New concerns have emerged over Bangladesh’s position in the global ready-made garment (RMG) export market. According to the latest data from the World Trade Organization (WTO), Vietnam overtook Bangladesh in 2025 to become the world’s second-largest garment exporter—a development that is undoubtedly an important warning sign for the country’s economy. However, attributing the entire responsibility for this situation to any single government, business community, or group of workers would fail to capture the depth of the problem. The underlying causes include long-standing structural weaknesses, policy instability, rising production costs, and the changing realities of global competition. It is also true that during the Awami League government’s tenure over the past decade and a half, several positive measures were taken to strengthen the garment sector in international markets. Following the Rana Plaza disaster, greater emphasis was placed on factory safety and compliance reforms, initiatives were taken to increase workers’ wages, and steps were undertaken to develop economic zones and infrastructure, expand electricity and gas supplies, and simplify export procedures. At the same time, efforts were made to sustain the RMG sector in global competition through the exploration of new markets, cash assistance, and export incentives. As a result of these initiatives, Bangladesh was able to maintain its position for years as one of the world’s leading garment exporters, second only to China. But the challenges are different now. High interest rates, energy shortages, complications related to the dollar and imports, rising production costs, declining orders, and administrative harassment are undermining the industry’s capacity. There are allegations that irregularities and a culture of bribery in various areas, including the renewal of bonded warehouse licenses, are further increasing the cost of doing business. These allegations must be properly investigated, and strict action should be taken against those found responsible. Policymakers must now take urgent action to restore Bangladesh’s competitiveness. Tax and tariff policies need to be stabilized, port and customs efficiency must be improved, digital transparency must be ensured in the bonded warehouse system, uninterrupted energy supplies must be maintained, and investment in technology and automation should be encouraged to increase productivity. At the same time, Bangladesh must expand its capabilities beyond low-cost garments and focus more on high-value fashion, technology-driven textiles, and environmentally sustainable products. Losing the second position to Vietnam is therefore not merely a matter of export statistics; it is a wake-up call for Bangladesh’s garment industry. The question is not simply why Vietnam has moved ahead—the bigger question is whether Bangladesh can overcome its weaknesses in time. Why Has Bangladesh Reached This Situation? An assessment of the situation suggests that the labor law amended under the Yunus government clearly allows trade unions to be formed with as few as 20 workers, while a factory may have between five and as many as 16 trade unions. Many industrial entrepreneurs consider such provisions impractical and unfavorable to the business environment, leading some to decide to shut down or wind up their businesses. Second, Bangladesh’s garment industry has been moving forward while facing new technological challenges. The industry has consistently supported efforts to learn and adopt new technologies. This has helped the sector maintain a strong position in the global market. However, under the new labor law, trade unions reportedly regard efforts to learn new technologies and acquire new skills as forced labor. They fail to recognize that acquiring technological skills is one of the most important aspects of becoming a more capable and productive worker. Third, The current situation has also been created by unprecedented syndication and shortages in the power sector over the past two and a half years, along with misguided government policies. Fourth, Since 2024, the costs and complications associated with customs and VAT payments have reportedly increased four to five times compared with the period under the previous Awami League government. Businesses have had little room to maneuver in this situation. The policy-less government, whether knowingly or unknowingly, has contributed to this problem. Fifth, Businesses are increasingly reluctant to make new investments due to widespread harassment cases, money-laundering cases, and labor-related lawsuits being filed against businesspeople. Unless these problems are addressed, Bangladesh’s position in the garment sector will deteriorate further. It is only a matter of time.

Author: Shachin Bangali, Columnist and Political Analyst