At least 402 ready-made garment factories in Bangladesh closed during the three years between July 2023 and June 2026, according to Commerce Minister Khandakar Abdul Muktadir.

The commerce minister disclosed the figure in parliament while responding to a question from MP Ruhul Amin during a question-and-answer session at the Jatiya Sangsad.

Of the factories that closed, 282 were members of the Bangladesh Garment Manufacturers and Exporters Association, or BGMEA.

Another 120 were members of the Bangladesh Knitwear Manufacturers and Exporters Association, or BKMEA.

Muktadir cited a June 22 report by BGMEA while presenting the figures.

According to the minister, the closures resulted from a combination of international and domestic economic pressures rather than a single factor.

He identified the effects of the COVID-19 pandemic, the Russia-Ukraine war, conflict in the Middle East, the United States-Iran war and the broader global economic slowdown among the external pressures affecting the industry.

Domestic political instability and a liquidity crisis in Bangladesh’s banking sector were also identified as factors affecting garment businesses.

The minister further pointed to changing international trade conditions.

Free trade agreements secured by competing garment-producing countries such as India and Vietnam with European markets have increased competitive pressure on Bangladeshi exporters.

Foreign buyers have also increasingly preferred placing orders with larger suppliers rather than small and medium-sized factories because managing and monitoring a smaller number of suppliers can be easier.

The government has introduced a number of measures intended to support the garment and textile industries amid these challenges.

These include alternative cash assistance of 1.50 percent in place of customs bond and duty drawback facilities for eligible export-oriented domestic textile industries.

Textile exporters to the Eurozone have also been provided an additional 0.50 percent special support on top of the existing 1.50 percent assistance.

The minister said an additional 3 percent benefit has been provided to small and medium-sized enterprises in the export-oriented RMG industry.

The support covers businesses involved in knitwear, woven garments and sweaters.

A further 0.30 percent special cash assistance has also been provided to the RMG sector.

Bangladesh’s approaching graduation from least developed country status represents another major challenge for exporters.

Muktadir said the transition to developing-country status would result in Bangladesh losing preferential market access available under various trade schemes in developed economies.

Exports worth approximately $17.5 billion could potentially be affected by the loss of those preferences, according to the minister.

The government is therefore pursuing new bilateral and regional trade arrangements to preserve and expand market access.

Bangladesh has already concluded an Economic Partnership Agreement with Japan.

Discussions are also under way on a Comprehensive Economic Partnership Agreement with South Korea.

The government is pursuing or considering EPA, CEPA and free trade arrangements with other major markets and trading blocs.

These include the European Union, the Regional Comprehensive Economic Partnership, the United Arab Emirates, Singapore, Indonesia and China.

Export-market diversification is another part of the government’s strategy.

The authorities are working to reduce tariff and non-tariff barriers through bilateral trade agreements while encouraging exporters to enter new markets.

A 2 percent special cash incentive has been continued for exports of new products and expansion into new textile markets outside the United States, Europe and Canada.

Bangladesh’s overseas missions have also been instructed to explore additional opportunities in Asia, Africa and South America.

Japan, India, South Korea and China are among the Asian markets receiving particular attention.

The Export Promotion Bureau is also working to diversify both Bangladesh’s export basket and its overseas markets.

As part of those efforts, the bureau is organising the Global Sourcing Expo in fiscal 2025-26 along with sourcing fairs focused on individual products.

The government is also seeking to strengthen economic diplomacy through Bangladesh’s missions abroad.

Commercial wings at those missions are expected to play a greater role in promoting Bangladeshi products, identifying potential buyers, increasing exports and opening new markets.

The closure of 402 garment factories nevertheless highlights the pressure facing an industry that remains central to Bangladesh’s export economy.

The coming transition from LDC status, changing global trade arrangements and increasing competition mean the sector will need to adapt while maintaining competitiveness in its traditional markets and expanding into new ones.