Role of Infrastructure to ensure Productivity and Sustainability

For all business stakeholders, infrastructure (transport and utilities supply) is the single largest
issue hampering Bangladeshs RMG industry. Buyers today are forced to carefully select the type of
products to source from Bangladesh, since congested roads, limited inland transport alternatives, Gas
and Electricity shortage and the lack of a deep-sea harbor add inefficiencies to garment lead time.
According to The World Economic Forums 2013-2014 Global Competitiveness Report ranks
Bangladeshs infrastructure 132
nd
out of 148. Therefore its quite impossible to consider the long term
viability of Bangladesh as a major garment production center without addressing significant gaps in the
countrys infrastructure.
With the aim to move toward sourcing more fashionable, shorter lead time items in Bangladesh,
reliable and fast transport is becoming extremely important. The transport and Electricity issues need to
be solved quickly in order to avoid a collapse in the transport network as volumes continue to grow.
Transportation: As the RMG industry is highly dependent on the Dhaka-Chittagong highway and
Chittagong harbors as the only main transport routes, the following examples of current issues are
already limiting the efficiency of Bangladesh garment industry:
The highway is often congested as capacity planning falls behind demand, increasing
transport time to Dhaka to Chittagong up to 18 hours.
Lead time for sea freight increased by about ten days due to lack of a deep-sea harbor.
Productivity at Chittagong port suffers from inefficient processes (like manual
processing), limited crane capacity, and strikes that sometimes span several days at a
time.
The Dhaka-Chittagong train connection offers limited capacity (offering only 120
containers per day) although experts estimate a tenfold capacity need.
At the moment, suppliers are making adjustments and manage around these issues by incorporating
additional transport days into planning building very close relationship with transport companies,
making drivers more accountable and by using tracking system to achieve full transparency of their
products movement at all times.
Bangladesh Government plans to expand the Dhaka-Chittagong highway to four lanes, prepare long-
term efforts to establish a deep-sea port in Chittagong, improve efficiency at Dhaka airport and double
the train container transport capacity.
Electricity and Gas: Power shortage and power black outs contribute to manufacturing delays, which
often lead to excessive overtime and increased costs that cause owners to hollow out wages benefits.
The county currently is unable to meet the rising demand for electricity. According to The World Bank
estimation in 2010 that only about 47% of households have the access to electricity, Electricity supply
meets less than 75% of peak demand and gas supplies meet less than 85% if daily demand. The world
Bank in Dhaka also pointed out that permanent solution require large investment of around $1.5 billion
per year or more over the next ten years is needed for gas and power sector investments.
The power supply issue seems more likely solvable within the next two or three years, although 90% of
local suppliers rate the current energy supply as very poor. Today many factories are investing a huge
amount to ensure having a constant power supply and they are using own generators in order to remain
independent of the public energy supply. However, the issuing of gas license has been limited, leading to
delays in manufacturers expansion plans.
According to Bangladesh Government, improving the countrys energy supply is a core topic for the
current government. Within the last two years, more than 2000 megawatts of power have been added
to Bangladeshs network, new contracts for 34 power plans have been awarded and negotiations for a
joint electricity grid to enable power trade in the region are under way.
Export Processing Zones: There are currently 425 enterprises inside 8 EPZs and 73 are under
construction. Global apparel brands have their production in the zones. Approximately 382000 workers
are currently employed in the EPZs, with an estimated 300000 workers employed in garment factories in
the zones. Well the objective of the EPZs is to attract foreign investment and create jobs. For that reason
the Government provides numerous incentives for companies to open factories in these zones. The
zones offer multiple advantages compare to other locations when it comes to workplace safety. Purpose
built buildings and uninterrupted supply of oil, gas and electricity in the zones improve safety conditions.
Thats why there was no fire accidents have occurred in any EPZ facility and no building has collapsed.
Therefore it remains to be seen if the improvements planned by the government can be financed,
implemented quickly enough and are sufficient in their form to avoid a possible transport network
collapse. The countrys past success rate in finalizing projects on time raises some doubts about a quick
solution for the infrastructure issue.
Therefore its quite clear and easy to say that Infrastructure plays a vital role to productivity and
sustainability. Therefore for Infrastructure development our recommendation is suppliers knowledge
should be increased about the technological advantage. To do this, buyers can keep the condition during
supplier selection that, suppliers have to have the technological facilities to be selected; like internet
connection in the suppliers plant. Fabric testing technologies are not sufficient in Bangladesh. There
are some sophisticated fabrics that are not possible to test by the existing facilities of laboratory. So,
laboratories with the latest technology should be set up in Bangladesh. Necessary computerized
technology may be set up in the suppliers plant area to launch the digital sampling system. Besides
these, different kinds of software, bar code labeling, and EDI and RFID technology should be set up at
suppliers own initiatives to decrease the lead time.