Intro and Case Brief:

Due to the global COVID-19 pandemic and trade war between China and the US, investors are relocating their
businesses. This is why China is likely to see tough competition from countries like Vietnam, India and
Bangladesh in the post pandemic era. This study shows how we can seize the opportunity and be a frontier in
the market of different sectors, primarily apparel and car manufacturing. The general approaches to attract
foreign direct investment can be applied in other sectors as well, and we believe these are capable of bringing
success.

Figure: The Business world with COVID-19.

General approaches for increasing FDI inflows in Bangladesh when COVID-19 pandemic
passes out of sight:

● Reduce Restrictions on FDI:​ Impose transparent conditions for both foreign and domestic firms, which
include but not limited to, flexible labor market, intellectual property rights, access to imports, and so
on.
● Form an Investment Promotion Agency (IPA):​ The role of this body will be to target appropriate
foreign investors and bridge the gap between them and the domestic market. Moreover, it might work as
a catalyst in Bangladesh to provide top-notch infrastructure and a high-skilled labor force as per the
requirement of investors. Existing IPA's can be provided with enhanced resources.
● Build a Top-Notch Infrastructure:​ This includes adequate transport facilities, reliable sources, and
supply of energy, a sufficiently skilled labor force, and so on.
● Set Up a National Skill Development Authority:​ This will prepare and evaluate adequately skilled
labor force for the tech-based industry.
● Increase Competitiveness among Local suppliers:​ Enable competitive pressure of foreign investors
on domestic suppliers to create competitiveness of the latter.
● Encourage the first time FD investors.
● Build smart cities/EPZs in strategic locations and enhance the resources of existing ones.
● Seek external donors from developing countries and financial institutions to better support the programs
of FDI.
● Lessen Barriers for Foreign Investors: We need to focus on reducing corruption, poor governance, and
especially complex bureaucratic procedures to attract more FDIs.
Objectives of Supply Chain in Different Sectors:

● Making quality product

● Minimizing Inventory and warehousing cost
● Accessible to world-class resources
● Synchronizing supply with demand value
● Operational Flexibility
● Competitiveness and more efficiency
● Reliable & flexible logistics support
● Knocking off all working process
● Delivery on time
● Creating Net value

Attracting FDI in Car Manufacturing Sector:

Given world-famous car manufacturing companies set up their assembling plants in Bangladesh, that would
boost the employment of local people, and return on products depict a huge prospect in the country’s economy.
We should definitely refrain from manufacturing a diesel or petrol engine while the world is advancing with
green electric vehicles.

Mitsubishi has assured to gradually transform its local plant to a full manufacturing plant, and already a good
number of foreign automobile companies reached a consensus with local businessmen to set up assembling
plants.

Bangladesh Auto Industries Limited (BAIL) is all set to produce electric vehicles with a preliminary investment
of $200 million, wherein 80% of the investment will be gathered locally, and 20% will come as an ​FDI​. The
total investment is likely to reach $1 Billion within five years.

Figure: Locally manufactured SUV.

The proposed plant will be located at ​Mirsarai Economic Zone, Chittagong. ​This ​strategic location​ will help
gather pieces of machinery, labor force, and other logistical components. The plant will also manufacture 60%
of the components of the vehicles eg. motor, lithium-ion battery, software platform, body and chassis​ by itself
to​ ​cut down a major portion of importing costs.

The company will offer the vehicles at a relatively cheaper price than existing cars in the market. In fact,
globally the market of EV is on the rise as it’s cheaper, and cuts down fuel and energy cost by a huge margin.
All fossil-fuel cars are likely to be replaced by EVs in the next 25 years, and the market size currently stands at
$30 trillion. Therefore, there is a significant local and global potential in this sector.

China is a leader in the EV market and given investors are leaving China, we have a chance of ​seizing the
opportunity of the frontier in the market. ​ How do we do so?

● Increase the percentage of locally-produced components for vehicles to cut down importing costs.
● Integrate 4IR eg. IoT devices to automate the production to the highest possible extent.
● Carry out joint R&D with local and foreign experts in the field.
● Build a web portal for co-creation and recommendations on product and ecosystem development to
make the environment more inclusive.
● Provide after-sales service and spare parts, which ensures the resale value of the vehicles.
● Forming a national skill development authority to ensure a tech-based skilled labor force.
● Collaboration with leading companies in the EV market.
● Follow other ​general approaches for attracting FDI​.
Present scenario of Apparel industry in Bangladesh:

Bangladesh​ exports apparels worth $5 billion annually to first world nations. It also provides satisfactory
quality levels, particularly in mid market products at the value and entry-level. Till today, cheap manual labor
remains our biggest competitive strength in attracting foreign buyers. Besides, cheaper labor costs, raw
materials, real estate costs and duty advantages help us attract foreign investors. Bangladesh is benefiting from
numerous trade agreements providing tax-free entry into many countries.

There are some problematic issues in our apparel industries that we need to identify effectively:

1. Inefficient infrastructure, eg. transportation and energy supply.

2. Insufficient skilled labor force.
3. Less access to raw materials and reliance on import.
4. Communication gap between buyers and suppliers.
Problem specification in the role of SCM​:

Areas of improvement in the Apparel Sector:

Figure: Room for improvement and changes need to be made in percentage to attract FDIs in apparel industry
1.Training Program:​ If we want to meet the demands of the RMG sector in the near future, cheap labor will no
longer be the only factor in attracting buyers. This is why training programs can be arranged to train apparel
staff management, communication, and specialized skills. Focuses can be put on safety measures as well.

2.Spinning Mills:​ We can make our RMG sector more dependent on the local suppliers through the following
steps:
● Decreasing the taxes on importing cotton.
● Continuous supply of gas in the spinning mills.
● By increasing the taxes on importing fabrics and yarns.
● Developing strong spinning, weaving, and dyeing factories to meet the demand of the Garments sector.
Thus we can encourage our garment industries to buy fabrics and yarns from the local spinning mills and lessen
reliance on import.

Figure: Development in RMG sector with integration of SCM

3. Electric Power Plant:​ Apparel industries face a lot of problems due to a lack of continuous power supply.
Hence we need to build power plants that will be dedicated only to the Apparel industries. Moreover,
substations can be integrated at garments as well.

4.Transportation Challenge:​ There are many challenges in the whole transportation process. This includes,
but not limited to :

● Container backlog in Chittagong port.

● Political unrest creating road hazard for transportation to and from factories to Chittagong.
 ● Long traffic jams on the highway, causing a delay for delivery.

The greatest challenge in the Apparel sector is to reduce the Lead time of the delivery. So we need a quick
transportation process. We need to develop our roads as well as building warehouses in the port city so that the
quality of the product doesn’t decrease.

5. Safety issues:​ A lot of buyers are unwilling to buy RMGs from Bangladesh because of the lack of safety of
the workers. So we need to keep in mind the safety precautions in order to attract new buyers.

6.Addressing 4IR in the apparel sector​:​

In the apparel sector, we need to implement the concept of the 4th industrial revolution to attract more FDIs.

Figure: Main pillars of 4​th​ Industrial Revolution .

Installing the 4IR machine:​ ​In order to​ install the 4IR machines, we need to hire a handsome amount of
experts in our apparel industry.

Implementing the IoT(Internet of things) services​:​ Industry 4.0 Supply Chain fully leverages IoT for agile
operations with greater visibility and transparency, as well as for horizontal and vertical collaboration.

Full integration of advanced analytics:​ ​The supply chain Industry 4.0 uses advanced analytics and big data to
provide end-to-end (E2E) tangible information from the manufacturer of raw materials to the end consumer.
Up-to-the-minute data is available to promote real-time decision-making and to bring visibility within and
outside the entire supply chain. We can create a common platform using a robust data integration network that
spans distinct departments like engineering and customer services.

Reliance upon cloud computing​: ​With the arrival of the new pattern of the cloud computing system, It’s
constantly producing insights in real-time, requiring incredible speed and precision, not to mention the capacity
for instant access and E2E visibility. By connecting all the parties of the supply chain in the cloud saves time
and money, and also increases efficiency. By using this technology, the brand is informed immediately and has
plenty of time to decide the right thing to order as soon as possible.

Visibility for all Stakeholders:​ Companies can be monitored from the individual machine view all the way up
to global corporate controls with long visibility.

Using Sewbots for manufacturing​:​ Sewbots created by American company software automation can be used
in the apparel industry for mass production and reduce the lead time operation. It will help BD produce more
cotton locally. Higher productivity, holding & operating cost, more flexibility, increased order fulfillment is
achieved through shorter lead times.

Cybersecurity and privacy issues:​ ​Industry 4.0 uses data exchange as a mode of faster transformation through
cloud computing. However, it is a matter of the fact that data can be lost or manipulated as it has some values.
We need to control and make privacy for the access of data.

Impact of 4IR on Business:

New innovations improve the durability and longevity of assets while data and analysis transform their
management.
Solving the unemployment problem in apparel industry:

Figure: Utilizing labor force in different sectors.

Electric Power Plant:

In order to utilize the workforce who might lose jobs due to integrating 4IR, we may transfer them to other
sectors such as electric power plants and waste management plants. We need sufficient power in order to make
our production smooth. That’s why we need respective private power plants or substations at our garments in
order to operate the newly installed machines. We can transfer the labor forces who are out of work from the
factories to the electric power plant. We need to train them and make them confident enough to operate those
plants. The additional electric supply can be added to the national grid system.
Waste management plant:

Figure: Total waste of RMG sector( in %).

From the apparel sector, every year, 5,00,000 tons of waste material(yarns, cutting scraps, cut pieces, roll ends,
overproduction, rejected pieces and garments, etc.) leftover which can be calculated as much as 47% of the total
raw material input of RMG. We can recycle them in waste management plants and make “Jhuta” processing of
the Bangladesh clothing industry. Jhuta can be transformed to cotton or fiber stages and these can be sold in the
local market at a competitive price. In fact, the annual export earnings from Jhuta currently stands at $5 million
and it can be expanded to $5 billion. Many people gain their livelihood from the processing of Jhuta or Jhuta
business.

Using the excess work force to expand the business of reusing and recycling remaining materials to produce
local yarn and cottone, the risk of job loss due to the implementation of advanced new 4IR technologies may be
minimized.
 ​Figure: Jhuta shop, a solid waste management process in the apparel industry.

References:
1. https://www.textiletoday.com.bd/jhuta-processing-bangladeshs-clothing-industry-unique-example-sustai
nable-solid-waste-management/​)
2. https://www.thedailystar.net/opinion/open-dialogue/news/will-foreign-investors-relocate-bangladesh-chi
na-1911109
3. http://textilefocus.com/rmg-industry-outlook-2019/
4. https://textilelearner.blogspot.com/2012/11/present-conditionsituation-of-ready.html
5. https://www.thedailystar.net/business/news/car-manufacturing-bangladesh-preparing-the-next-biggest-in
dustry-after-apparel-1880917
7. ​https://www.thedailystar.net/business/news/local-firm-set-200m-plant-make-electric-vehicle-1776208
8. ​https://www.theigc.org/blog/attracting-quality-foreign-direct-investment-developing-countries/