Bangladesh's heavy reliance on RMG 'very risky': ADB chief economist

Bangladesh's concentration in a single sector, the ready-made garments industry, for exports is "very risky" for its economy, the chief economist of the Asian Development Bank (ADB) said today.

The country needs to think about opportunities to upgrade within the value chain, said ADB Chief Economist Albert Park on the sidelines of the 59th Annual Meeting of the Board of Governors of ADB in Samarkand, Uzbekistan, which concluded today.

He made the comment in response to a query at a media briefing unveiling the Asian Development Policy Report on Global Value Chains and Inclusive Development at the event.

Neil Foster-McGregor, ADB's principal economist, presenting the main findings of the report, said despite recent tensions, global value chains remain resilient, with developing Asia and the Pacific playing a growing role.

"The benefits from global value chains are real but uneven — driving growth and poverty reduction, but not equally across economies, firms and workers," he said.

Gains are increasingly concentrated in large firms and in capital-intensive, higher-value activities, reflecting capability gaps, he said.

As global value chains reconfigure, competitiveness will hinge on resilience, sustainability and firm capabilities, not just low labour costs, Foster-McGregor said.

The ADB chief economist said Bangladesh has done very well in garments, but that it is a very labour-intensive activity with little upgrading to higher value-added activities.

"And also, for Bangladesh, there's such concentration in this one export sector that I think it's very risky for the economy if something unexpected occurs that really hampers that sector, as we've seen in the past."

"So it would be good to try to diversify into other sectors and create openness for other sectors to import inputs without tariffs. The same kind of treatment that ready-made garments get should be extended to other sectors to expand opportunities."

"And meanwhile, really think about opportunities to upgrade,” Park said.