A Report On

Garments Sector In Bangladesh

Prepared By : Genesis Group

Department Of Marketing
University Of Barisal

Course Name: Business Communication

Course Code: 123

Submitted to:
Nusrat Jahan
Lecturer
Department of Marketing

Submitted By
Group: Genesis
Semester- 2nd
Session: 2011-12
Department Of Marketing
Date of Submission: 17th September,
2012

III

LETTER OF TRANSMITTAL

17 September, 2012
Nusrat Jahan
Lecturer
Department of Marketing
University of Barisal, Barisal
Subject: Submission of a Report on Garments Sector In Bangladesh.
Dear Madam,
This is our pleasure to accomplish the Project work and submit the report on Garments Sector
In Bangladesh. Here is the report on Garments Sector In Bangladesh. We have prepared the
report on the basis of the Study on Bangladeshi Garments Sector, its prospects, contribution,
problems etc. We have collected data from internet, magazines, Wikipedia & other business
related magazines. The main purpose of the report is to provide an insight to the garments sector
in Bangladesh.
We would like to express our gratitude to you for your tiresome effort for us which provided the
opportunity to complete this project.
Yours Sincerely,
Masrur Alvee -333
Alimuzzaman Ahammed -337
Md.Golam Rabbani -351
Nishat Binta Kader -383
Nishat Zahan Nowshin -384
Afroza Khanom -386
Amina -392

IV

CONTENTS

Chapter 1.0
Executive Summary.

-----------------------------------------

Page
(v)

Chapter 2.0
History Of Garments Sector In Bangladesh . ------------------

2-13

Chapter 3.0
SWOT Analyses. --------------------------------------------------

14

Chapter 4.0
Condition Of Garments Sector In Bangladesh.--------------

15-25

Chapter 5.0
Problems surrounding readymade garments sector.----------

26-31

Chapter 6.0
Opportunities in this field.---------------------------------------

32-36

Chapter 7.0.
Recommendation.------------------------------------------------

37-41

Chapter 8.0.
Concluding Remarks.--------------------------------------------

42

1.0 Executive Summary

Everywhere, the industrial sector has been the driver of growth as countries have moved from
low- to middle-income status. Bangladesh as a country with a poor land-person ratio is unlikely
to prosper through agricultural growth alone. The average productivity of industry is higher than
in agriculture. As people move out of agriculture into industry, the sector can provide high-wage
employment for large numbers of workers and can raise social productivity by producing highvalue goods on a mass scale. Besides, poor countries can also earn valuable foreign exchange by
exporting manufactured products and the ensuing foreign exchange can be used to invest in new
vintage of machines and technologies so that a rapid move up the technology ladder becomes
possible. The importance of industrial development as an engine of Bangladesh's economic
growth is also reinforced by a growing realization that the development of agriculture sector, of
the mainstays of the country's economy, critically hinges on its backward and forward linkage
with the industrial sector. The importance of Garments in the countrys export basket has
increased steadily. From its humble beginning in the late seventies, the Garments sector

now

accounts for more than three- quarters of the total exports of the country. Thus, during the last
three decades Bangladesh has moved from an excessive dependence on jute products to
Garments products in its export .In this report we will discuss about the Garments sector of
Bangladesh, its history ,prospect, problems , solution & other topics.

VI

2.0 History Of Garments Sector In Bangladesh .

During the post-independence period, Industrial development of Bangladesh has been directed
by several Industrial policies: Industrial Policy of 1973, the New Industrial Policy of 1982, the
Revised Industrial Policy of 1986, Industrial Policy of 1999 followed by a number of other
policies, with the latest being the Industrial Policy of 2010. All these policies have attempted to
revamp the sector with a view to creating a strong manufacturing base in the economy. 1 As a
result, according to the latest BBS data (FY09-10), the contribution of the manufacturing sector
to GDP is 17.86 percent, which was recorded 17.9 percent in FY08-09. The BBS recorded the
growth rate of the manufacturing sector at 5.73 percent in FY 09-10. The Industrial Policy, 2010,
announced recently, proposes an integrated strategy of economic growth through rapid
industrialization. It envisages an increase in the industry sectors share in GDP to 40 percent by
2021, with the proportion of the workforce employed in the sector concurrently rising to 25
percent of the countrys total labor force. Data available from Bangladesh Bureau of Statistics
(BBS) show that the quantum of industrial production, representing medium to large-scale
industries, rose to 413.40 in FY08-09 from 254.45 in FY02-03. In FY 2009-10 averages QIP
stood at 431.51. This implies that the large industry has come to play an increasingly important
role within the industrial sector in recent years. The rise in the share of large industry in the
industrial GDP, however, conceals the fact that the industrial base has continued to remain rather
narrow. Accordingly, the top five industries contributed to sector growth excepting ready-made
garment (RMG), the other four such industries belong to import substituting category:
pharmaceuticals, publication and printing and re-rolling mills. However, excepting cement
industry, which was supported by large FDI infusion, dominant import-substituting industries
such as pharmaceuticals, soap and detergent, fertilizer, re-rolling, silk and synthetics have failed
to post robust growth in recent years.

1
On the contrary, driven by robust export sector performance, export-oriented industries such as
RMG (both woven, and most notably knit), leather and frozen food have performed relatively
well. At the inception of Bangladesh (early 1970s), the manufacturing output accounted for 44
percent of total manufacturing output and was concentrated heavily on the processing of jute,
the then major cash crop. With dampen demand for jute in overseas markets this industry
exhibited downward trends. As a result of trade reforms, its concomitant impact on the
production capacities within the country, enhanced access to production and non-production
related imports and accelerated growth of exports, the degree of openness of the Bangladesh
economy has gone up significantly over the recent past: from 13.5 percent in FY80-81 to 43.4
percent in FY06-07.2 Exports expanded at 3.65 percent to 17.83 percent, whilst the
corresponding figures for imports were 9.86 percent to 45.18 percent during the period.
Consequently, there has been a steady rise in the capacity of export sector to pay for the rising
imports: from 31 percent in FY80-81 to 67 percent in FY99-00. Over the last two decades there
has been significant shift from resource-based to process-based exports and, from a significant
dependence on primary commodities to manufactured ones within the export basket. However,
the flip side of this is that there has been a parallel shift from jute-centric export structure to
RMG-centric one with the result that the degree of concentration in exports has gone up
significantly in the 1990s. Woven and knit RMGs now contribute about three-fifths of total
exports from the country. This growing product concentration was also accompanied by a
growing market concentration, where EU and USA account for more than four-fifths of the total
export. Below is a succinct delineation of this transformation.

2.1 Initiation: Role of Korean Firms (1980s)

Within a single decade garments industry in Bangladesh has emerged as the single dominant
industry in export arena: the industry set its profile with four billion dollars in gross value terms
and employment scopes of more than million skilled and semi skilled women workers. This
compelling successful economic development path was initiated in Bangladesh during 1978. At
that time there were only 9 export-oriented garment manufacturing units, which generated export
earnings of hardly one million dollar. Some of these units were very small and produced
garments for both domestic and export markets. One of such units was Reaz garments
established in 1960 as a small tailoring outfit, named after Reaz store in Dhaka. After serving
only domestic markets for 15 years in 1973 it changed its name to M/s Reaz Garments Ltd and
initiated new dimension in Bangladesh export industry by shipment of 10,000 pieces of
Bangladesh made garments (mens shirts) worth to 13 million Francs to a Paris-based firm in
1978.But the actual milestone was led by the Desh Garments Ltd established in 1977. It was
setup in joint venture with Daewoo of South Korea and at that time emerged as the single largest
and most modern garment-manufacturing unit in the sub-continent. A contract signing of
collaborative arrangement for technical and marketing between Desh-Daewoo during 4 July of
1978 enabled Desh garments to send 130 workers and management trainees to be trained at
Daewoos state-of-the-art technologies at Pusan plant in South Korea in 1979. The 130 Deshselected trainees returned home after a six-month training period to form the nucleus of the RMG
sectors technology and its core human resource base. 3 Consequently, Deshs modern factory
constructed with Daewoos specification and technical assistance with capability of 6 lines, 600
workers, 5 million pieces per year capacity worth $1.3 million investment goes into operation.
Another South Korean firm, Youngones Corporation formed the first equity joint-venture
garment factory with a Bangladeshi firm, Trexim Ltd in 1980. Bangladeshi partners contributed
51 percent of the equity of the new firm, named Youngones Bangladesh. It exported its first
consignment of padded and non-padded jackets to Sweden in December, 1980.
3

2.2 Promotions by the Government (1990s)

Usually governments in less developed countries are weak and always lack proper timing and
coordination with regard to creating supportive policy regime for conducive growth of emerging
industry. From that perspective the role of successive governments to promote the RMG industry
in Bangladesh is quite remarkable. It is worthy to note that the first export consignment of shirts
from Bangladesh made by the state-trading agency, the Trading Corporation of Bangladesh, in
the mid-1970s was destined to some East European countries under counter trade arrangements.
Bangladesh inherited its industrial

policy framework from Pakistan which focused on

bureaucratic control of a largely private industrial sector with emphasis on import substitution
and near exclusion of foreign investment. Immediately after independence the government
regime due to its socialist orientation chose to maintain tight control over the economy and
started to nationalize all large-scale industries, in particular, jute and cotton textiles, sugar, and
most banks. At that time limits were imposed on private investment and on foreign direct
investment. After 1975 a number of socialist policies of the previous regime was reversed to
more pro-market and laissez-faire leaning even through the new regime intervened frequently
in the economic development process. As a consequence, investment approval and loan
disbursement procedures were simplified to liberalize the investment climate of the country. The
investment ceiling was raised to Tk. 100 million and then finally withdrawn in September
1978.As a consequence, giant multinationals such as Daewoo and other South Korean firms
initiated their intrusion in Bangladesh economy via joint ventures with local entrepreneurs.
During the early eighties, the government issued licenses to many entrepreneurs for the duty-free
importation of machinery to produce garments for export purposes. Consequently, the number of
firms in the garments industry increased rapidly and reached 632 in numbers in FY84-85. Export
increased from US $ 1.3 million in FY80-81 to US $ 116.2 million in FY84-85.

Even though rigidity of government responsiveness in terms of adaptability of the ideas from
private entrepreneurs is very common cases in LDC countries, in case of RMG in Bangladesh the
scenario was quite extraordinary: the innovative ideas and strategies from the entrepreneurs were
well accommodated by the policy makers of the government. Two most important financial
features that play key role to expansion of rapid growth of manufactures are back-to-back L/C
and bonded warehouse facilities. Both these policy components were formulated based on the
prescription of the leading entrepreneurs. The innovation of the back-to-back L/C system
eliminated the need for cash for working capital and the need for foreign exchange in the RMG
industry. This allowed the entrepreneurs to set-up factories with low capital investment and thus
allowed rapid growth of the industry. As consequence, these policies ensured net foreign
exchange earnings for the country. As in 1993, revised import policy specified that the back-toback L/C cannot exceed 70 percent of mother L/C. It implies that the foreign exchange spent on
purchasing intermediate materials for manufacturing RMGs for export cannot exceed seventy
percent of the value of export earnings. It, thus, ensures 30 percent net foreign exchange earnings
of total export volume. During 1980s government modified import policy regime for 100
percent export oriented garments industries to provide them with the scope of bonded warehouse
facility instead of duty draw back system. Due to prevailing anti-export bias in the policy regime
it was then restricted to imports raw materials but the policy modification permitted 100 percent
export oriented RMG establishments to import fabrics, accessories at ease in duty free
environment. This policy modification added extra edge towards the industrys competitiveness
as it readily removed the bottleneck of trade barriers in terms of bureaucratic hazards, rentseeking power and effective lead time reduction of production.

Following the trends Bangladesh, government continuously supports the industry in terms of
rationalization of tariffs and taxes on imports of capital machinery, raw materials, dyes and
chemicals, and reduction of interest on long- and short-term loans. As a forward looking attitude,
at present the Bangladesh government offers lucrative incentives for encouraging the use of local
fabrics in the export-oriented garment industries. To encourage textile export, companies can
import capital machinery duty-free. Cotton also may be imported duty-free. Moreover, the
government recently has implemented several policy reforms to create a more open and
competitive climate for foreign investment in the backward linkages of the industry.

2.3 Threat of MFA Phase out and Counteractions against It

(2000-04)
It may be noted that textiles and clothing are susceptible to trade restrictions caused by trade
friction. From historical trend it was found that after World War II Japan was strongly
encouraged to exercise voluntary restraint on cotton textile exports to the US in 1957 because
rapid expansion of Japanese textile exports frustrated the textile industry in the US (Yamazawa,
1988). Since then controlled trade has been the norm rather than temporary regulation of the
trade in textiles and clothing. The import restrictions by the US, Canada, and the European
countries were first incorporated as a short-term arrangement regarding international trade in
textiles in 1961, which was followed by a similar long-term arrangement regarding international
trade in cotton textiles between 1962 and 1974. In the sequel, a restricted trade regime was
perpetuated through the Multi-Fiber Arrangement (MFA) on international trade in textiles, which
came into effect in 1974.When the World Trade Organization (WTO) was launched in 1995, it
was assumed that the MFA system of controlled trade would be phased out by January 1, 2005.
At the beginning of 2005 exports from China and India jumped in the first half of the year in
open markets. Since China was the largest exporter of garments to the US and since the growth
rate in the value of exports from China was extremely high, the US government seriously
considered invoking safeguards to put brakes on garment imports from China. The EU also faced
a surge in garment imports from China. As a result, the EU and China reached an agreement on a
three-year transitional arrangement on June 10, 2005 which set ceilings on growth rates of
exports of the main categories from China and limits the annual increase in Chinese garment
imports to about 10 percent until trade is liberalized in 2008. The US and China made a similar
agreement in November 2005, which sets quotas covering nearly half of Chinas garment imports
into the US by the end of 2008. So, the controlled trade regime partially survived up to 2008.

Academics and researchers have generally attributed the remarkable growth of RMG exports
from Bangladesh to the Multi-Fiber Arrangement (MFA): bilateral quota system imposed by
developed apparel countries, and low wages in Bangladesh (Siddiqi,2004; Razzaque, 2005; and
World Bank, 2005). The initiation of the industry was started by the Korean and Hong Kong
ventures in order to penetrate the developed countries market via channeling their production
through Bangladeshs granted quota access. In 2002 Bangladesh depends on quota restrained
markets for about 94 percent of its RMG exports, among the highest ratios in the world. Such
high concentrations of market access through quota readily pose concern for her potential
vulnerability to the possible large scale shock due to abolition of quotas among policy planners,
researchers and academicians. The main concern was related to the competitiveness of
Bangladesh garment industry and its growth in the quota free world which might, in turn,
deteriorate countrys balance of payments, output and employment vis--vis overall
macroeconomic balances. Several studies have conducted to assess the potential impact of MFA
phase out on Bangladesh economy. Most of these studies used general equilibrium model for
their simulation exercise to estimate the possible impact of phase out on Bangladesh economy.
Elbehri (2004), Lips et al. (2003), Mlachila and Yang (2004), Nords (2004), and Spinanger
(2004) had been the five main quantitative studies that had used database provided by Global
Trade Analysis Project (GTAP) based at the Purdue University, the USA. Most of these studies
depicted a gloomy future for the garments industry of Bangladesh in open era. Spinanger (2004)
found that the abolition of quota could result in 8 percent fall in exports that would to lead to the
countrys GDP decline by 0.54 percent. Mlachila and Yang (2004) considered as one the most
influential studies argued that planned Abolition of the quotas would alter the competitiveness of
various exporting countries and the relatively weak competitiveness makes the Bangladeshi
economy highly vulnerable to the final stage of the quota phase-out. Assessing the quota
restrictiveness and export similarity, and analyzing its supply constraints, the paper concludes
that Bangladesh could face significant pressure on its balance of payments, output, and
employment.

They estimated that MFA import quota abolition may result in a decrease in exports of apparel
from Bangladesh by 6.2 percent to 17.7 percent. Nords (2004) does not find an absolute
decrease in total export from Bangladesh but finds a decrease in the market share of
Bangladeshs apparel in the US market. Lips et al (2003) found that the phase out would lead to a
20 percent decrease in the production of Bangladeshi wearing apparels. They also analyze the
decomposition effect and found that due to phasing out negative terms of trade effects will cause
Bangladeshs welfare loss by around $ 340 million. Fontana et al. (2002) using a computable
general equilibrium (CGE) model of Bangladesh in association with a social accounting matrix
constructed for 1999-2000 simulated the scenario in context of RMG price shocks. They found
that just a 9 percent decline in the world price would lead to a consequent 29 and 35 percent
shrink in volume and value of Bangladesh RMG export. The empirical data shows that the RMG
has grown consistently after the phase out period. It has been noted that from 1990 the RMG
exports on average grew at an annual rate of about 19 percent up to 2005. Data from Export
Promotion Bureau(EPB) show that during the first six months of the quota-free regime the RMG
sector registered export growth of about 19 percent. The growth rate recorded for FY05-06 was
higher than average to 23.5 percent. In value terms between July 2004 and June 2007 RMG
exports earn $ 4 billion extra which is 75 percent higher of the RMG export volume of FY03-04.
From the empirical evidence it is evident that Bangladesh comes as winner in the post-MFA
world.

2.4 Aftermath and Reconciliations with Workers (2005-till

Date)
Mechanization and automation have not diminished the role of human element in industrial
establishments. Nor have the economic reforms belittled the significance of labor. Human
resource is an important factor to increase productivity and quality and to reduce costs; all of the
factors of production are equally important to survive in the competitive world. In fact, the role
of workforce has become highly critical in garment industry. Labor force is an important input in
industrial production and this is equally in garment industry of Bangladesh. History of labor
unrest is as old as history of industrialization. History of the Industrial Revolution in England in
late 18th century records the plight and struggle of working class people. Workers were to work
for long hours in unhygienic environment for a low wage. They lived in shabby slums of
Lancashire and London and were deprived of nutritious food, medicine and health care, and
education for their children. There were no daycare center and women with children had to work
in the factory keeping their children asleep with sleeping syrup. Frederick Engels commented
that intellectually, they were dead; lived only for their petty, private interest, for their looms
and gardens, and knew nothing of the mighty movement which, beyond their horizon, was
sweeping through mankind. Garments workers in Chicago fought against working 12 hours a
day and seven days a week in 1886, some 125 years ago. The phenomenon still remains same in
Bangladesh. At twenty first century it can easily be compared with the condition of working class
in England at the outset of Industrial revolution. Despite having a significant achievement in
national economy, labor unrest in this sector is not diminishing at all. In order to survive in the
quota-free competitive international market, addressing labor unrest has been a crying need.
Labor unrest has been a common phenomenon in the RMG industry of Bangladesh. Workers are
being embroiled in clashes frequently; they call strikes often to press their demand home. It
causes enormous loss to the owners, cripples the economy and tarnishes the image of the country
aboard. It also makes foreign buyers reluctant to render future orders. In addition the industry is
losing competitive edge for this. But the basic needs of the labor force must be mitigated. The
socioeconomic condition of labor force of RMG industry of Bangladesh, in no way, can be said
well.

10

As most of them are uneducated and unskilled, they get very poor salary in contrast to everincreasing expense of livelihood. Very often they do not get their salary, bonus and overtime bills
in time. In many factories they are forced to work long hours in unhygienic condition.
Maltreatment by the mid-level officers is their common fate. As there is no provision for trade
unionism, they do not have any access to the policy-making process. In such a situation, they
come to the street to raise their voice and involve themselves in vandalism and rampage. Several
studies have closely looked at the causes of the uprising within this industry. Among them
Hossain et al. (2010) analyzes the various estimates of basic needs in terms of calories and
relevant per day money value to meet up such requirements and found in all respect living
conditions of RMG workers are worse than any other social group of the country. He concludes
that long-standing deprivation of basic human needs often force the garment workers to follow
the path of violence. Absar (2001) argues that low wage and sub-standard living condition are
major causes of labor unrest in the RMG industry of Bangladesh. He rightly argued that those
who can get adequate food and live in better environment can contribute more to the production
than those are deprived of these necessities. In respect of wage and living standard, the garment
workers of Bangladesh lag far behind of those of China, Sri Lanka and Vietnam. Yet, RMG
production is higher in Bangladesh. The owners of garment factories should take it into
consideration. He further points out another cause of labor unrest in the readymade garment
industry of Bangladesh: workers lack of feeling of ownership. Shahiduzzaman (2010) claimed
that most garment factories do not follow the labor law and ILO conventions. The Labor Act,
2006 clearly stipulates that the wages of a worker must be paid within seven workings days of
the completion of the stipulated wage period. This is not followed in practice. In addition, some
of the factories do notprovide appointment letters, identity cards and service books. Alamgir
(2010) found that from the generated total net profit in the industry, only 30 per cent is being
spent on the workers, whereas around 50 per cent is spent on workers' wages in other countries.
Ali (2008) observes that the adverse impact of labor unrest in national economy of Bangladesh.
He reported that ownership of about 40 large scale garment factories has been handed over to the
foreigners and ownership of about 100 factories is under process of handing over during the
previous one year. This, the author, claimed was happening under intensive supervision of high
officials of factories who are responsible for widening the gap between the owners and workers.
11

Though causes of labor unrest are many and cross-cutting, it is evident that the foremost is the
long-standing grievance of the workers. In this regard workers concern for job security and
ensure payments are crucial and need to be look at. At present it is established that the wage they
get is low. Very often they do not get their salary, overtime bills and bonus in time. Their
recruitment system is outright hiring and firing as they do not get any appointment letter and
identity card of the factory, they can be dismissed by owners for any reason at any time. They do
not know anything about their job contract. Being maltreated by owners and mid-level officers,
working long hours in congested environment without sufficient rest, lack of nutritious foods,
medicine, right to legitimate protest against ruthless exploitations, etc. are their daily destiny.
Factory building collapse, fire accident, stampede render many dead and injured. Nevertheless, if
any worker protests against owners or management, he/she is threatened by various types of
harassment such as dismissal, arrest or even physical assault by the hired hooligans of owners.
The conflict of interests between buyer and seller of labor power has become conspicuous and
this has led to the rise of trade union movement throughout the world. The tradition of the
parallel development of the nationalist and the trade union movement, which has originated in
British India, continued through the Pakistan period down to the birth of Bangladesh. Bombay
Mill Hands Association, first of its type in India, formed in 1890, gave impetus to the trade union
movement in British India. The establishment of ILO in 1919 provided a source of inspiration for
the workers to organize themselves and shape their destiny. History is the evident that the
outburst of workforce deriving from their struggle for a humble living can never be subdued.
Coercive measures to disperse the agitation only infuriate the workforce which can take the
shape of a revolution. Taking necessary steps to solve labor unrest in RMG industry is a demand
of time. Under prevailing uprising Bangladesh government has taken initiatives to address the
grievance issues through fixing minimum wage for the industry. In this regard government
formed a high powered body to recommend the minimum wage by consulting various social
stakeholders. The body was also asked to prepare a report on the nutritional requirements of the
apparel workers by consulting the Institute of Food and Nutrition of the University of Dhaka,
Sramik Karmachari Oikya Parishad and other garment workers association.

12

The board recommended the minimum wages in light of 10 issues: cost of living, living
standards, production cost, productivity, cost of the goods produced, inflation rate, job pattern
and associated risks, business capacity, socioeconomic condition of the specific industrial sector
and the country as well as other relevant issues. But incorporating such issues resulted in a
number of controversies as the Bangladesh Bank, BBS, and BIDS reported that since 2006, the
cost of living increased by at least 35 percent, while Centre for Policy Dialogue (CPD) reported
that the average cost of living has risen by around 70 per cent. Still CAB by workers, had
increased by 53 percent on an average.

13

Strengths

Weaknesses

1. The biggest foreign currency earning

industry.

1. Backward Linkage industry is absent

2. Ancillary services, fees, commission are

more.

2. Automation is not cost effective in our

country.
3. External raw materials supply.

3. RMG credit experts are available.

4. Competitors like China doesnt have vertical
integration

Opportunities

Threats

1. Investment in Backward Linkage Industry.

1. WTO agreement.

2. Liberalized Globalization will push to

improve the quality of the RMG products.

2. Pressure on Compliance issues from

consumer groups.

3. Composite plants will get advantage by

reducing lead time.

3. Negative image of Bangladesh in the

international market for less concern on
human and social issue

3.0 SWOT Analyses:

14

4.0 Condition Of Garments Sector In Bangladesh.

Bangladesh has secured an important place in the world apparel market. The major competitors
of Bangladeshi exporters in the EU and the US market are China, Turkey, Vietnam, India,
Indonesia, Mexico, Honduras, Cambodia, Pakistan and Sri Lanka. Bangladesh is the third largest
supplier of Knitwear to the world market with 3.8 percent global market share in 2008, where
China is the top supplier with 33.8 percent market share. Turkey stands second with 4.4 percent
share of the world market for knitwear. In the woven garment market Bangladesh is again the
third largest supplier in the world with 3.3 percent share of the global trade in 2008. China is the
largest supplier with a market share of 29.3 percent followed by India (3.3 percent).11 The world
markets for knitwear and woven are almost equal in size and both are growing steadily.
Bangladesh has gradually increased its share of the world apparel market from 2.6 percent in
2000 to 3.4 percent in 2011. During this global recession the RMG sector of Bangladesh fairly
conclusively showed its maturity. Very few countries that export substantial amount of RMG
products competed as effectively as the exporters of Bangladesh. Their competitiveness in the
world market helped them to maintain, and indeed increase, the market share. This is analyzed in
more detail in the following sections in the context of the principal markets of Bangladesh, the
EU, the USA, and Canada.

15

4.1Composition Of Export Of Bangladesh.

Jute & Jute

1.15%

Engineering
Products
1.92%

others
7.56%

Chemical
Products
0.63%
Agriculture
Products
1.50%
Frozen food
2.75%

Leather, leather
goods and
Footwear
2.83%

Knitwear
40.01%
Woven
Garments
37.11%

4.2World GDP and Export Growth 2010-11

7.00
6.00
5.00
4.00
3.00
2.00

Real GDP
1.00
0.00
1.00
-2.00

Export volume

As indicated earlier, RMG products comprise more than three-quarters of the total export of
the country; knitwear is the largest export category with 40.0 percent share of the total export
earnings (2009-10) followed by woven garments with 37.1 percent share (see Figure 5 below).
Although many categories of other goods are exported from the country, none of them earn a
substantial amount. The third most important export item is jute and jute goods. Export of this
sector contributed 4.5 percent of the total export revenue followed by home textiles that
accounted for 3.3 percent. Frozen food (principally shrimp) contributed 2.8 percent, leather and
leather products 2.8 percent, and engineering products 1.9 percent. However, none of these
sectors have shown sufficient and sustained dynamism to reduce the importance of the RMG
sector in the export trade of the country, which in fact has increased over time especially after the
recession that badly mauled most of these other sectors. Jute and jute goods exports have surged
during the last two years as did home textiles, but it is too early to say if the higher growth would
be sustained, although the prospects seem bright. Bangladesh has not yet succeeded in
diversifying the sources of its export revenue; on the contrary it has become even more
concentrated with overwhelming dependence on RMG products. However, it should be
mentioned that the number of products under the RMG rubric has multiplied over time. The
global downturn has reduced export demand for Bangladeshi goods, the total export earnings
decreased by -1.9 percent in 2009. Total export had grown by 23.4 percent in the previous year.
Both knitwear and woven garments exports withstood the recession well. The former decreased
by only 0.42 percent while the latter increased by 0.73 percent in 2009. Export of ready made
garments as a whole remained stagnant with a growth of 0.13 percent. Such growth was achieved
despite the fact that the global imports of these items declined markedly in both the EU and the
US market 13 Other mmentionable export items that achieved positive growth in 2009 are jute
products, engineering and agricultural products, terry towel, chemical products and footwear.
However, the growth in the exports of these items did not offset the reduction in other items.
18

4.3The US Market
The USA is the largest importer of the world with a total import bill of about $1.9 trillion in
2010 ($1.5 trillion in 2009) or about 12 percent world imports. This is the amount that the rest of
the world exported to the USA, and hence, the export performance of these countries depends
crucially on the size of the US import bill. Figure 7 shows the value of US total import measured
on the left vertical axis and the value of US imports from Bangladesh only on the right vertical
axis. Total import of USA increased by 58 percent during the new millennium, but its import
from Bangladesh increased by 77 percent. Until before the recession, import of the USA from
Bangladesh moved in line with its total import. But during the recession US total import
nosedived, but its imports from Bangladesh remained almost unchanged. After the recession both
seem to have again moved in line. Hence, it would appear that the growth of the US import of
Bangladeshi products roughly follows the growth of the total import of the USA. Whatever be
the other determinants of export growth, it would seem that the total import bill of the USA has
an overriding influence on the total export of Bangladesh to the USA. The main export item of
Bangladesh to the USA is RMG, especially woven garments. Figure8 shows that the export of
RMG from Bangladesh to the USA is also sensitive to the total RMG import of the USA;
Bangladesh gains from a robust growth of the total RMG import of the USA. This obviously also
implies that a contraction of the US global import adversely impacts on its import from
Bangladesh, which is evident from the figures
.

19

4.4 Import Of USA From The World & Bangladesh

2000
4.50
4.00

1500

3.50
1000

3.00
2.50

500

2.00
1.50

100

1.00

50

0.50

US import from
world

US import from Bangladesh

US import
from World
(Billion
USD)

Knitwear did not feature prominently in the export of RMG products from Bangladesh to the
USA; but there has been a turnaround in recent years. Knitwear now comprises nearly a quarter
of the RMG exports to the USA. During 2006-08, knitwear achieved a higher growth than that of
woven garments, but the reduction in 2009 was also sharper. It is difficult to explain from these
data alone why knitwear has performed so much poorer in the USA compared to woven
garments. One reason could be that most knitwear exports receive duty- free treatment in the EU
market since the end of the last century. Most other developed countries have also granted duty
free access to RMG exports including knitwear from Bangladesh. However, the USA has
stubbornly declined to provide duty-free access to most Bangladeshi products. Indeed, the US
importers of Bangladeshi apparels pay very high custom duties. Hence, knitwear is more
profitable in the EU and other markets relative to the US market. This might have encouraged the
exporters to concentrate their efforts in these other markets rather than the US market. In the case
of woven garments, most of the exported items to EU do not qualify for duty-free treatment since
these do not satisfy the rules of origin. Consequently there is no special advantage in exporting to
EU. The US market being long established (by virtue of MFA quota) and more profitable attracts
much of the woven exports from Bangladesh. The economic downturn in the USA has affected
the exports of both woven and knit garments. As shown in Figure 9 there has been a trend
decline in exports of both these categories of export to USA after December 2008, i.e. after
almost two quarters of the onset of the recession in the USA. Since import orders are placed
several months ahead of the actual imports, some lag in the impact of a recession is not
unexpected. During 2009 US imports declined by a whopping 25.9 percent, which was the
steepest contraction since the Great Depression. Both knitwear and woven exports fell. This
adversely impacted on the imports of apparels from individual countries. Table 1 below shows
the apparel exports of the top-10 exporters to the USA. Except for China every other country
suffered reductions in their exports. However, Bangladesh had the smallest and an insignificant
reduction.

21

The yearly growth rates of major competitors of Bangladesh in the US market are
Only China, Indonesia and Vietnam obtained positive growth in knitwear export to the USA in
2009 while the rest had negative growth rates, in some cases very large negative rates. All
countries except Honduras and Hong Kong bounced back in 2010. In woven garment export,
only Bangladesh achieved positive growth in 2009. All other countries including China had
negative growth. Some countries such as Hong Kong, Thailand Cambodia and Honduras
suffered very heavily. However, the recession may not be the only factor behind the decline of
such countries as Hong Kong and Thailand. Both countries suffered from negative growth since
2004, long before the recession. Hong Kong appears to have been almost eliminated from the
woven garment market of the USA; it has experienced a massive 95.5 percent reduction in its
woven export to the USA since 2004. Thailand has suffered a decline of 44.2 percent during the
same time. It seems unlikely it will make a comeback. As its economy develops and wages
increase, it is likely to become less competitive in the global apparel market and hence lose
market share progressively just as Hong Kong did. RMG exporters to aggressively compete to
raise their share of the US market. Since the end of the MFA, the share of Bangladesh in the US
woven garment import has more than doubled from 3.9 to 8.3 percent. The share of knitwear rose
from 1.8 to 2.6 percent of US total import of knitwear. The rapid increase in the share of the
RMG export of Bangladesh since 2004, especially woven export, is a testimony to the maturity
and competitiveness of the Bangladeshi exporters serving the US market. Bangladesh is now the
fourth largest exporter of RMG to the US market behind China, Vietnam and Indonesia.

22

4.5 The EU Market

Since nearly nine-tenths of the exports of Bangladesh to EU comprise RMG, the demand for
its exports in the EU market did not decline on account of the recession. The total export volume
showed a healthy increase of 6.7 percent between 2008 and 2009. The increase was driven by the
robust growth of RMG export of 8.4 percent. Figure 13 below shows that the Bangladeshs
export of RMG products to the EU fairly closely followed the trend of the total RMG import of
the EU from the world. The RMG exporters of Bangladesh managed to extract a greater share of
the global apparel import of EU. This suggests an increasing competitive of RMG exporters in
the EU market. The rapid growth of the RMG export from Bangladesh to the EU market was
greatly facilitated by several factors including duty-free and quota-free access from 1986 onward
under a bilateral textile agreement, the easing of the EU rules of origin for apparels from three to
two-stage domestic production with quota restrictions in 1997 and without quota restrictions
from 1999, and Everything But Arms (EBA) scheme of GSP that granted duty- free and quotafree access to virtually all export products of the least developed countries of the world
commencing from 2001.15 There seems little doubt that the preferential treatment of the LDC
exports to EU that gave LDC exports an edge over non-LDC exports was instrumental in
building the export capacity of Bangladesh fairly rapidly and in this sense the GSP of EU served
its purpose. The duty free access was especially helpful to the ready made garments exports since
the average duty on garment imports to the EU is quite high (11.5 percent). The two-stage
production requirement to satisfy the EU rules of origin for GSP conferred special advantages to
knitwear export since the garment manufacturers could profitably produce knit fabric locally and
cut and make (CM) the fabric into knit garments. Knit garments, therefore, satisfied the twostage domestic production requirement and could obtain duty-free access into EU market. Riding
on this advantage knitwear export to EU expanded very rapidly. The share of Bangladeshi
knitwear in EU total import increased rapidly as shown in Figure 14. As in the case of the US
market, the share of Bangladeshi apparels in the total EU import rose markedly during the
recession. Bangladesh is now the

23

second largest supplier of knitwear to the EU market. However, it has not fared as well in the
woven garment export whose share remained virtually unchanged from the beginning of this
decade .The manufacture of woven garments to take advantage of the two-stage relaxation posed
greater difficulties. The sunk cost requirement for the establishment of a woven fabric production
facility is very large (several times the requirement of that of knit fabric). The cost of production
is significantly higher than that in the competing countries. Hence, most woven products are
made from imported fabric. Consequently, these woven exports do not qualify for GSP treatment.
EU importers of woven garments from Bangladesh are required to pay fairly steep custom duties,
pushing up the cost of procurement from Bangladesh. 16 On the other hand some developing
countries that have a textile base, such as Pakistan, can obtain GSP duty concessions. Thus, the
profitability of export of woven garments to EU countries is lower. As shown in Figure 14, the
share of woven garment export of Bangladesh in the total EU import of woven products is much
lower than that of knitwear export. About three-fourths of the total RMG exports to EU currently
enjoy duty free access. Bangladesh RMG products thus have a considerable price advantage over
non-LDC countries since the average duty rate on the RMG products is quite high (about 11.5
percent). Further expansion of woven fabric manufacturing will raise the proportion of RMG
export receiving EBA duty-free facility. The outlook for RMG export to EU seems bright.

24

14%
12%
10%
8%
6%
4%
2%

Knitware
Total RMG

Woven Garment

4.6 Share of Bangladesh in EU global RMG

import

5.0Problems surrounding ready made garments sector.

The garment industry of Bangladesh has been the key export division and a main source of
foreign exchange for the last 25 years. National labor laws do not apply in the EPZs, leaving
BEPZA in full control over work conditions, wages and benefits. Garment factories in
Bangladesh provide employment to 40 percent of industrial workers. But without the proper laws
the worker are demanding their various wants and as a result conflict is began with the industry

5.1 Raw materials:

Bangladesh imports raw materials for garments like cotton, thread color etc. This dependence on
raw materials hampers the development of garments industry. Moreover, foreign suppliers often
supply low quality materials, which result in low quality products

5.2. Unskilled workers:

Most of the illiterate women workers employed in garments are unskilled and so their products
often become lower in quality.

5.3. Improper working environment:

Taking the advantages of workers' poverty and ignorance the owners forced them to work in
unsafe and unhealthy work place overcrowded with workers beyond capacity of the factory floor
and improper ventilation. Most of the garment factories in our country lack the basic amenities
where our garment workers sweat their brows from morning to evening to earn our countries the
major portion of our foreign exchange. Anybody visiting the factory the first impression he or
she will have that these workers are in a roost. Improper ventilation, stuffy situation, filthy rooms
are the characteristics of the majority of our factories. The owners profit are the first priority and
this attitude has gone to such an extent that they do not care about their lives.

26

5.4. Lack of managerial knowledge:

There are some other problems which are associated with this sector. Those are- lack of
marketing tactics, absence of easily on-hand middle management, a small number of
manufacturing methods, lack of training organizations for industrial workers, supervisors and
managers, autocratic approach of nearly all the investors, fewer process units for textiles and
garments, sluggish backward or forward blending procedure, incompetent ports, entry/exit
complicated and loading/unloading takes much time, time-consuming custom clearance etc.

5.5. Gendered division of labor:

In the garment industry in Bangladesh, tasks are allocated largely on the basis of gender. This
determines many of the working conditions of women workers. All the workers in the sewing
section are women, while almost all those in the cutting, ironing and finishing sections are men.
Women workers are absorbed in a variety of occupations from cutting, sewing, inserting buttons,
making button holes, checking, cleaning the threads, ironing, folding, packing and training to
supervising. Women work mainly as helpers, machinists and less frequently, as line supervisors
and quality controllers. There are no female cutting masters. Men dominate the administrative
and management level jobs. Women are discriminated against in terms of access to higher-paid
white collar and management positions. When asked why they prefer to employ women foe
sewing, the owner and managers gave several reasons. Most felt that sewing is traditionally done
by women and that women are more patient and more controllable than men.

5.6 Wages:
The government of Bangladesh sets minimum wages for various categories of workers.
According of Minimum Wage Ordinance 1994, apprentices helpers are to receive Tk500 and
Tk930 per month respectively. Apprentices are helpers who have been working in the garment
industry for less than three months. After three months, Apprentices are appointed as helpers.
Often female helpers are discriminated against in terms of wages levels, and these wages are also
often fixed far below the minimum wage rate. A survey conducted in 1998 showed that 73% of
female helpers, as opposed to 15% of their male counterparts, did not receive even the minimum
wage.

27

5.7 Insufficient of loan:

Insufficiency of loan in time, uncertainly of electricity, delay in getting materials, lack of
communication, problem in taxes etc. Often obstruct the industry. In the world market 115 to 120
items of dress are in demand where as Bangladesh supplies only ten to twelve items of garments.
India, South Korea, Hong Kong, Singapore, Thailand, Taiwan etc, have made remarkable
progress in garments industries. Bangladesh is going to challenge the garments of those countries
in the world market.

5.8. Unit labor cost:

Bangladesh has the cheapest unit labor cost in South Asia. It costs only 11 cents to produce a
shirt in Bangladesh, whereas it costs 79 cents in Sri Lanka and 26 cents in India. Clearly,
Bangladeshs comparative advantage lies in having the cheapest unit labor cost.

5.9. Working hours:

Though the wages are low, the working hours are very long. The RMG factories claim to operate
one eight-hour shift six days a week. The 1965 factory Act allows women to work delivery
deadlines; however, women are virtually compelled to work after 8 oclock. Sometimes they
work until 3 oclock in the morning and report back to start work again five hours later 8
oclock. They are asked to work whole months at a time the Factory Act, which stipulates that no
employee should work more than ten days consecutively without a break.

5.10. Poor accommodation facilities:

As most of the garment workers come from the poor family and comes from the remote areas
and they have to attend to the duties on time, these workers have to hire a room near the factory
where four to five huddle in a room and spend life in sub human condition. For four to five
workers there is one common latrine and a kitchen for which they have to pay from Tk=2000 to
Tk=2500/-.
28

They share this amount among themselves to minimize the accommodation expense. One cannot
believe their eyes in what horrible condition they have to pass out their time after almost whole
day of hard work in the factory. After laborious job they come into their roost, cook their food
and have their dinner or lunch in unhygienic floor or bed and sleep where they take their food.
They share the single bed or sleep on the floor. The owners of these factories must not treat the
workers as animals. The owners of these factories who drive the most luxurious car and live in
most luxurious house do ever think that these are the workers who have made their living so
juicy. Will these selfish owners ever think of these workers of their better living for the sake of
humanity by providing better accommodation for these workers in addition to providing with the
job.

5.11. Safety Problems:

Because of the carelessness of the factory management and for their arrogance factory doors
used to be kept locked for security reason defying act Safety need for the worker 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. Some important cause of the
accident are given below Routes are blocked by storage materials
Machine layout is often staggered
Lack of signage for escape route
No provision for emergency lighting
Doors, opening along escape routes, are not fire resistant
Doors are not self-closing and often do not open along the direction of escape
Adequate doors as well as adequate staircases are not provided to aid quick exit
Fire exit or emergency staircase lacks proper maintenance
Lack of proper exit route to reach the place of safety
Parked vehicles, goods and rubbish on the outside of the building obstruct exits to the open air
Fire in a Bangladesh factory is likely to spread quickly because the principle of
compartmentalization is practiced
29

5.12. Political crisis:

Garments industries often pay dearly for political unrest, hartal and terrorism etc. The
international market has withdrawn quota advantage over garments export form Bangladesh
since December 2005.Bangladesh has to advance cautiously for getting better position of her
garments in the world market. Finally destruction of twin tower in 11 September 2001. invasion
on Afghanistan and Iraq and depression in world Economy have seriously affected the export
trade of Bangladesh.

5.13. Price competitiveness:

China and some other competitors of Bangladesh have implemented sharp price-cutting policies
in exporting garment products over the last few years, but Bangladesh has failed to respond
effectively to such policies. China was able to drop the export price of 29 garment categories by
46 per cent on average in the United States within a year, from $6.23 per sq meter in December
2001 to $3.37 per sq meter in December 2002. Bangladesh needs to respond to such price-cutting
policies of its rivals in order to remain competitive in the quota-free global market.

5.14. Lead time:

Lead time refers to the time required for supplying the ordered garment products after the export
order has been received. In the 1980s, the usual lead time in the garment industry was 120-150
days for the main garment supplier countries of the world; it has been reduced to 30-40 days in
the current decade. However, in this regard the Bangladesh RMG industry has improved little;
for example, the average lead time is 90-120 days for woven garment firms and 60-80 days for
knit garment firms. In China, the average lead time is 40-60 days and 50-60 days for woven and
knit products respectively; in India, it is 50-70 days and 60-70 days for the same products
respectively. Bangladesh should improve its average lead time to compete in the international
market.

30

5.15.Governments Inaction:
Governments negligence has also created various problems in this sector. For instance, the
minimum wage for textile workers was first set in 1994 7has only been revised twice in 2006 &
2010.

5.16.Labor Unrest:
In Bangladesh, labor unrest occurs frequently. Most recently, this year labors of all garments
industries has demanded some facilities & left their work . And the condition became too
critical.The resurgence of unrest in the Bangladeshi garment sector continues with over 500,000
workers now locked out in Ashulia.

31

6.0 Opportunities in this field.

The garment industry is Bangladeshs largest foreign currency earner, contributing nearly 80% of
all export earnings at around $19bn last year. So, there exists huge opportunities in near future.
The last few decades witnessed a dramatic increase in the globalization trend, particularly for the
emerging market economies. Increased pace of globalization was aided, among other factors, by
the spectacular advancement of technology, removal of trade and investment barriers and
collapse of the former Soviet regime. Although the wind of globalization has swept over many
South and Southeast Asian nations and reached the shores of Bangladesh, Bangladesh still has to
exploit the full potentials of this powerful undercurrent unleashed by the globalization process.
The present position of Bangladesh RMG in global market is flourishing.

New Export-sector
Bangladesh has a great scope for exporting apparel products. Day by day, the export sectors are
increasing, which is a good news for Bangladesh. According to the industry leaders saying,
Korea has the potential to emerge as the fourth largest Asian market for Bangladeshi apparel
products after China ,Japan and India. Korea has become a lucrative destination for Bangladesh's
garment as apparel exports to that country nearly doubled to $80.01 million in the last financial
year. "Korea is a good emerging market for our products thanks to the quality and competitive
price we offer," President of Bangladesh Garment Manufacturers and Exporters Association
(BGMEA)Shafiul Islam Mohiuddin said recently.

Cheaper Labor Cost:

Bangladesh has very cheap labor cost, so big industries in USA, Canada, UK, Europe, and
Australia can easily outsource their works from Bangladesh. Bangladeshi garments sector,
ICT emerges because of the cheap labor and high quality. The hundred percent exportoriented RMG industry has experienced phenomenal growth during the last 15 years.

32
Within a very short period of time, it has attained great importance in terms of its
contribution to GDP, foreign exchange earnings and employment and also as a vehicle of
social changes. Cheap fabric imports & phenomenally low labor costs back home are among
the advantages that Bangladesh is using to the hilt.

Exporting Duty-free Products:

In September 2011, India had announced duty-free access to 46

garments products from

Bangladesh including items such as pants, shirts, blouses, skirts, kids wear, cotton night wear,
jeans, swim wear & tar-suits.

Cost Management:
The Bangladesh garment sector, despite making a raw material base , has emerged more cost
competitive than the Indian clothing industry & now has an edge even over the Chinese
garments in specialized clothing items such as woven garments & knit wear. Besides labor
cost and duty advantage, raw materials and real estate costs are also cheaper in Bangladesh.
There is also no doubt that Bangladesh is benefiting from various preferential trade
agreements providing tax free entry into several dozen countries.

Open-rule Policy:
In order to stimulate rapid economic growth of the country particularly through
industrialization, the Govt. has adopted an Open-rule

Policy to attract foreign investment to

Bangladesh.

33

 Export Processing Zone(EPZs):

EPZs have been created to provide complete infrastructural facilities including communication &
utility connection, where potential investors would find a congenial investment climate free from
cumbersome procedures.

Attractive Business Field:

RMG and all that are involved have opened up so many doors and windows for the nation.
Recent surveys carried out by the consulting firm McKinsey and the accounting firm KPMG
identified attractive prices as the most important reason for purchasing in Bangladesh. Price
levels will remain highly competitive in the future, since significant efficiency increases will
offset rising wage costs. A recent survey by the consulting firm McKinsey found that although
Western buyers are evaluating a considerable number of sourcing options in the Far East and
Southeast Asia, including Cambodia, India, and Pakistan, many of them view Bangladesh as the
next hot spot.

Market overview:
The Ready Made Garments (RMG) sector is a major foreign exchange revenue generator for
Bangladesh contributing 77% to the countrys net exports during 2009-2010. Garment exports,
totaling $12.3 billion in FY09 and remittances from overseas Bangladeshis totaling $9.7 billion
in FY09 accounted for almost 25% of GDP.The Government of Bangladesh has set 26.36 billion
dollar export target for the fiscal year 2011-2012. This target is 15% more than the actual exports
for which a comprehensive policy support by the Government is required.

34

Key opportunities:

Opportunities contribute a lot to a overall performance & help to achieve the goal. The best use
of opportunities is so important. Two major destination markets for Bangladesh garment exports
have been the US and the EU.
In Bangladesh, business opportunities are available in the following areas:

Supply of textile testing instrumentation

Test materials for textile testing procedures

Supply of lab equipments

Supply of dye and chemicals

Supply of air compressor, boiler & generators

Supply of second hand/recondition textile machineries.

Consultancy

Fashion Designing

An ambitious project would be introduction of sewing machine operating/cutting course in all

secondary school of villages as extracurricular subject to ensure smooth trained labor.

Contributions:
In the field of industrialization, role of textile industry is found very prominent in both
developed and developing countries. Garments Industry occupies a unique position in the
Bangladesh economy. It is the largest exporting industry in Bangladesh, which experienced
phenomenal growth during last two decades. The industry plays a key role in employment
generation and in the provision of income to the poor. Nearly two million workers one directly

and more than ten million inhabitants are indirectly associated with the industry. The sector has
also played a significant role in the socio-economic development of the country.
35
It also plays a pivotal role to promote the development of linkage small scale industries. For
instance, manufacturing of intermediate product such as dyeing, printing, zippers, labels has
began to take a foothold on limited scale and is expected to grow significantly. Moreover it has
helped the business of baling, insurance, shipping, hotel, tourism and transportation. The sector
also has created jobs for about two million people of which 70 percent are women who mostly
come from rural areas. The sector opened up employment opportunities for many more
individuals through direct and indirect economic activities, which eventually helps the countrys
social development, woman empowerment and poverty alleviation. In such a way the economy
of Bangladesh is getting favorably contribution from this industry.

Some Key Facts The Garments Sector, Trade, & Bangladeshs Economy:

The garment sector is one of the most important components of Bangladeshs

economy. Here is some key factors

Garment exports were an estimated $16 billion USD out of total merchandise exports
$22.92 billion USD in 2011 a 43% increase over previous year, making them the nations
largest source of exports.

Garment sector exports accounted for 25% of GDP in FY 2009-2010.

The garment sector is an important source of employment generation and currently

provides employment for over 4 million people or approximately 3% of the labor force.

As 90% of the workforce in the garment manufacturing sector is female, the garment
sector is particularly important for womens employment.

The garment sector is a key provider of employment and income to the urban poor.

The sector is concentrated in Dhaka and Chittagong, where approximately 90% of the
factories are located. The garments sector of Bangladesh has grown impressively and
captured an increasing share of the world market. Garments now make up over threefourths of Bangladeshs merchandise exports.
36

7.0Recommendation.
The

garments

sector

plays

vital

role

in

our

economy.

But

there

are

still some lack ages for which this sector cant improve so much. In order to hold profitable
position for garments in the world market the proper steps should be taken. Increasing the
productivity of the labor remains at the core of increasing competitiveness, which in turn
depends on level of technological capability, wage incentives, working conditions and skill up
gradation. However, even now Bangladesh could not achieve all these elements to improve labor
productivity. As a result, productivity of Bangladeshi garment workers is less than that of fellow
competing countries. Thus my primary recommendation is to improve the productivity of the
garment workers. To increase the productivity, implementation of all the existing labor laws is
necessary. Also, new labor laws should be formulated according to the needs of countrys labor
market. The workers have to be made aware of their rights and should be given some support
services by the garment factory owners. Along with increasing the productivity of the workers,
the industry as a whole has to be supported by the government by increasing and developing the
present infrastructure, i.e. development of backward linkage, improve port facility, improve
communication facilities, reduction of custom delays, setting up of export processing zones, etc.
to

improve

the

competitiveness

of

the

Bangladesh

garment

industry.

37

Increasing Productivity of Workers:

(A) Sufficient Raw Materials:
In Bangladesh maximum raw materials of RMG sector is imported from foreign countries, which
are time consuming & not sufficient. So managing of sufficient raw materials is a must.

(B) Implementation of Existing laws and formulation of new laws according to the needs:
In Bangladesh the Government support is less & there is shortage of proper implementation of
laws. So, the Government should enforce the laws according to the needs of the country market.
Productivity greatly depends on the occupational safety of garment workers. Measures should be
undertaken to improve the implementation of the labor laws regarding occupational safety. Laws
regarding working hours, minimum wage, weekly holiday, work environment i.e. ventilation,
cleanliness, fire prevention should be strictly implemented by the government.
(C) Raise Awareness among the workers
Laws cannot be enforced if there is no high demand for the same. Most surveys done so far
shows that the workers are barely aware of their rights. Most female workers were unaware of
maternity leave and most of all the workers did not know about their rights to a weekly holiday.
Thus the factory owners could take full advantage of this lack of knowledge. Hence, there is a
pressing need for educating the workers about labor laws. Thus the government, with
cooperation from manufacturers, should conduct educational programs for their workers. The

workers should be educated about their rights. Alongside, the government could also run
educational programs for the manufacturers citing the advantages of a safe and congenial
working environment.

38
(D) Relationship Between worker & Employ
A good relationship between worker & employer is very important for a proper performance.
So, Bangladesh garments makers are talking with the International Labor Organization (ILO) to
try to establish better industrial relations between worker & factory managers by implementing
the better work program.

(E) Provision of Support Services by the Owners

Since most of the garment workers are women, the following support services should be
provided to them. Factory owners, government agencies and even non-government agencies can
come forward to help in this.
(i.) Transport Services:
Existing transport system is not women friendly at all. It is mainly due to the fact that
Bangladesh is a highly sex-segregated society and women mobility is restricted. So, a bus service
only for women should be started so that the women workers can commute to and from their
workplace without any hassle. Even factory owners can start a bus service to pick up their
workers. It would not be too difficult since most of the workers of a factory tend to live together.
(ii.) Housing Facilities:
Similar to transport services, existing housing facilities cannot meet the need of female workers
since present housing facilities require a male household head. So the young female workers
migrating from the village for work have to take shelter in unhygienic and insecure places. As a
result, they are often stressed during their work and it leads to decrease in productivity. Hence,

attempt should be made to provide cheap, secure and hygienic housing facilities

39
(iii.) Health Care Services:
However, lack of health care facilities is also greatly responsible for the ill health of the workers
employed in the garments industry. Along with absence of medical facilities, lack of leave
facilities is also to blame for the workers ill health. Sometimes the employers even let the
workers out of the factory for a short time for medical purposes. Thus, there is an immediate
need to provide medical assistance to the workers at the doorstep of the factory. Factory owners
and non-government agencies should set up mini-clinics at factory premises for the workers to
avail medical treatment regular.
(iv.) Training and Education facilities:
Most of the garment workers enter the job market without any prior training or education. They
mostly learn their trade through on the job training. However, their productivity could be greatly
increased if they were given skill training and other necessary education for an industrial worker.

Develop the present Infrastructure:

One of the primary reasons for the Bangladeshi garment industry not to be able to compete with
the others is the long lead-time. It is found that it takes about three months for the factory to
deliver the products to the US and European markets after getting an order. This is too long a
time compared to the other manufacturing countries around the world. Below are few reasons
and how to improve them:
(a) Backward Linkage:
Bangladesh still lacks the backward linkage industries, which support the garment industries.
There are just not enough textile factories. As a result, Bangladesh has to import its textiles from

India, China or Thailand, which takes a long lead-time. Especially since the factories have to
place the order for textiles after they receive the order from their European and American buyers.
Thus, the government should give incentive to entrepreneurs to set up textile factories, which
would reduce this lead-time greatly.
40
(b) Improving Infrastructure and Communication Services including Port:
Primarily, Bangladesh lacks a proper highway between its capital city Dhaka to its port city
Chittagong. As a result, a mere 250 km journey takes up to 10 hours for trucks. And once the
products to be exported reach the port, it takes a long time to load them. The port needs badly to
be upgraded and modernized to reduce delay in exporting.

(c) Reduce Custom Delay and setting up of Export Processing Zones:

In Bangladesh, custom delay is one of the main hindrances to timely export. The government
needs to make exporting much easier. It is found that one has to complete around 40 forms for a
product to be exported. This procedure definitely has to be made easier. The government can also
think of setting up more Export Processing Zones (EPZ). A few already exist in Bangladesh and
exporting products from these zones are much easier. All the custom formalities are done in the
zones, and once the container for export is out of the EPZ, its ready to be loaded on a ship.
If proper review system is created & enforced the revisions will help address the basic needs of
workers & bring great stability to the market.

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8.0 Concluding Remarks

The garment industry in Bangladesh had been expanded year by year until MFA was phased out
at the end of 2004, and remains internationally competitive after that. The initial high presence of
foreign capital has been diluted as local garment producing firms grow. Notwithstanding some
reduction in the export of RMG products during 2009, the industry has emerged out of the global
recession of 2008-09 as a stronger and more efficient competitor in the world apparel market. It
has captured a larger share of the RMG (import) market of Canada, EU and USA. The RMG
exporters are now exploring other duty-free markets such as Japan and Australia. The recent
stimulus package that provides financial incentives for exporting to new markets should raise the
competitive strength of the industry in these markets. It seems likely that the RMG sector will
expand its market shares even more in the coming years and will become a major sourcing hub
for apparels for all major importers. A chronic problem that has adversely affected the
productivity of the RMG sector is the poor state of infrastructure services, especially gas and
electricity. Frequent outages and uncertainty of supply of gas and electricity have increased
costs. These problems have become more acute in recent months. Unless there is a quick
resolution of these and other infrastructure related problems the competitive strength of the
apparel exporters will suffer. Bangladesh is still a supplier of cheap basic apparel items that can
be profitably produced by unskilled and semi-skilled workers. If it wants to move up the value
chain as new opportunities emerge in the post-recession global market, it will need to improve
the quality (productivity) of its workforce and management. Such improvements will not be
possible without a substantial increase in the skill, and hence, remuneration of the workers. If the
sector fails to do so, and the wage rate rises nonetheless in response to positive developments
in other sectors, it will find its comparative advantage pared away steadily.
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References
1) Preference Erosion: Impact on Exports of Bangladesh, Economic and Political Weekly, vol.

42, No. 23 June 09 - June 15, pp. 2219-22.

2) Key Issues and Strategic Options for Bangladesh Readymade Garment Industry, Bangladesh
Development Series- paper no. 2, Dhaka,
3)http://www.scribd.com/doc/14270128/Problems-and-Prospect-of-Garments-Industry-inBangladesh and the-Supportive-Policy-Regime-Current-State-of-Affairs.
4) www.oppapers.com/.../garments-sector-in-bangladesh-page1.html
5) http://en.wikipedia.org/wiki/Bangladesh_textile_industry
6)http://www.worldbank.org/en/news/2012/07/03/consolidating-accelerating-exports-bangladesh
7) http://www.assignmentpoint.com/business/economics/report-on-the-contribution-of-garmentsindustries-in-bangladesh-economy.html
8) http://nsts.in/images/ARSHAD-JAMAL-bgmea-North-South_Textile_Summit-2.pdf
9) http://www.thefinancialexpress-bd.com/2009/07/05/71959.html
10) Different Magazines & Newspapers .