Bangladesh Ready-made Garment Industry from Investor’s Point of View

The Ready-made Garment (RMG) industry is a large industry in Bangladesh. It is one of the major contributors to exports and employment. It is a promising investment sector, primarily due to low labor costs and high demand. But investing in the RMG industry is risky. The risks are related to business performance and profitability. This blog will explore risks and how to manage them in the context of recent research.

The Ready-Made Garment (RMG) sector is a vital part of Bangladesh’s economy, and a significant drawcard for domestic and international investment. When making investments, however, different risks may impact business operations and profitability.

Risks in the RMG Industry

There are 4 categories of risks of investing in the Bangladesh RMG industry.

First, the compliance risk is very important. There are many international buyers with high labor and safety standards. If the factories do not comply, they could lose orders (Huq et al. 2013).

Second, uncertainty because of supply chain problems. Delays in the delivery of raw materials, coordination, and transportation can suspend production and increase costs (Islam & Khan 2023).

Third, market uncertainty is an issue. Fashions and tastes are constantly changing, and orders are canceled. This affects factories’ cash flow management (Moin et al. 2024).

Lastly, lack of modern technology is also a major risk. Not every factory uses new technologies, so it is less productive and less competitive (Salman et al. 2023).

Research findings

The study by Rubayat (2026) uses data from industry specialists and workers.

The results show that the investor’s major concern is demand uncertainty; disruption is a common incidence, and organizations are in the middle of adopting technology. At the same time, it is technology that is considered one of the best strategies to reduce risks .

The findings have indicated that the industry is risk aware. But it has some risks to manage.

Strategies for reducing investment risk

There are several strategies for the RMG industry to reduce risk:

Improve compliance: Compliance with global standards increases market and investment. Improved working conditions and safety inspire trust and reduce risk (Kurpad 2014).

Adopt new technology: Automation and technology boost productivity and reduce errors. It also helps with planning and growing production (Salman et al. 2023).

Improve supply chain: With multiple suppliers, better communication helps prevent supply chain issues. Effective supply chain management supports production (Islam & Khan 2023).

Increase flexibility: Agile manufacturing helps factories to be flexible. This will help reduce losses in the event of a change in demand (Moin et al. 2024).

Manage risks: RMG companies should develop risk management plans to address risks. This will assist in decision-making and improve stability.

Compliance and accomplishment first

The results show that non-compliance, supply chain problems, demand uncertainties, and lack of technology integration are the key risks. Lack of compliance with international standards results in order cancellations and reputational damage, while supply chain disruptions cause delays and increased costs. Furthermore, the global market’s dynamic nature makes it hard to plan production. It is proposed that influencing industry 4.0 technologies, improving compliance, optimizing the supply chain, and improving manufacturing flexibility can minimize investment risks. These factors contribute to increased efficiency, stability, and investor trust. (Rubayat 2026) 

The RMG sector in Bangladesh is a practical investment but is risky. For companies and investors, when using new technology, compliance, and planning, it is important to ensure accomplishment comes first. Risk management will help the industry become more sustainable and more attractive to investors.

References

Huq, F. A., Stevenson, M. & Zorzini, M. 2013. Social sustainability in developing country suppliers: An exploratory study in the ready-made garments industry. International Journal of Operations & Production Management, 34(5), 610-638. Cited 2 Mar 2026. Available at https://doi.org/10.1108/IJOPM-10-2012-0467

Islam, M. T. & Khan, S. 2023. Supply chain adaptability in the Bangladesh ready-made garment industry. SSRN. Cited 13 Mar 2026. Available at https://papers.ssrn.com/sol3/Delivery.cfm/SSRN_ID4520403_code794096.pdf 

Issac, B. 2025. Workers are sewing clothing in a busy factory. Unsplash. Cited 13 Mar 2026. Available at https://unsplash.com/photos/workers-are-sewing-clothing-in-a-busy-factory-KZFJAmCt1a0

Kurpad, M. R. 2014. Made in Bangladesh: Challenges to the ready-made garment industry. Journal of International Trade Law and Policy, 13(1), 80-96. Cited 2 Mar 2026. Available at https://doi.org/10.1108/JITLP-06-2013-0019

Moin, C. J., Iqbal, M., Malek, A. B. M. A., Khan, M. M. A. & Haque, R. 2024. Manufacturing flexibility and company performance under demand and supply uncertainty: Evidence from the apparel industry of a developing country. Journal of Manufacturing Technology Management, 35(3), 434-458. Cited 1 Mar 2026. Available at https://doi.org/10.1108/JMTM-03-2023-0119

Rubayat, M. R. H. 2026. Reducing Investment Risk in Bangladesh RMG Industry. Bachelor’s thesis. LAB University of Applied Sciences. Cited 11 May 2026. Available at https://urn.fi/URN:NBN:fi:amk-2026051913944

Salman, S., Hasanat, S., Rahman, R. & Moon, M. 2023. Analyzing the key barriers of adopting Industry 4.0 in Bangladesh’s ready-made garment industry: An emerging economy example. International Journal of Industrial Engineering and Operations Management, 6(3), 232-255. Cited 1 Mar 2026. Available at https://doi.org/10.1108/IJIEOM-04-2023-0034