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GARMENTS SECTOR IN BANGLADESH

Introduction
Globalization has hit the populations of the third world hard. Unemployment has risen as established industries have been destroyed and poverty has deepened. Yet the organizations that clear the way for Foreign Direct Investment do have something to be proud of in Bangladesh the rapid e!pansion of the garments industry" which now employs appro!imately #.$ million people. %owever" for these wor&ers the 'oy of having a 'ob is marred by the harsh conditions they endure in the wor&place. Bangladesh began creating (!port )rocessing *ones +()*s, in #-./ to attract foreign capital and earn e!port dollars. In #--0 the Bangladesh (!port )rocessing *one 1uthority +B()*1, was set up and a blan&et ban on trade union activity imposed. 2his is obviously the most attractive feature for investors" on top of ta! brea&s and other incentives on offer. 2he ()*s now employ .3"333 wor&ers" mostly in the garment and shoe4ma&ing industries. 5ational labor laws do not apply in the ()*s" leaving B()*1 in full control over wor& conditions" wages and benefits. %owever" B()*1 ignores not only national standards but its own. 2he guaranteed minimum monthly wages of 6U7.3" 6U7 83 and 6U7 9$ for s&illed" uns&illed and probationary wor&ers respectively is a laughable fiction. 1s is the entitlement of permanent wor&ers to annual festival bonuses" medical coverage" and accommodation and transportation allowance. 2he body has consistently refused to give out letters confirming employment and does not hire any wor&ers on a permanent basis. In reality" earnings average about 693 per month less than half the official rate and wor&ers do forced overtime under threat of dismissal. 2he withholding of pay for months at a time a practice common throughout the private sector is also the norm. 2he situation in the garment industry at large is even worse. 2he nation:s top e!port earner employs #.$ million wor&ers under conditions of super4e!ploitation. 2he ma'ority are young women from rural areas who have migrated to the urban centers in search of wor&. 2he sweatshops are more li&e prisons than factories" with no fi!ed hours" regular brea&s or days off. ;or&ers earn between 6. and 6#3 a month" for an average of #0 hours a day" up to 9. days per month. 2his comes to an hourly rate of two or three cents< 2he bourgeois media reports that the industry currently owes 6 033"333 in bac& pay" a staggering amount considering the miserly wages. Garment wor&ers change 'obs fre=uently because of wage arrears" lay4offs" ill health or harassment from the bosses and their >security guards?. 1s the vast ma'ority of employees are girls and young women most living apart from their families there are many cases of physical and se!ual harassments.

1s it is very significant issue of the country so intellectuals should watch about it. 2hey have reflected on it how the problem can eliminate on this sector.

Working environment and La in Garment! Indu!trie! in Bang"ade!#


2here are some certain criteria in wor&ing condition. (very employer is bound to provide sound wor&ing environments for their employees according to different section of the factor is act #-@$. In wor&ing environment the following criteria:s should be provide by the environment for employees of hisAher organization. 2his are4

Hea"t# and H$giene


Bleanliness C Disposal of wastages and effluentsCC Dentilation and temperatureCC Dust and fumeCC 1rtificial humidificationCCC Ever crowdingCCC FightingCC Drin&ing waterCC Fatrines and urinalsCC 7pittoonsCCC

Sa%et$

)recautions Incase of fireCC Fencing of machineryCCC ;or&ing on or near machinery in motionCCC (mployment of children:s on dangerous machinesCCC 7tri&ing gear and devices for cutting of powerCCC 7elf acting machinesCCC Bausing of new machineriesCC )rohibition of employment of women and children near cotton openersCCC Gevolving machineryCC Floors stairs and means of access.C (!cessive weights.C )roduction of eyes.C

We"%are

;ashing facilities. C Fast aid appliances. CC 7helters. CC Banteens.C Gooms for children:s. CC

Working #our!

;ee&ly hours. CCC ;ee&ly holiday. CC Bompensatory wee&ly holiday. CCC Daily hours. CCC Intervals for rest or meals.C 7pread over. CCC 5ight shift. CCC )rohibition of overlapping shift. CC (!tra allowance for over time. CC Gestriction on double employment.

Em&"o$ment o% $oung &er!on


)rohibition of employment of children. CCC Bertificate of fitness. CCC ;or&ing hours for children:s. CCC Gegister of child wor&ers. CCC )ower to re=uire medical e!amination. CCC

Leave and #o"ida$! it# age!


1nnual leave with wages. CCC Festival holidays. C Basual leave and see& leave.C Haternity leave. CCC ;ages during leave or holiday periods. CCC )ayment in advance in certain case. CC

Mi!ce""aneou!

)enalties. 1ccident offences by wor&ers.

2hose are the specific criteria which are mention in the factories act #-@$. (ach and every section of the law is not mentioned and describe here due to the shortage of space and those are not sub'ect related. 2hose laws must be followed by the employer of garments wor&er.

Garment! indu!tr$ in Bang"ade!#


Bangladesh earns nearly 6. billion a year by e!porting te!tile products" mainly to (urope and the United 7tates. 2his is about .3 percent of total e!port earnings of the country. 2he GHG industry has around 8"333 units across the country. It employs around 9.$

million wor&ers" -3 percent of whom are poor women. ;henever the country is criticized for its high level of corruption and confrontational politics" its garment industry is held up as a success story. For Bangladesh" the ready4made garment e!port industry has been the proverbial goose that lays the golden eggs for over fifteen years now. 2he sector now dominates the modern economy in e!port earnings" secondary impact and employment generated. 2he events in #--/ serve to highlight the vulnerability of this industry to both internal and e!ternal shoc&s on the demand and supply side. Given the dominance of the sector in the overall modern economy of Bangladesh" this vulnerability should be a matter of some concern to the policyma&ers in Bangladesh. 1lthough in gross terms the sector:s contributions to the country:s e!port earnings is around .8 percent" in net terms the share would be much less partially because the bac&ward lin&ages in te!tile have been slow to develop. 2he dependence on a single sector" no matter how resilient or sturdy that sector is" is a matter of policy concern. ;e believe the policyma&ers in Bangladesh should wor& to reduce this dependence by moving =uic&ly to develop the other e!port industries using the lessons learned from the success of apparel e!ports. 7upport for the apparel sector should not be reduced. In fact" another way to reduce the vulnerability is to diversify the product and the mar&et mi!. It is heartening to observe that the &nit products are rapidly gaining share in overall garment e!ports as these products are sold i )reliminary data and informal evidence indicate that this sector seems to have weathered the devastating floods relatively well. 2he industry is one hundred percent e!port4 oriented and therefore insulated from domestic demand shoc&sI however" it remains vulnerable to domestic supply shoc&s and the smooth functioning of the ban&ing" transportation and other forward and bac&ward lin&age sectors of the economy. 2he Dha&a4Bhittagong road remains the main transportation lin& connecting the production units" mostly situated in and around Dha&a and the port in Bhittagong" where the raw material and the finished products are shipped in and out. Despite increased dependence on air transportation" truc&s remain the main vehicles for transporting raw materials and finished products for Bangladesh garment e!ports. 2he floods disrupted the normal flow. (ventually" this road lin& was completely severed for several days when large sections of the road went under water for a few wee&s during the latter phase of the floods. 2his delin&ing of the road connection between Dha&a and the port in Bhittagong was as serious a threat as one can imagine for the garment e!porters. 2he industry responded by calling upon the Bangladesh navy to help with trawlers and renting a plane from 2hai 1ir that was used to directly fly garment consignments from the Dha&a airport to the Bhittagong airport.

Li!t o% Bang"ade!# Garment Manu%acturer! and E'&orter!

() A*TE+ LIMITED () AGAMI A,,ARELS LTD() AGAMI *ASHIONS LIMITED () AGRANI SWEATERS LTD() AG.S A,,ARELS LTD () AHMED *ASHIONS () AHMEDIA GARMENTS /,TE0 LTD() AHSAN *ASHIONS LTD() AHSAN 1NITTING LTD() AIRTEES A,,ARELS LTD() A ONE DRESSMA1ERS LTD() A ,L2S IND2STRIES LTD() A-B- *ASHIO WEAR LTD() A-B- SIDDI32EE A,,ARELS LTD() A-B-C- ATTIRE LTD() A-B-M A,,ARELS LTD() A-B-M- *ASHIONS LTD() A-B-S- GARMENTS LTD() A-D- ENTER,RISE /GARMENTS DI4ISION0 () A-*-M- SWEATERS LTD() A-G- DRESSES LIMITED-

() A-H- GARMENTS LTD() A-5- S2,ER GARMENTS LTD() A-1- 1HAN 6 CO- LTD- /GARMENTS DI40 () A-1-B- *ASHIONWEAR /,4T0 LTD() A-1-5- *ASHIONS *ABRICS LTD() A-1-M- 1NIT WEAR LTD() A-M- DESIGN LTD() A-M- SWEATERS LTD() A-M-C- GARMENTS LTD() A-M-1- A,,ARELS LTD() A-N- GARMENTS LTD () A-N- SWEATERS LTD() A-3-M- A,,ARELS /,4T0 LTD() A-R- A,,ARELS LTD() A-R- *ASHIONS LTD() A-R- 1HAN SI7ING 6 *ABRICS LTD() A-R-A- GARMENTS 6 TE+TILES LTD() A-R-B- 1NIT WEAR LTD () A-S *ASHION LTD-

Contri8ution! o% Garment! indu!tr$ in Bang"ade!#


Garments Industry occupies a uni=ue position in the Bangladesh economy. It is the largest e!porting industry in Bangladesh" which e!perienced phenomenal growth during last two decades. By ta&ing advantage of an insulated mar&et under the provision of Hulti Fibre 1greement +HF1, of G122" it attained a high profile in terms of foreign e!change earnings" e!ports" industrialization and contribution to GD) within a short span of time.2he industry plays a &ey role in employment generation and in the provision of

income to the poor.5early two million wor&ers one directly and more than ten million inhabitants are indirectly associated with the industry +1hmed and %ossain" 933@,. 2he sector has also played a significant role in the socio4economic development of the country. In such a conte!t" the trend and growth of garments e!port and its contribution to total e!ports and GD) has been e!amined the following table shows the position.

Growth and 2rend of Garments (!ports" and contribution to GD) +1mounts in Hillion U7D, Year #-/84/$ #-/-4-3 #--84-$ #---433 933843$ 933$43@ Garment (!port +Hin U7D ##@ 4 @98 +83, 999/ +9-, 808- +#8, @8#/ +/, .-3# +90, 2otal (!port +Hin U7D, -08 4 #-98 +#@, 08.0 +#0 $.$9 +##, /@$$ +-, #3$9@ +99, 7hare to total e!port in J #9.89 4 09.80 +9#, @8.#$ +#$ .$.@# +0 .8.#$ +4# .$.3@ +#, 7hare to GD) in J 4 4 $./. 4 -.90 +-, #3.@0 +0, #9.@8 +9,

Source9 (conomic Geview of Bangladesh" BGH(1 and Bomputation made by author. Figures in parentheses indicate compound growth rates +BGG, for the respective periods.
It is revealed from the 2able 30 that the value of garment e!ports" share of garments e!port to total e!ports and contribution to GD) have been increased significantly during the period from #-/84/$ to 933$43@. 2he total garments e!port in 933$43@ is more than @/ times compared to garments e!ports in#-/84/$ whereas total country:s e!port for the same period has increased by ## times. In terms of GD)" contribution of garments e!port is significantI it reaches #9.@8 percent of GD) in 933$43@ which was only $./. percent in #-/-4-3. It is a clear indication of the contribution to the overall economy. It also plays a pivotal role to promote the development of lin&age small scale industries. For instance" manufacturing of intermediate product such as dyeing" printing" zippers" labels has began to ta&e a foothold on limited scale and is e!pected to grow significantly.Horeover it has helped the business of basling" insurance" shipping"hotel" tourism and transportation. 2he sector also has created 'obs for about two million people of which .3 percent are women who mostly come from rural areas.2he sector opened up employment opportunities for many more individuals through direct and indirect economic activities"which eventually helps the country:s social development"woman empowerment and poverty alleviation.In such a way the economy of Bangladesh is getting favorably contribution from this industry.

Contri8ution o% t#e RMG Indu!tr$


GHG business started in the late .3s as a negligible non4traditional sector with a narrow e!port base and by the year #-/0 it emerged as a promising e!port earning sectorI presently it contributes around .$ percent of the total e!port earnings. Ever the past one and half decade" GHG e!port earnings have increased by more than / times with an e!ceptional growth rate of #@.$ percent per annum. In FY3@" earnings reached about / billion U7D" which was only less than a billion U7D in FY-#. (!cepting FY39" the industry registered significant positive growth throughout this period

In terms of GD)" GHG:s contribution is highly remar&ableI it reaches #0 percent of GD) which was only about 0 percent in FY-#. 2his is a clear indication of the industry:s contribution to the overall economy. It also plays a pivotal role to promote the development of other &ey sectors of the economy li&e ban&ing" insurance" shipping" hotel" tourism" road transportation" railway container services" etc. 1 #--- study found the industry supporting appro!imately U7D 9.3 billion worth of economic activities +Bhattacharya and Gahman," when the value of e!ports stood at a little over U7D 8.3 billion. Ene of the &ey advantages of the GHG industry is its cheap labor force" which provides a competitive edge over its competitors. 2he sector has created 'obs for about two million people of which .3 percent are women who mostly come from rural areas. 2he sector opened up employment opportunities for many more individuals through direct and indirect economic activities" which eventually helps the country:s social development" woman empowerment and poverty alleviation.

E'&orting Condition o% Garment! Indu!tr$


2he Geady4Hade Garments +GHG, industry occupies a uni=ue position in the Bangladesh economy. It is the largest e!porting industry in Bangladesh" which

e!perienced phenomenal growth during the last 93 years. By ta&ing advantage of an insulated mar&et under the provision of Hulti Fibre 1greement +HF1, of G122" it attained a high profile in terms of foreign e!change earnings" e!ports" industrialization and contribution to GD) within a short span of time. 2he industry plays a &ey role in employment generation and in the provision of income to the poor. 5early two million wor&ers are directly and more than ten million inhabitants are indirectly associated with the industry. Ever the past twenty years" the number of manufacturing units has grown from #/3 to over 0@33. 2he sector has also played a significant role in the socio4 economic development of the country. 2he 1greement on 2e!tile and Blothing +12B, introduced in #--8" aimed at bringing te!tiles and clothing within the domain of ;2E rules by abolishing all =uotas by the end of 9338. It provides an ad'ustment period of #3 years" so that countries affected by the HF1 could ta&e the necessary steps to ad'ust to the new trading environment. Fiberalization of trade following the Uruguay Gound agreement presents opportunities as well as challenges for a developing country li&e Bangladesh in GHG sector. In the )ost4Uruguay Gound period" traditional instruments of trade policy such as tariffs" =uotas" and subsidies will become less feasible and less relevant. In a liberalized trade regime" competition among te!tiles and clothing e!porting countries is li&ely to become intense. 2he ob'ective of this paper is to identify the prospects of GHG industry after the HF1 phase out by analyzing the current scenario along with different policy measures and the available options in order to be more competitive in the new regime. 2he e!port made by Garments Industries of Bangladesh is improving year after year e!cept some of the year. 7tri&e" layout" shutdown of company" political problem" economic problem" inflation etc. are the prime cause of decreasing e!port in this important sector. But above it" Geadymade Garments Industries is the leading sector in e!port sector.
:ear #--# -9 #--9 -0 #--0 -8 #--8 -$ #--$ -@ #--@ -. #--. -/ #--/ -#--- 33 9333 3# 933# 4 39 9339 30 9330 38 9338 3$ 933$ 3@ E'&ort /in 2S ; mi""ion0 @98.#@ /@@./9 ##/9.$. #88$.39 #$$$..999/.0$ 9$8..#0 033#.9$ 0./#.-8 83#-.-/ 808-.8# 8/$-./0 8$/0..$ 8-#9.#9 $@/@.3,ercentage c#ange 09.80/.// 0@.80 99.#..@. 80.8. #8.## #../0 9@.3# @.9/.###..8 $.@/ ..9# #$./0

*igure9 Year (!port by the garments industries +in U7 6 million,

1verage Kuota )rices of 7elected Garments Items (!ported by Bangladesh" 933@

)osition of Bangladesh is e!porting product in U71 is not very satisfactory but this situation is better than any other condition of the previous time. But if our Government ta&e some essential law and brea& out the wall of biasness then the position of Bangladesh in Garments sector would be hope to better.

*inding!
From the survey we have found some tremendous information that help to build our practical &nowledge about the garments industry of our country. 2hrough our survey we try to bring out the present situation" problems and the prospects of these industries. In these aspects we divided our finding into three main parts. First part contains the general information about the garments industries of our country and the other second and third part contains the problems and the prospects of these industries se=uentially. 2hese topics are discussed below4 Bompany profile ;e ta&e information from five leading garments company to identify the problem of this sector. 7hort profile of the Bompany are given below4

Mi""enium Garment! Limited


It is a manufacturing company" established in #--3. Hore than #933 employees found their wor&ing place in this organization. Different types of modern e=uipment in here to run the production smoothly. 7uch as4 8$3 pcs of different type of cutting" sewing and finishing machines supplied by mostly 7inger and Brother. Its main mar&et for e!porting is (uropean Bountries" U71. 1nd the other customer groups are (&insa" 7painI Desage" ULI (tam" 7ingaporeI Detura" FranceI 1mcobus" U.7.1I Hiles" GermanyI 7tar ;ear" U.7.1. It is one of the leading e!ports Garment Bompany of our country.

RAHAN GARMENTS /,4T0 LTD


It was founded in #--0. Gahan started manufacturing and e!porting from #--$. Hanufacturer and e!porter of all type of apparels" specialized in under garments" sportswear and &nit M woven garments. 2he total wor&ing area comprises of 9-"333 s=uare feet in one floor. 2heir plant and office is located in the central part of the city. 2his give security and convenience for the transportation of goods and all &inds of supports needed for daily production and financial facility.

TO1IO MODEL LIMITED


2he company was established in #--3 as a )ublic Fimited Bompany. 2he company authorized capital was in U7 6 #9.. Hillion. Its production capacity is 9-"333 DozA Honth 1ppro!. Even M Lnitwear Items. Hore than .$3 employees participate here in the manufacturing activities. It is another leading Garment Bompany of our country.

Fabrics M Bommodities (!change Ftd:s a well reputed Garments (!porters in Bangladesh. 1ccordingly as a first step of their customer familiarization process" they would li&e to brief with their business process and how this could be of any interest to their organization. Based in Dha&a" Bangladesh they manufacture over 933"333 units a month including Lnit" ;oven and 7weater. 1 highly =ualified team of K1 foresees the manufacturing process. Geliability and cost effectiveness are on the utmost priority while we provide value added services to our vast growing client list.

ALAM *IBER IM,E+ LIMITED


1lam Fiber Impe! is one of the leading (!porter and Hanufacturer:s agents in Bangladesh. It was established in #-//. It basically wor&s with the product of4 G1;NU2( +NU2( FIB(G, NU2( Y1G5 A NU2( 2;I5( NU2( BFE2% +%(77I15 A BBB, NU2( B1G A NU2( 71BL7 %15DIBG1F27 G(1DY4H1D( G1GH(527. 2hey demand they offer reasonable price for their products. 2here stay some motto with which 1lam Fiber Impe! willing to run4 ;e maintain =uality properly" we never compromise with =uality" 2imely shipment is our business ethics" and Bustomer:s satisfaction is our motto.

,ro8"em! Regarding Wit# RMG


2he garment industry of Bangladesh has been the &ey e!port division and a main source of foreign e!change for the last 9$ years. 5ational labor laws do not apply in the ()*s" leaving B()*1 in full control over wor& conditions" wages and benefits. Garment factories in Bangladesh provide employment to 83 percent of industrial wor&ers. But without the proper laws the wor&er are demanding their various wants and as a result conflict is began with the industry. Fow wor&ing salary is another vital fact which ma&es the labor conflict. ;or&er made stri&e" layout to capture their demand. 7ome time bonus and the overtime salary are the important cause of crisis. Insufficient government policy about this sector is a great problem in Garments Bompany. 2here are some other problems which are associated with this sector. 2hose are4 lac& of mar&eting tactics" absence of easily on4hand middle management" a small number of manufacturing methods" lac& of training organizations for industrial wor&ers" supervisors and managers" autocratic approach of nearly all the investors" fewer process units for te!tiles and garments" sluggish bac&ward or forward blending procedure" incompetent ports" entryAe!it complicated and loadingAunloading ta&es much time" time4consuming custom clearance etc.

Sa%et$ ,ro8"em!
7afety need for the wor&er is mandatory to maintain in all the organization. But without the facility of this necessary product a lot of accident is occur incurred every year in most of the company. 7ome important cause of the accident are given below4 O Goutes are bloc&ed by storage materials O Hachine layout is often staggered O Fac& of signage for escape route O 5o provision for emergency lighting O Doors" opening along escape routes" are not fire resistant. O Doors are not self4closing and often do not open along the direction of escape. O 1de=uate doors as well as ade=uate staircases are not provided to aid =uic& e!it O Fire e!it or emergency staircase lac&s proper maintenance O Fac& of proper e!it route to reach the place of safety O )ar&ed vehicles" goods and rubbish on the outside of the building obstruct e!its to the open air

O Fire in a Bangladesh factory is li&ely to spread =uic&ly because the principle of compartmentalization is practiced O Fac& of awareness among the wor&ers and the owners But now the situation is much improved and we found" all the surveyed garments are fulfilling the re=uirement of emergency e!it. It is provided in all the cases" signage is present and fire fighting e=uipments are up to date" a departure from the past. (ven fire drill is held once in a month.

Savar Traged$
En 98th of 1pril" a nine storied building collapsed in 7avar" in the outs&irts of Bangladesh capital Dha&a" where thousands of wor&ers were either &illed or trapped. 1 long and difficult rescue operation has been going on ever since and more than 9/08 wor&ers have been rescued alive so far from the rubbles. 2he death toll has risen to 0-. on ;ednesday +Hay #" 93#0, and thousands of in'ured have been hospitalized. 1uthorities claim that #8- persons are still missing in the country:s worst ever industrial disaster.

Bang"ade!# *ace! t#e C#a""enge o% G"o8a"i<ation


Bangladesh faces the challenge of achieving accelerated economic growth and alleviating the massive poverty that afflicts nearly two4fifths of its #0$ million people. 2o meet this challenge" mar&et4oriented liberalizing policy reforms were initiated in the mid4#-/3s and were pursued much more vigorously in the #--3s. 2hese reforms were particularly aimed at moving towards an open economic regime and integrating with the global economy. During the #--3s" notable progress was made in economic performance. 1long with maintaining economic stabilization with a significantly reduced and declining dependence on foreign aid" the economy appeared to begin a transition from stabilization to growth. 2he average annual growth in per capita income had steadily accelerated from about #.@ per cent per annum in the first half of the #-/3s to 0.@ percent by the latter half of the #--3s. 2his improved performance owed itself both to a slowdown in population growth and a sustained increase in the rate of GD) growth" which averaged $.9 percent annually during the second half of the #--3s. During this time" progress in the human development indicators was even more impressive. Bangladesh was in fact among the top performing countries in the #--3s" when measured by its improvement in the %uman Development Inde! +%DI, as estimated by the United 5ations Development )ro'ect +U5D),. In terms of the increase in the value of %DI between #--3 and 933#" Bangladesh is surpassed only by Bhina and Bape Derde. ;hile most low4income countries depend largely on the e!port of primary commodities" Bangladesh has made the transition from being primarily a 'ute4e!porting country to a garment4e!porting one. 2his transition has been dictated by the country:s resource

endowment" characterized by e!treme land scarcity and a very high population density" ma&ing economic growth dependent on the e!port of labor4intensive manufactures. In the wa&e of the 933# global recession" Bangladesh:s reliance on foreign countries as a mar&et for e!ports and as a source of remittances has become obvious. If Bangladesh is to become less vulnerable to the economic fortunes of others" it will need to strengthen its domestic economy" creating 'obs and mar&ets at home. 1 strong domestic sector and an improved overall investment environment will provide a more stable source of income li&e what the garment industry has provided so far and will re&indle and sustain Bangladesh:s economic growth.

,ro!&ect! o% t#e RMG Indu!tr$


Despite many difficulties faced by the GHG industry over the past years" it continued to show its robust performance and competitive strength. 2he resilience and bold trend in this HF1 phase4out period partly reflects the imposition of Psafeguard =uotas: by U7 and similar restrictions by (U administration on Bhina up to 933/" which has been the largest supplier of te!tiles and apparel to U71. Ether factors li&e price competitiveness" enhanced G7) facility" mar&et and product diversification" cheap labor" increased bac&ward integration" high level of investment" and government support are among the &ey factors that helped the country to continue the momentum in e!port earnings in the apparel sector. 7ome of these elements are reviewed below.

Market Diver!i%ication
Bangladeshi GHG products are mainly destined to the U7 and (U. Bac& in #--@4-." Bangladesh was the .th and $th largest apparel e!porter to the U71 and (uropean Union respectively. 2he industry was successful in e!ploring the opportunities in mar&ets away from (U and U7. In FY3." a successful turnaround was observed in e!ports to third countries" which having a negative growth in FY3@ rose three4fold in FY3." which helped to record 90.# percent overall e!port growth in the GHG sector. It is anticipated that the trend of mar&et diversification will continue and this will help to maintain the growth momentum of e!port earnings. 1t the same time a recent ;2E review points out that Bangladesh has not been able to e!ploit fully the duty free access to (U that it en'oys. ;hile this is pointed out to be due to stringent rules of origin +GEE, criteria" the relative stagnation in e!ports to (U re=uires further analysis.

,roduct Diver!i%ication
2he growth pattern of GHG e!ports can be categorized into two distinct phases. During the initial phase it was the woven category" which contributed the most. 7econd phase is the emergence of &nitwear products that powered the recent double digit +year4on4year, growth starting in FY38. In the globalized economy and ever4changing fashion world" product diversification is the &ey to continuous business success. 7tarting with a few items" the entrepreneurs of the GHG sector have also been able to diversify the product base ranging from ordinary shirts" 24shirts" trousers" shorts" pa'amas" ladies and

children:s wear to sophisticated high value items li&e =uality suits" branded 'eans" 'ac&ets" sweaters" embroidered wear etc. It is clear that value addition accrues mostly in the designer items" and the sooner local entrepreneurs can catch on to this trend the brighter be the GHG future.

Back ard Integration


GHG industry in Bangladesh has already proved itself to be a resilient industry and can be a catalyst for further industrialization in the country. %owever" this vital industry still depends heavily on imported fabrics. 1fter the liberalization of the =uota regime some of the ma'or te!tile suppliers 2hailand" India" Bhina" %ong Long" Indonesia and 2aiwan increased their own GHG e!ports. If Bangladesh wants to en'oy increased mar&et access created by the global open mar&et economy it has no alternative but to produce te!tile items competitively at home through the establishment of bac&ward lin&age with the GHG industry. 2o some e!tent the industry has foreseen the need and has embar&ed on its own capacity building.

*"o o% Inve!tment
It is plausible that domestic entrepreneurs alone may not be able to develop the te!tile industry by establishing modern mills with ade=uate capacity to meet the growing GHG demand. It is important to have significant flow of investment both in terms of finance and technology. Figure 0 indicates that the investment outloo& in this sector is encouraging" although the uncertainties before the HF1 phase4out period caused a sluggish investment scenario. In part the momentum in the post4HF1 phase4out period is indicative of the efforts underway towards capacity building through bac&ward integration. 2his is evident in the pace of lending to the GHG sector and in the rising import share of GHG related machinery. %owever further progress would be necessary to improve and sustain competitiveness on a global scale.

,o"ic$ Regime o% Government


Government of Bangladesh has played an active role in designing policy support to the GHG sector that includes bac&4to4bac& FAB" bonded warehouse" cash incentives" e!port credit guarantee scheme" ta! holiday and related facilities. 1t present government operates a cash compensation scheme through which domestic suppliers to e!port4 oriented GHG units receive a cash payment e=uivalent to $ percent of the net FEB value of e!ported garments. 1t the same time" income ta! rate for te!tile manufacturers were reduced to #$ percent from its earlier level for the period up to Nune 03" 933/. 2he reduced ta! rates and other facilities are li&ely to have a positive impact on the GHG sector.

In%ra!tructura" Im&ediment!
2he e!istence of sound infrastructural facilities is a prere=uisite for economic development. In Bangladesh" continuing growth of the GHG sector is dependent on the development of a strong bac&ward lin&age in order to reduce the lead time. %owever" other factors constraining competitiveness of Bangladesh:s GHG e!ports included the absence of ade=uate physical infrastructure and utilities.

La8or ,roductivit$
2he productive efficiency of labor is more important determinant for gaining comparative advantage than the physical abundance of labor. In Bangladesh" the garment wor&ers are mostly women with little education and training. 2he employment of an uneven number of uns&illed labors by the garment factories results in low productivity and comparatively more e!pensive apparels. Bangladesh labor productivity is &nown to be lower when it compared with of 7ri Fan&a" 7outh Lorea and %ong Long. Bangladesh must loo& for ways to improve the productivity of its labor force if it wants to compete regionally if not globally. Because of cheap labor if our country ma&es the labor productivity in the ape! position" then we thin& the future of this sector is highly optimistic.

Re!earc# and Training


2he country has no dedicated research institute related to the apparel sector. GHG is highly fashion oriented and constant mar&et research is necessary to become successful in the business. BGH(1 has already established an institute which offers bachelor:s degree in fashion designing and BLH(1 is planning on setting up a research and training institute. 2hese and related initiatives need encouragement possibly intermediated by donor4assisted technology and &nowledge transfer. 1 facilitating public sector role can be very relevant here.

Su&&ortive Government ,o"ic$


In contrast to the public sector4led import4substituting industrialization strategy pursued during the first few years after independence" the industrialization philosophy of the government changed rather dramatically from the late #-.3s when the emphasis was on e!port4oriented growth to be spearheaded by the private sector. 2owards this end" various policy reforms were implemented in the #-/3s and #--3s. 7ome of these reformed policies contributed considerably to the growth of the GHG industry in Bangladesh. During the #-/3s" a number of incentives were introduced to encourage e!port activities. 7ome of them were new li&e the Bonded ;arehouse Facility +B;F," while others li&e the (!port )erformance Ficense +Q)F, 7cheme 0. were already in operation and were improved upon. 1lso" rebates were given on import duties and indirect ta!es" there were ta! reductions on e!port income" and e!port financing was arranged. Under the Q)F scheme" e!porters of non4traditional products

received import licenses for specific products over and above their normal percentage allotment based on the f.o.b. value of their e!ports. Under the Duty Drawbac& 7ystem" e!porters of manufactured goods were entitled to get refund of duties and ta!es paid on imported inputs used in e!port production" and also all e!cise duties paid on e!ported finished goods. For certain fast4moving items such as GHG" a notional system of duty payments was adopted in #-/94/0. Under this system" e!porters were e!empted from paying duties and ta!es on imports used in e!port production at the time of importation" but were re=uired to &eep records of raw and 9#pac&aging materials imported. 2he duties and ta!es payable on the imports were &ept in a suspense account. Fiabilities to pay the amounts in suspense were removed on proof of e!ports. 2he discussion in this section clearly points to the positive contribution made by policy reforms to the growth of the GHG industry in Bangladesh. In particular" two policies the 7B; facility and the bac&4to4bac& FAB system4 led to significant reduction in cost of producing garments and enhanced competitiveness of Bangladesh:s garments e!ports. It also allowed garment manufacturers to earn more profit which" when necessary" could be used to overcome difficulties arising from wea& governance. Furthermore" poor governance" reflected in the lea&age of duty4free imported fabrics in the domestic mar&et" parado!ically enough also helped the garment manufacturers to earn e!tra Pprofit: and thereby enabled them to absorb the Phigh cost of doing businesses a fall out of bad governance.

Recommendation
Bangladesh economy at present is more globally integrated than at any time in the past. 2he HF1 phase4out will lead to more efficient global realignments of the Garments and Blothing industry. 2he phase out was e!pected to have negative impact on the economy of Bangladesh. Gecent data reveals that Bangladesh absorbed the shoc& successfully and indeed GHG e!ports grew significantly both in FY3@ and +especially, in FY3.. Due to a number of steps ta&en by the industry" Bangladesh still remains competitive in GHG e!ports even in this post phase4out period. Eur Garments Industries can improve their position in the world map by reducing the overall problems. 7uch as management labor conflict" proper management policy" efficiency of the manager" maintainable time schedule for the product" proper strategic plan etc. Government also have some responsibility to improve the situation by providing4 proper policy to protect the garments industries" solve the license problem" =uic&ly loading facility in the port" providing proper environment for the wor&" &eep the industry free from all &ind of political problem and the biasness. Bredit must be provided when the industry fall in need. 2o be an upper position holder in the world Garments 7ector there is no way e!cept follow the above recommendations. ;e hope by maintaining proper management and policy strategies our country will ta&e the ape! position in future.

Sugge!tion! Regarding *ire Sa%et$


;e need to remember that when there is a fire" the first thing one should do is to run away from it. 1nd this is what everyone does in such a situation. But the situation become dangerous and tragic when the escape doorways and gates are found loc&ed. )recautionary should need to be adopted are given belowR O O O O O O O O O O O Building should be constructed with fire resisting materials 1de=uate e!its and proper escape routes should be designed )rotection against fire and smo&e should be ensured (lectrical wiring must be properly designed" installed and maintained (scape routes should be lighted at all times" &ept clear" be indicated by signs Gegular fire drills should be held Doors should be protected and should open along the direction of escape Doors should not open on the steps and sufficient space should be provided. 7mo&eAFire alarm systems must be installed ade=uate number of e!tinguishers should be provided )rior relationship with local Fire services should be established

Conc"u!ion
2he Geady4Hade Garments +GHG, industry occupies a uni=ue position in the Bangladesh economy. It is the largest e!porting industry in Bangladesh" which e!perienced phenomenal growth during the last 9$ years. By ta&ing advantage of an insulated mar&et under the provision of Hulti Fibre 1greement +HF1, of G122" it attained a high profile in terms of foreign e!change earnings" e!ports" industrialization and contribution to GD) within a short span of time. 2he industry plays a &ey role in employment generation and in the provision of income to the poor. 2o remain competitive in the post4HF1 phase" Bangladesh needs to remove all the structural impediments in the transportation facilities" telecommunication networ&" and power supply" management of seaport" utility services and in the law and order situation. 2he government and the GHG sector would have to 'ointly wor& together to maintain competitiveness in the global GHG mar&et. Given the remar&able entrepreneurial initiatives and the dedication of its wor&force" Bangladesh can loo& forward to advancing its share of the global GHG mar&et.

THE END