There is a trend of taking over of small garment factories by big factories and also number of garment units is reducing but the production is increasing in Bangladesh. There is no visible investment from home and abroad. This is another sign of moving towards less competitiveness. The creations of new jobs are declining, according to latest study of BBN.

1. Bangladesh Garments are ‘not’ competitive
Published Time: September 7, 2022, 6:49 pm
https://www.ourtimebd.com/beta/bangladesh-garments-are-not-competitive/
Updated Time: September 7, 2022 at 6:49 pm
M S Siddiqui / Non-Government Adviser, Bangladesh Competition Commission
Competitiveness is considered by all economies to be a prerequisite for maintaining high levels of
investment, income and employment. A pure competitiveness facilitate developing countries to diversify
from dependence on a few primary-commodity exports and move up the skills and technology ladder, this
being essential in order to sustain midst rising wages and permit greater economies of scale and scope in
production. The employment, industrialization and export earning is aligned to Ready-made garment
industries.
According to Michael E. Porter, Professor at Harvard, “the competitiveness of nations depends on their
economic creativity. Economic creativity is measured using technology index, innovation index and
transfer of technology index and a business start-up index. The start-up index includes the ease of starting
a business, access to loan capital without collateral and access to venture capital.
According to prevailing thinking, labor costs, interest rates, exchange rates, and economies of scale are
the most potent determinants of competitiveness. Entrepreneurs expect more government support for
different industrial segments. In industries level, companies try to be competitive with scale of production
and vertical integration through merger, alliance, strategic partnerships, collaboration, and supranational
globalization.
The competitiveness is also expected in business environment and the sophistication of industrial
technology as well as inter-sectorel cooperation. The business environment is the policy and institutional
point of views and laws in place to create an enabling business environment. The business environment is
now global environment due to globalization and integration to global value chain. It also includes “an
expanding base of domestic enterprises able to compete globally; thus, competitiveness is sustained and is
generally accompanied by rising incomes” (UNCTAD, World Investment Report, 2002).
According to a researcher, competitiveness attained with the increased productivity of a nation’s
enterprises as well as though increases in value-addition. To achieve these continuous increases in value-
addition, enterprises must transform their ways of competing. They must shift from comparative

2. advantages (i.e. low-cost labour, etc.) to competitive advantages, namely the ability to compete on cost
and quality, delivery and flexibility.
Some experts have described three stages in competitiveness: (1) catching up, (2) keeping up and (3)
getting ahead. According to Efendioglu, strategic competitiveness has two main aspects: the ability to stay
close to the frontier of technology and of integrated international production systems and the capability
and flexibility to accommodate change in old and new industries (catching up/keeping up). Bangladesh
garment industries still making non-brand, traditional and low cost garments without much change in
design and test. This sector is surviving without any R&D and innovation.
Competitiveness has been taken up with top priority by the global studies by world Bank and other
organizations. They use to study and publish annual report on competitiveness of most of the countries.
Some of these reports are by UNCTAD’s World Investment Report (WIR), and the Global
Competitiveness Reports, published by the World Economic Forum. The Global Innovation Index
captures elements of the national economy that enable innovative activities: (1) Institutions, (2) Human
capital and research, (3) Infrastructure, (4) Market sophistication, and (5) Business sophistication. Two
output pillars capture actual evidence of innovation outputs: (6) Knowledge and technology outputs and
(7) Creative outputs. The Global Innovation Index 2017 measures the Bangladesh ranking at 114 in the
Global Innovation Index (GII) in 2017 among 127 countries. She ranked 99 out of 137 countries in the
Global Competitiveness Index (GCI) 2017-18 by the World Economic Forum. In 2016, global FDI flows
decreased by 2% to $1.75 trillion owing to weak economic growth and significant policy risks perceived
by multinational enterprises. The present domestic investment of Bangladesh is much below the target of
35 per cent of GDP that is required for achieving more than 10 per cent growth as is expected. It is
universally agreed that important element in improving competitiveness is building domestic capabilities.
Competitiveness is dependent not only on macroeconomic adjustments or natural endowments but also on
the ability to achieve high productivity by deploying and using these assets (human resources, and capital
and physical assets) in the most effective manner.
Moreover, the macroeconomic fundamentals right will not necessarily lead to competitiveness,
particularly if the enterprise sector is weak that is if there is little or no productive (supply) capacity. As
Porter says, “For sound policies at the macro level to translate into an increasingly productive economy,

3. then parallel microeconomic improvements must take place”. New patterns of competition require active
micro policies and measures aimed at shaping new industrial locations; and enterprises have to restructure
activities and facilities and acquire skilled labour.
Bangladesh use to promote market of garment to the global buyers branding as the “cheapest source
labour”, although cost of labour is not the single most important indicator of competitiveness. The means
of competitiveness are consists of management, technology and skill of labour. Among the drivers of
competitive industrial performance and capability are the technological effort as shown by research and
development expenditures by productive enterprises or technology imports and infrastructure.
Some countries do well on the technology index but fall down on the ease of starting a business. The WB
sponsor Doing Business study found that the rank of Bangladesh is 122. The competitiveness is that
competitive advantages are to a large extent created by deliberate collective action rather than being mere
products of the invisible hand of the market but through systemic competitiveness. Competitiveness is a
systematic and collective action of government and regulatory authorities and constant development of
technology and skilled manpower and efficient entrepreneurship. The concept of systemic
competitiveness seeks to capture both the political and the economic determinants of successful industrial
development. It refers to a pattern in which state and social actors deliberately create the conditions for
successful industrial development.
The systemic competitiveness is characterized by two distinguishing features. First, it emphasizes the
significance of the meso level (location, size, or scale of different indicators) in addition to the micro and
macro levels.
The meso level includes local systems, both policies and supporting institutions. Second, the most
important aspect of systemic competitiveness is the interaction or connectivity among the various actors
at the various levels and their collaboration in the design and implementation of policies and support
institutions and programmes.
The national competitiveness is total competitiveness of business units. According to Altenburg et al.
(1998), business unit competitiveness is the ability to sustain a market position by, inter alia, supplying
quality products on time and at competitive prices through acquiring the flexibility to respond quickly to
changes in demand and through successfully managing product differentiation by building up innovative

4. capacity and an effective marketing system. The difference between the competitiveness of anenterprise
and that of a nation is that the enterprise will cease to exist if it remains uncompetitive for long whereas a
nation never goes out of business no matter how badly it is managed or how uncompetitive it is.
Different Global survey of Bangladesh such as World Competitiveness index and Corruption index and
Cost of doing business are suggesting that Bangladesh is not a competing location of investment.
According to World Investment Report 2016 of the United Nations Conference on Trade and
Development (UNCTAD), FDI inflows to Bangladesh rose by 4.38% to $2.33 billion in 2016, which was
$2.23 billion in 2015. Both domestic investment and FDI is really frustrating.
Any nation cannot prosper in the globalized economic arena without competitiveness. The main goal of a
competitiveness strategy is to improve the structural position of the country in the global economy by
upgrading current activities and incorporating new skills and capita intensive activities. A national
economic development vision should be based upon a consensus among the national stakeholders and an
awareness of both the national goals and the steps that have to be taken to achieve them. This should
begin with stocktaking in terms of strengths and weaknesses of existing policies, programmes and
structures at the macro-, mesoand micro-levels. Then, on the basis of the stocktaking, the stakeholders
should design policies and programmes that contribute to increasing the value-added of national
production.
The lack of competitiveness is reflectsprimarily in its deteriorating welfare conditions rather than
elimination from the market. There reflected in wages of labour, working environment and other social
factors. There is global concerned of working condition (Rana Plaza) and growing concern of buyers
about labour rights and other human rights in Bangladesh.
There is a trend of taking over of small garment factories by big factories and also number of garment
units is reducing but the production is increasing in Bangladesh. There is no visible investment from
home and abroad. This is another sign of moving towards less competitiveness. The creations of new jobs
are declining, according to latest study of BBN. All these indicate that garment industry is not competitive
and sale of low cost garments to overseas buyers have negative impact on wages, working and human
right condition and employment.
Companies achieve competitive advantage through acts of innovation.

5. They approach innovation in its broadest sense, including both new technologies and new ways of doing
things and policy support with finance and other logistics for survival of SMEs in garment sector.
Bangladesh garment started with private initiative of entrepreneurs namelyMr Zakaria Bhuiyan and Mr
Md Riaz and subsequently given a big boost by Ex-CSP Mr Nurul Quader, who influenced the
government to accept the landmark reform of with introduction of ‘bond license’ and ‘back-to-back Letter
of credit’ etc. These reforms are swallowed by authorities without amending the Customs Act 1969 and
Foreign Exchange Regulation Act, 1947.
The Garment sector demands further systemic competitiveness support from government and others
stakeholders.