rhinestones, Security Tags (RFID), Metal Clip, Beads, Buckle, PU Leather, Studs, hangers and poly bags Materials, zippers and cartons carton Materials were not made of locally and must be imported. But through the last two decades, a large number of accessories industries have come up to fill in this gap to the extent of about 70% of the total requirement of the industry.”
Investment and earnings from the Garment Accessories unit:
According to BGAPMEA Bangladeshi garments accessories and packaging makers have made massive investment of the sector is about Taka 35 thousand crore and value addition is about 40%. After all, it is the first backward linkage industry of RMG sector. Tk. 1,000 crore to push up exports and meet the demands of the apparel sector and presently, around 1,900 factories produce accessories in the country.
The accessories produced by locally include woven labels, leather badges, stone and metal motifs, rubber patches, gum tapes, satin and cotton ribbon hangers, price tags, buttons, and zippers.
This sector earned about US$ 7.67 billion (deemed & direct export) for the country during the year 2021-22, out of which about US$ 1.0 billion was direct export.
Accessories and packaging industry is new hub of employment:
As per BGAPMEA More than 7 lac employees are working in this sector of whom 20% are women. Now global packaging market size is about US$ 700 billion. GAP sector can earn US$ 7.0 billion by capturing 1% market share. There is also opportunity to export to emerging countries like: Myanmar, African nation etc. Garments Accessories sector can extend its contribution from 17% to 20% in achieving US$ 50.0 billion export of RMG sector.
Challenges of the sector:
1) False purchase – Sector insider opined there are lots of false purchase has been shown some time by the garments manufacturer instead of taking goods from the real suppliers.
“Maximum Group of Companies and Buying Houses has been doing their all accessories by opening a small manufacturing unit, Trading Unit or a commission agent to take the whole profits. They have been taking B2B LC by their factories (sometimes false) and agents. And finally, the real manufacturing units are losing profits and facing huge payment-related hassles.” said Mahbubul Alam Shohag, Director (Marketing), Dody Trims Ltd.
2) Payment kept unpaid or not given totally- It has been said that some garment manufacturers are not willing to pay the accessories supplier’s payment on the due date. Even they try to pay without back-to-back LC and most cases this makes the situation tough to survive when the work order gets canceled without prior notice. During Covid period lots of payments are not being done by the RMG manufacturers just because of order cancellation by the buyer.
3) Increasing raw materials price- The accessories and packaging industry mostly depends on abroad for its raw materials but globally materials cost is getting higher but backward linkages are not able to provide materials at low cost as a result many backward linkage industry shut their factories down.
Mr. Rezanur Sohel, Managing Director, eS Trims Ltd. said “Day by day production costs are increasing but prices are decreasing, so that’s another challenge are facing. As an SME manufacturer, the government needs to support young entrepreneurs by providing low-interest loans for further investment. Still, we sourced raw materials from abroad. To save cost we need to set up raw material factories. Besides, the government has to provide an uninterrupted supply of gas and electricity.”
4) Lacking expertise to provide quality products- Industry insiders’ express the opinion that Bangladesh accessories and packaging manufacturers are not capable of providing quality products to rival countries. So they need to improve their overall expertise in the development of various items.
Opportunity and progressing:
Besides challenges Bangladesh backward linkage of accessories and packaging industries are achieving LEED Gold Certification. Bangladesh based one of the largest packaging & accessories manufacturing company, Swisstex Packaging & Accessories Ltd a concern of Swiss Tex Group achieved USGBC (LEED) GOLD Certificate with 65 LEED points.
Dekko Accessories Ltd. is the world’s first LEED PLATINUM Certified Green garments accessories manufacturing factory. Dekko Accessories Ltd & Agami Accessories Ltd have taken an exemplary initiative to set up a Library for their employees, workers and their family at the factory premises.
Union Accessories Ltd” installed brand new Tagtrans 225 Printing Machine, from UK Based “Focus Label Machinery Company”. This machine is Single & Multi-Colour Halo free Transfers.
Initiative from the BD garments:
A high-powered panel has formed by the BD Ministry of Commerce (MoC) and has assigned the seven-member body to identify –
1)The bottlenecks of the RMG accessories and packaging sector.
2) To suggest remedial measures to help boost up the export earnings from the sector.
3) The recommendations will be submitted within the next couple of months sources said.
A senior official at the MoC. pointed out BD garments are taking necessary efforts to mitigate possible shocks after the country’s LDC graduation by 2026. A vast preparation has been taken out ahead of graduation of Bangladesh from the least developed country (LDC) status.
The sources said to increase earnings from the subsector that mainly supplies to local readymade garments factories the commerce ministry has asked the country’s 18 missions abroad to explore potentiality and find barriers to boost up the business.
In conclusion, there is a growing need for sub-sector to diversify industrial technology, economy and to find new sources of accelerating growth to face possible challenges. So production capacities of garment accessories and packaging products, Bangladesh need to make efforts to explore export potentials of such items worldwide.
