For decades, the readymade garment (RMG) sector has been the heartbeat of Bangladesh’s economy, making up over 80 percent of our export earnings and providing a livelihood to millions. However, as we stand on the threshold of our graduation from Least Developed Country (LDC) status, the very foundation of our success is meeting uncertainty. The "cheap labour" narrative that enabled us to become the world’s second-largest apparel exporter is no longer a sustainable strategy. To survive in a post-LDC world, Bangladesh must shift from a model based on low wages to one defined by high efficiency, technological sophistication, and social accountability.
Compounding the pressure of LDC graduation is the ongoing conflict in the Middle East, which has pushed our industries further towards uncertainty. This is a matter of the physical and structural disruption of the global supply chain, and is affecting our RMG sector. The ongoing Middle East war and tensions in the Strait of Hormuz create a geopolitical pincer that directly threatens Bangladesh’s shipping logistics.
On the export side, the war in the Middle East has forced vessels to reroute around the Cape of Good Hope, adding approximately 14-25 days to transit and causing freight costs to skyrocket. Simultaneously, the volatility surrounding the Strait of Hormuz creates an energy bottleneck. Bangladesh relies on the Middle East since it is the key route for fuel and LNG imports, meaning any escalation in this region directly hits the boiler rooms of RMG factories.
The disruption of air-freight operations by major carriers from Qatar, Kuwait, Oman, and the UAE has further strangled our primary routes to the EU. With seaports facing delays and cargo shipments suspended, the timely delivery of goods has become a risk that threatens the stability of our entire economy. Beyond these immediate disruptions, another major challenge—a potential “tariff cliff”—is also impending that could undermine our market share. Bangladesh currently enjoys duty-free access to major markets, including in the EU—which will continue for three years after graduation, until 2029. But after that, we stand to face tariffs of nine percent to 12 percent in the EU unless we qualify for GSP+.
Furthermore, post graduation, we will have to meet global benchmarks for labour rights, environmental sustainability, and corporate governance which are essential for ethical and inclusive growth. But these will also increase production costs.
A regional reality check
While Bangladesh offers the lowest wages ($115–$135 monthly) in the region, we suffer from the longest lead times—around 90-120 days on average—which is a major competitive disadvantage. There is a direct correlation between technology, speed, and better lead times. China leads in this regard with $165.2 billion in exports, high monthly wages ($500-$800), and a 30- to 45-day lead window. Vietnam pays a monthly wages of $250-$350 with a 45- to 60-day turnaround driven by high-level automation transitions, while Turkey utilises AI and digital tools to achieve a 20- to 30-day lead time. India ($16.4 billion in exports) and Cambodia ($9.9 billion in exports) maintain lead times of 60-90 days, with India utilising specialised automation and its cotton base, while Cambodia operates with low-to-moderate automation. Even Indonesia ($8.7 billion in exports) delivers in 45-75 days as an emerging player. China and Vietnam can pay their workers significantly more yet maintain dominance because their vertical integration and automation allow them to deliver products in half the time it takes Bangladesh. Our lead time is primarily consumed by the import of raw materials, a dependency we have yet to break from.
Automation, energy, and labour displacement
Technology adoption in Bangladesh’s RMG sector remains fragmented. While spinning, dyeing, and printing are largely automated, sewing, finishing, and packaging operations are still semi-automated or fully manual. Recent studies suggest that up to 30 percent of RMG workers are less needed due to automation. While this increases accuracy, it also causes a massive displacement of low-skilled labour. This requires thoughtful government intervention to ensure just transition for the workers. Additionally, SMEs operate as third-party producers with weaker enforcement of labour standards, wages, and safety regulations—creating a two-tier industry—that is particularly vulnerable in the post-LDC era.
Bangladesh’s RMG sector is fundamentally dependent on gas and electricity, both of which are currently on the verge of significant disruption due to the unrest in Middle East. With nearly 90 percent of fuel and LNG imports originating from the Gulf, escalation in the Iran-Israel-US tensions directly impacts the industrial zones of Gazipur and Narayanganj, introducing a profound level of uncertainty into the production process.
Perhaps the most concerning aspect of the RMG transition is the increasing gender gap. Historically, the sector played a central role in female economic empowerment. As factories move towards advanced machinery, a gender skill mismatch has emerged. Technical jobs—including operating machines that pay higher—tend to go to men while women are more likely to get manual jobs—such as helpers, taggers, folders—that are increasingly at risk of being automated. As the manual roles decline, women are at risk of being displaced, while the new, higher-paying technical jobs are filled by men. Without a targeted intervention—including technical training for women—our RMG success will no longer be a story of female empowerment.
To make 2026 a milestone rather than a setback, we must adopt a multi-pronged strategy. First, we must drastically reduce lead times by investing in local Man-Made Fiber (MMF) production, so we no longer wait months for imported fabric. Second, the government and Bangladesh Garment Manufacturers and Exporters Association (BGMEA) must launch large-scale technical training specifically for female workers to ensure they can transition into technical roles. Third, we must create funds to help SMEs upgrade their technology, so they aren't left behind. Fourth, healthcare, insurance, and retirement must be institutionalised to meet post-graduation governance standards. Finally, we must diversify our energy sources and explore alternative maritime and air-freight routes to bypass regional choke points.
The RMG sector will remain our backbone, but it must evolve. We can no longer win by just being the cheapest; we have to be the smartest. Our competitors in China, Vietnam, and Turkey are already using technology to move ahead. To survive, we must stop seeing machines as a threat and start seeing them as a tool for a more skilled, better-paid workforce.
Dipa Das is research associate at South Asian Network on Economic Modeling (SANEM). She can be reached at [email protected].
Views expressed in this article are the author's own.
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