“Bangladesh trails India and Vietnam in embracing automation and AI”: M. Masrur Reaz, PEB

M. Masrur Reaz, Chairman and CEO of Policy Exchange Bangladesh (PEB)

“The need of the hour for the RMG industry is to embrace Industry 4.0 technologies such as big data, analytics, AI and machine learning,” argued M. Masrur Reaz, Chairman and CEO of Policy Exchange Bangladesh (PEB). He earlier worked as a Senior Economist in the Finance, Competitiveness and Innovation (FCI) Global Practice of the World Bank Group (WBG) where he served for ten years during 2010-20. He also served as the Programme Manager/Head of Bangladesh Investment Climate Fund (BICF), a flagship initiative of World Bank Group that helped strengthen the economic competitiveness of Bangladesh.

“The main goal of PEB is to help boost economic growth in the private sector, especially high priority sectors such as the Readymade Garments (RMG) industry,” said M. Masrur Reaz. In a bid to support the RMG industry, he explained that PEB focuses on three core areas: analytics, public-private dialogue, industry collaboration and advisory support for investors.

First, PEB often carries out detailed studies to understand the RMG sector better. This includes reviewing policies, analysing markets and emerging trends, studying regulations and identifying gaps that need to be addressed to improve the industry. Secondly, it works closely with different stakeholders like manufacturers, policymakers, buyers, trade groups and

other key players. By sharing research findings and discussing challenges, it aims to raise awareness about the issues facing the industry. Finally, PEB provides direct help to investors. This includes sharing market insights, helping them plan growth strategies, guiding them on entering markets and navigating complex regulations.

In an interview with Apparel Resources, M. Masrur Reaz shared insights into PEB’s efforts to support the industry and address its key challenges. Here are the edited excerpts.

 AR: What are the pressing challenges facing the RMG sector in Bangladesh?

Masrur Reaz: The RMG sector is confronting several significant challenges, especially with Bangladesh’s potential graduation from the Least Developed Country (LDC) status in 2026. This transition could lead to the loss of the Generalised System of Preferences (GSP), which is concerning since about 50 per cent of our RMG exports go to GSP-enabled countries. Additionally, European Union partners and other buyer nations are revising their regulations related to compliance, environmental sustainability, social standards, human rights and governance. The fragmentation of compliance requirements from different buyers complicates operations and leads to inefficiencies.

AR: With sustainability becoming a competitive advantage, how is PEB equipping the RMG sector to meet stringent international compliance requirements without burdening manufacturers?

Masrur Reaz: We’re deeply committed to advancing sustainability and a key focus for us is promoting the transition to circular economy. While the world acknowledges the importance of recyclable materials in driving sustainability, Bangladesh still has some catching up to do. We face significant challenges including a lack of supportive policies, limited access to advanced technologies, gaps in skills and inadequate investment.

To address these issues, we’ve partnered with Chatham House, a respected foreign policy think tank in the UK, to help facilitate Bangladesh’s transition toward a circular economy. Together, we’re conducting thorough assessments of the current policy landscape to understand its strengths and identify areas that need improvement.

In partnership with Chatham House, under SWITC2CE program delivered by the United Nations Industrial Development Organisation (UNIDO), which operates in seven countries globally, we have prepared a detailed report outlining the current state of policies affecting circular economy factors in the RMG sector. This report highlights critical policy gaps and offers targeted recommendations for reforms. We have shared the report with key stakeholders, including the Bangladesh Government, the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) and other garment-related entities.

One of our key strategies is to help consolidate our buyers into a unified platform. Bangladesh had success in the past with a buyers’ forum established between 2005 and 2007 to create labour standards, which helped eliminate child labour and improve working conditions. In light of the current challenges related to Environmental, Social and Governance (ESG), Human Rights Due Diligence (HRDD) criteria, it is essential to bring our buyers together again to streamline compliance requirements and strengthen the resilience of the RMG industry.

AR: With technological advancements like AI, robotics and smart textiles shaping global fashion, how is PEB preparing the RMG sector to adopt and benefit from these trends?

Masrur Reaz: Technology is critical for improving management, monitoring, evaluation and operational efficiency. Unfortunately, Bangladesh, particularly its RMG sector, has lagged behind countries like India and Vietnam in adopting basic automation and advanced technologies such as AI and robotics.

PEB is focused on presenting compelling arguments to policymakers and industry leaders about the need for technological adoption. We highlight the benefits of improved operational efficiency and competitiveness while also emphasising the risks of inaction. By fostering dialogue amongst stakeholders from both public and private sectors, we aim to create a collective vision for a technologically empowered RMG sector.

AR: This year, PEB and Metropolitan Chamber of Commerce and Industry (MCCI), Dhaka launched Purchasing Managers’ Index (PMI) in Bangladesh. Can you explain its significance?

Masrur Reaz: The PMI, a collaboration between PEB and the Metropolitan Chamber, is a vital tool for gauging the dynamism in economy. It helps businesses make informed investment decisions and provides policymakers with insights into areas that require attention. This is the first implementation of PMI in Bangladesh, supported by the British Government’s Foreign, Commonwealth and Development Office (FCDO). We are conducting the PMI in technical partnership with a Singaporean organisation that has successfully implemented this tool in various East Asian countries, providing us with vital technical expertise.

The PMI currently focuses on four key sectors: manufacturing, agriculture, construction and services, with manufacturing focus including the RMG industry. Recent findings indicate a slight uptick in manufacturing activities from October to November, which is a positive trend for growth.

AR: How does the PEB ensure that the voices of small and medium-sized enterprises (SMEs) in the RMG sector are heard in the policy-making process? Are there mechanisms in place to gather input from these stakeholders?

Masrur Reaz: For an effective policy, it is essential to assess its impact. To gauge this impact, we utilise a business environment index developed by the Metropolitan Chamber PEB, which is called Bangladesh Business Climate Index. This index, inspired by the World Bank’s Doing Business report involving 190 countries, is specifically tailored to reflect the unique business landscape of Bangladesh. The Bangladesh Business Climate Index evaluates multiple sectors, with insights drawn from small, medium and large enterprises across approximately 10-11 sectors, including the RMG industry. Businesses provide feedback across 11 critical pillars, such as the ease of starting a business, tax challenges, access to land, infrastructure issues, the overall business environment, access to finance and the resolution of business disputes. An annual overview synthesises this feedback, offering a comprehensive assessment of policy effectiveness or shortcomings.

In the context of the RMG sector, understanding the experiences and challenges faced by garment manufacturers and exporters is crucial. Their feedback not only indicates whether current policies are fostering a conducive business environment but also highlights areas needing reforms.

Moreover, transparency in policy formulation is vital. Engaging stakeholders throughout the policy formulation and refom process ensures that their perspectives are considered. We facilitate dialogues with RMG industry representatives to gather their insights and feedback on proposed policies.

Related

Stay updated on your topics of interest with our handpicked news and articles.

Submit

_{Images are for reference only.Images and contents gathered automatic from google or 3rd party sources.All rights on the images and contents are with their legal original owners.}