In Bangladesh, the industry employs almost two million people - mainly women - in 4,000 factories. The World Bank estimates that many more depend on the industry through related activities such as button making and transport.

A good number of garment factories in Bangladesh have already closed, although it is unlikely this is because buyers in the west are switching to, say, China.

Speaking from Dhaka, Zafarullah Chowdhury, the owner of Shundarban Garments, explains: 'I don't know of any factory that has closed because of MFA. They can be shut for all sorts of other reasons and not because of MFA.'

Labour leader Shahidullah Chowdhury agrees. 'Job cuts are a regular feature here. Workers are often fired on false accusations or lose their jobs because the owner has suddenly closed the factory and moved elsewhere to avoid paying salary arrears. It's too early to say job losses are a result of the new order. Companies are still working on past orders,' he says.

Optimists believe that although China has better infrastructure, economies of scale and shorter lead times, Bangladesh's advantage will be its cheap labour. For a labour-intensive sector like the garment industry, this is an important factor.

Shahidullah Chowdhury says there will be problems, no doubt, but is confident that Bangladeshi suppliers will be in demand. 'Look, we're easily the cheapest in most categories - knitwear, woven shirts, T-shirts and denim and cotton trousers - and that's a powerful advantage.'

It also helps that the United States, far and away the biggest importer of Bangladeshi garments and other goods, recently decided to continue the generalised system of preference (GSP) privileges after Bangladesh promised that trade unions would be allowed in its export processing zones. GSP benefits allow products from developing and least developed countries to be imported at lower customs tariffs.

The European Union, for example, has withdrawn GSP facilities from Chinese textiles but decided to continue them for India, despite attempts by some EU members to end them.

Bangladesh Garment Manufacturers and Exporters Association president Anisul Haq sounds even more confident. 'The garment industry is ready to enter the new global business arena. We're going to be aggressive and take on rival countries,' he says.

Tapas Bhaumik, a textile analyst with the Confederation of Indian Industry in New Delhi, agrees. He says that all the studies predicting Bangladesh's fate vary enormously but he thinks it will manage.

'It will continue to benefit from various concessions given its status as a least developed country and in many segments, such as the low end of the market, its industry doesn't compete directly with India or China. It has its own niche.'

Pakistan is in a stronger position than Bangladesh. Its strengths are not just low labour costs. It also has a raw-material base in both cotton and man-made fibres and has invested an estimated US$4 billion in the past four years. In some segments - such as bed linen and towels - it is expected to put up a good fight against China and India.

There is a lot at stake for Pakistan. Textiles is the oldest industry in the country and the largest on most parameters - investment, employment and exports. The sector accounts for about 27 per cent of industrial output, employs about 38 per cent of the industrial labour force and contributes about 70 per cent of the national export earnings, predominantly to Europe and the US.

But although Pakistan produces 8.9 per cent of the world's cotton, its share in the global clothing trade, which is about US$300 billion, is only 2.4 per cent.

The reason is partly the government's failure to protect the industry's interests in a quota-free market. The private sector, too, despite the US$4 billion invested by the biggest industrial textile firms, has remained generally lethargic about facing the new challenge.

The foremost problem the apparel industry is going to face is the high cost of production compared with the competition from India and China. One reason is that exports are exempted from sales tax, but the refund takes an inordinate time to come through, blocking funds for long periods and so tying up much-needed capital.

Corruption also plays a part - rapacious officials demand a percentage of the refund before agreeing to pay it.

The industry's electricity costs are also high compared with those in India, China or Bangladesh. According to the World Bank, the per unit cost of power in Pakistan is 3.5 US cents, while in Bangladesh it is 0.7 US cent and in India 0.9 US cent.

But psychologically, parts of the industry at least are ready. Workers and executives are trying to anticipate changes and plants are being modernised so that factories can scale up production.

'We foresee a jump of 15 to 20 per cent in our garment exports once the dust has settled,' says Dawood Usman Jakhora, chairman of the Karachi-based Pakistan Ready-Made Garment Manufacturers Association.

In fact, Pakistan's relatively strong position is disconcerting India. A report late last year by the Associated Chambers of Commerce and Industry in New Delhi said China and Pakistan could make massive inroads into India's markets if India did not launch a modernisation drive to strengthen its textile sector.

The fact is that no one really knows which way things will pan out. Mr Bhaumik says it will take until the middle of the year for trends to emerge. And then there are those industry watchers who say that people are barking up the wrong cotton plant by focusing so much on Asian suppliers.

Given how successful clothes retailers increasingly demand superfast design and stock turnaround, they say it makes little sense for firms such as Spain's Zara to source from Asia due to the time it takes to get goods from A to B. When Hungary and Turkey are just round the corner, why look to Asia?