Bangladesh should prioritise long-term trade agreements to mitigate the impact of global crises, as geopolitical tensions and structural weaknesses threaten to disrupt supply chains and reduce export orders, industry leaders and experts said at a seminar in the capital.

The country’s readymade garment (RMG) sector, a key driver of export earnings, is facing mounting challenges in sustaining long-term competitiveness amid shifting trade rules, rising production costs and persistent global uncertainties, they warned.

The observations were made at a seminar titled ‘Geopolitical Conflicts and Global Supply Chain Disruptions: Implications for the RMG Industry’, held during the closing ceremony of the Bangladesh International Textile, Knitting and Garment Industry Exhibition (BTKG) 2026.

The event was jointly organised by the Bangladesh Knitwear Manufacturers and Exporters Association and Inforchain Digital Technology Co Ltd at the International Convention City Bashundhara.

Participants said Bangladesh must adopt a multi-pronged strategy, including negotiating durable trade agreements, strengthening energy security through renewable solutions and improving access to affordable finance.

Nuria Lopez, chairperson of EuroCham Bangladesh, called for immediate negotiations on a free trade agreement (FTA) with the European Union.

She cautioned that Bangladesh’s graduation from least developed country status without a sustainable alternative to preferential market access could deal a major blow to exports.

‘An FTA with the EU would provide a permanent and predictable framework, unlike complex and uncertain schemes such as GSP+, and should be treated as a national priority,’ she said.

Lopez also highlighted tightening European regulations, particularly the Corporate Sustainability Due Diligence framework, which came into force in 2024 and is set to extend to suppliers between 2027 and 2028.

While legal obligations fall on buyers, she noted that operational burdens would largely be borne by manufacturers.

‘This is no longer about ticking boxes. Due diligence requires full corporate governance, with owners and managing directors directly involved,’ she said, adding that traceability, environmental compliance and digital systems are becoming essential.

Lopez warned that non-compliance could erode competitiveness and stressed the need for shared responsibility among buyers, government and producers, particularly to support small and medium-sized enterprises.

Riad Mahmud, president of National Polymer Industries Ltd, said the sector is grappling with interconnected macroeconomic and structural challenges, including heavy dependence on imported raw materials and global disruptions that are causing production gaps and operational slowdowns.

He warned that ongoing tensions in the Middle East could further dampen export demand, leaving factories underutilised and increasing financial stress.

‘The cumulative impact could weaken both industry and banks and raise the risk of broader economic instability,’ he said.

Mahmud argued that reliance on blanket government support is unsustainable, proposing instead targeted mechanisms such as dedicated funds linked to specific disruptions.

He also called for tax incentives, lower-cost economic zones and financial restructuring tools, including bonds and equity participation, to ease pressure on manufacturers.

He urged a shift towards capital market financing, noting that high bank interest rates and limited long-term lending capacity are constraining industrial growth.

Akhter Hossain Apurbo, a director of the Bangladesh Employers’ Federation, said current disruptions reflect a structural shift rather than a temporary crisis, requiring adjustments in sourcing, inventory management and energy use.

‘To remain competitive, manufacturers must maintain higher levels of raw material stock to ensure uninterrupted production and timely delivery,’ he said.

Apurbo said that borrowing costs have surged sharply, with nominal rates rising from around 9 per cent to as high as 14-15 per cent, and effective rates reaching up to 16-17 per cent when additional charges are included.

Terming energy security a critical concern, Apurbo stressed that uninterrupted electricity and gas supply is vital, particularly for energy-intensive processes such as dyeing.

He called for accelerated adoption of renewable energy, noting that while solar panels are duty-free, key components like lithium batteries remain heavily taxed, limiting wider uptake.

The three-day exhibition featured around 900 exhibitors from nearly 28 countries, showcasing innovations across the textile and garment value chain, including advanced machinery, dyes and chemicals, knitting and weaving technologies, as well as cutting, sewing, washing and dry-cleaning solutions.