Introduction:

The tremendous success of readymade garment exports from Bangladesh over the last two
decades has surpassed the most optimistic expectations. Today the apparel export sector is a
multi-billion-dollar manufacturing and export industry in the country. The overall impact of
the readymade garment exports is certainly one of the most significant social and economic
developments in contemporary Bangladesh. With over one and a half million women
workers employed in semi-skilled and skilled jobs producing clothing for exports, the
development of the apparel export industry has had far-reaching implications for the society
and economy of Bangladesh. Thus, RMGs contribution to Bangladesh, both direct and
indirect, needs to be recognized for what it is. In the following pages, an attempt is made to
quantify the key role that RMG has come to play in the economy of Bangladesh. The RMG
sector has also played a significant role in the social metamorphosis in a broader context.
This paper attempts to qualify aspects such as women empowerment, population control,
education, environmental awareness, elimination of child labor which contributed to overall
improvement in the HDI (Human Development Index) Indicators.

History of Garments Industry in Bangladesh:

On the formation of Bangladesh in 1971, the new government set up policies, rules and
regulations, which control the economy, partly in accordance with its socialist orientation.
Most private and autonomous organizations and companies including banks were
nationalized. Limits were imposed on private investment and on direct foreign investment.
Direct foreign investment was allowed only in collaboration with the public sector. Until very
recently, the main source of foreign income was jute fibre. The world export market peaked at
80% during the Second World War and the late 1940s, and even in the early 1970s, jute
accounted for 70% of Bangladeshs export earnings. The share of the jute sector in foreign
exchange earnings started to decline due to various synthetic substitutes and artificial fibres
entering the market since the 1980s. With the significant decrease in world demand for jute
fiber leading to declining prices, together with the constant threat of flooding, the
contribution of the jute sector to the countrys economy declined. The focus soon shifted to
the production sector, especially garments industry.
The ready-made garment (RMG) industry of Bangladesh started in the late 1970s and became
a prominent player in the economy within a short period of time.
It was the state trading agency, the TCB (Trading Corporation of Bangladesh) that made the
first export of RMG from Bangladesh in the mid-seventies. The first consignment of private
sector export of garments from Bangladesh took place in 1977-78 when M/S. Reaz Garments
Ltd. exported mens shirts worth 13 million French Francs to a Paris-based firm. At that time,
there were only 9 export-oriented RMG units in Bangladesh. Along with Desh Garments,
some other apparel-producing enterprises were set up in 1979, bringing the total number of
firms in the industry to 22. By 1980, the number of firms in the industry increased to 47, but
total RMG export from Bangladesh was less than US $ 1 million.

In the early 1980s Bangladeshi workers received free training from the Korean Company
Daewoo. After these workers came back to Bangladesh, many of them broke ties with the
factory they were working for and started their own factories. In the 1980s, the RMG industry
of Bangladesh was concentrated mainly in manufacturing and exporting woven products.
Despite the small export volume in the initial years, by the early eighties, the export-oriented
RMG industry was well on its way to a historic place in the annals of industrial development
in Bangladesh.

During the early eighties, the government issued licenses to many entrepreneurs for the dutyfree importation of machinery to produce garments for export purposes. Consequently, the
number of firms in the garments industry increased rapidly and reached 632 in 1984-85.
Export increased from US $ 1.3 million in 1980-81 to US $ 116.2 million in 1984-85, a
phenomenal growth indeed. Bangladesh exported its garments to the North American and
European markets in the early eighties; at that time, its exports were not subject to MFA
Quotas in these markets, hence the spectacular growth. However, the very rapid growth of
imports of apparel from Bangladesh prompted the US, Canada and the European countries to
impose MFA Quotas on Bangladeshs garments exports in 1985. This had temporarily
showed down growth of the RMG industry in Bangladesh; there was a restrained increase in
the number of firms from 744 in 1985-86 to 804 in 1989-90. Export growth had also slowed
down somewhat during 1985- 90 period. However, the industry bounced back from 1990
onwards.
Table-01: Growth of garments factories in Bangladesh
Year
1971
1977
1981
1983
1984-85
1989-90
1994-95
1999-00
2004-05
2005-06

No. of Factory
5
7
78
141
384
759
2182
3200
4107
4250

Compound Growth Rate in %

5.77
82.70
34.45
65.03
14.60
23.52
7.96
5.12
3.48

Source: Annual Report of BGMEA

Since the early 1990s, the knit section of the industry has started to expand. Shirts, T-shirts,
trousers, sweaters and jackets are the main products manufactured and exported by the
industry. The number of garments factories shot up to some 3000 in 2002 and by 2005 it
reached 3560. By 2004-05, exports had reached US $ 6.4 billion.
Table-02: Important issues related to the Bangladesh ready-made garment industry
Year(s)
1977-1980

Issue
Early period of growth

1982-1985

Boom days

1985

Imposition of quota restrictions

1990s

Knitwear sector developed significant

1993-1995

Child labour issue and its solution

2003

Withdrawal of Canadian quota restriction

2005

Phase out of export-quota system

Source: Compiled bu the author from Quddus and Rashid (2000) Mainuddin (2000) and database of the Bangladesh Garment
Manufacturers and Exporters Assocition and the Export Promotion Bureau, Bangladesh

SWOT Analysis of Bangladeshi Garment Industry:

Strengths:
Considerable number of qualified/keen to learn workforce at lower charge.
Energy at low price.
Easily accessible infrastructure (Sea and river ports).
FDI is legally permitted.
Moderately open economy.
GSP facilities and duty free facilities as a less developed country (LDC).
Bangladesh is a member of MIGA (Multilateral Investment Guarantee Agency), under
which protection and safety measures are available.
Bank interest rate of 7% for financing export.

Weaknesses:

Unplanned progress of RMG.

Deficiency in quality.
Owners are unable/unwilling to create friendly work environment.
Political instability and labor unrest.
Subject to natural calamities;
Shortage of skilled manpower.

Opportunities:
European Union (EU) is willing to establish industry in Bangladesh, particularly for
knit sector.
Sweaters are very economical and we have future prospect in this sector.
Japan to be observed as conventionally they purchase handloom textiles and
garments. This sector can be encouraged and expands with continued progress in
quality.
If skilled technicians are available to instruct, then prearranged garment is an option
because labor and energy is inexpensive.
Threats:
Political Violence.
Withdrawn of GSP, duty free access.
Competition faced from other country.

The Garment Sector, Trade, and Bangladesh Economy:

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

Garment exports were an estimated $5.8 billion USD out of total merchandise exports
$7.8 billion USD in 2004, making them the nations largest source of exports.

Garment sector exports accounted for 9.5% of GDP in FY 2003/4.

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

provides employment for over 2 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.

Contribution of Garments Industry to the Economy:

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. In such a context, the trend and growth of garments
export and its contribution to total exports and GDP has been examined the
following table shows the position.

Table-02: Growth and trend of garments exports, and contribution to GDP

Year

Garment Export (Min USD)

Total Export (Min

USD)

Share to Export in %

Share to GDP in %

1984-85

116-

934-

12.42-

1989-90

624 (40)

1924 (16)

32.43 (21)

1994-95

2228 (29)

3473 (13)

64.15 (15)

5.87

1999-00

4349 (14)

5752 (11)

75.15 (-1)

9.23 (9)

2004-05

6418 (8)

8655 (9)

74.15 (-1)

10.63 (3)

2005-06

7901 (23)

10526 (22)

75.06 (1)

12.64 (2)

Source: Economic Review of Bangladesh, BGMEA

It is revealed from the Table-02 that the value of garment exports, share of garments export to
total exports and contribution to GDP have been increased significantly during the period
from 1984-85 to 2005-06. The total garments export in 2005-06 is more than 68 times
compared to garments exports in 1984-85 whereas total countrys export for the same period
has increased by 11 times. In terms of GDP, contribution of garments export is significant; it
reaches 12.64 percent of GDP in 2005-06 which was only 5.87 percent in 1989-90. It is a
clear indication of the contribution to the overall economy. 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
basing, 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.

Table-03: Exports of knit and woven garments

Rank

Origin

Amount (Million US$)

Rate of Change (%)

2003

2004

2005

2003-04

2004-05

China

8,690

10,723

16,808

23.39

56.75

Mexico

7,098

6,845

6,230

-3.56

-8.98

Hong Kong

3,732

3,878

3,523

3.93

-9.16

India

2,056

2,277

3,058

10.74

34.29

Indonesia

2,155

2,402

2,882

11.47

19.99

Bangladesh

1,759

1,872

2,268

6.45

21.15

Cambodia

1,229

1,418

1,702

15.42

20.06

Source: U.S Department of Commerce, Burean of Census cited in Yamagata

Table-04: Exports of knit and woven garments t0 the EU

Rank

Origin

Amount (Million US$)

Rate of Change (%)

2003

2004

2005

2003-04

2004-05

China

56,918
10,913

65,552
13,714

69,642
20,334

15.17
25.66

6.24
48.27

Turkey

8,112

9,348

9,790

15.24

4.72

Bangladesh

3,471

4,578

4,346

31.90

-5.08

Romania

4,124

4,572

4,285

10.87

-6.28

India

2,599

3,020

3,988

16.23

32.02

Cambodia

475

643

587

35.27

-8.77

All Countries

Source: U.S Department of Commerce, Burean of Census cited in Yamagata

Garments Product Portfolio and Its Diversification:

The specific character of products and level of industrial development indeed determines its
variance of product diversification. In such a context, the product mix, product line as well as
product diversification are very important strategies for any industry to develop its market by
meeting the present market requirements. For the garments industry it is also very important
because product diversification will call for developing capability for product development
and product design especially in response to fast changes in fashion. The growth pattern of
garments export can be categorized into two distinct phases. During the initial phase it was
the woven category. Second phase is the emergence of knitwear products. On the other hand,
an analysis of the product mix of the garments industry revealed that so far Bangladesh has
been able to export very limited categories of products. In such a context, an attempt has been
made to examine the growth and trend of product portfolio or categories of products exported
from Bangladesh.
The position can be better explained if we look into the more details of the product mix in the
various categories of garments. The garment sector has been able to diversify the product
base ranging from ordinary shirts, T-shirts, trousers, shorts, pajama, ladies and childrens
wear to sophisticated high value items like quality shirts, branded jeans, jackets, sweater,
embroidered wear etc. In such a context, an attempt has been made to classify the garments
export into different products in order to understand product diversification strategy and its
relative importance and performance as well. The following Table shows the picture in this
regard.

Table-05: Pattern of export performance of different garments products

Shirts

Trousers

Jackets

T-Shirts

Sweaters

Others

Year
1994-95
1999-00
2004-05
2005-06

791 (36)
1021 (23)
1053 (16)
1057 (13)

101 (5)
484 (11)
1668 (26)
2165 (27)

232 (10)
564 (13)
1350 (21)
1782 (23)

N/A
325 (8)
893 (14)
1044 (13)

N/A
1515 (35)
1024 (16)
1463 (19)

CGR (%)

2.67

32.13

147 (7)
440 (10)
430 (7)
390 (5)
(19)
9.28

20.36

21.47

Source: Garments Export Data, BGMEA and Export Promotion Bureau-EPR stands for
compound Growth Rate.

From Table-05, it is evident that the highest compound growth rate has been found in
Trousers 32.13 percent, followed by T-shirts 20.36 percent, Jackets 9.28 percent, and T-Shirt
2.67 percent respectively during the period of 1994-95 to 2005-06. The rate of Sweater is also
significant during the period of 1999-2000 to 2005-06. It is observed that the share of
Trousers and T-Shirt in the total garment export is increasing. On the other hand, the share of
shirts and Jackets is declining trend. The Figures indicate that Bangladesh has concentrated in
the production and export of Trousers, T-Shirts and Sweater. This means that there is a scope
and actually need for structural change in product mix

Social Impacts of the RMG Sector:

Women Empowerment
It is well recognized that womens participation in income generation activities lends them a
better status within the family and provides them with considerable freedom. A job ensures
equitable access to household resources (nutrition) and larger investment on female human
capital (health and education). .At present, this sector has created highest employment
opportunity in the country where nearly 2 million women are working.
As a result the distress, poor, divorced and suppressed women of the
country now dont think themselves as helpless.

Savings
Regular earning enables a large number of the garment workers to go for some savings.
Workers investments on family pension schemes etc. create savings. A BIDS survey
conducted in the early 1990s found that 21 percent of both male and female workers aged 15
years and above had their own bank accounts. A higher proportion of workers (30 percent)
had bank accounts in the EPZ. Findings showed that women are on average better savers than
men and save about 7.6 percent of their otherwise small income.
Child Labor
Bangladesh responded positively to the international requirement of elimination of child
labor from the garments sector. Under the Memorandum of Understanding jointly signed by
BGMEA, ILO, UNICEF and US Embassy, Dhaka on 4 July 1994, Bangladesh pledged to
eliminate child labor by November 1996. Accordingly, it took necessary measures to do so.
The laid-off children were provided financial support so that they could attend schools until
they attain the age of 15. BGMEA and some NGOs jointly operate a number of schools for
these children
Population Control
Employment opportunities especially for women created positive impact on family planning
and population control in the country. Independent working-women are getting more
conscious about the advantage of a small family, and they are adopting modern family
planning methods. Adolescent girls are working to avoid early marriage as they have their
own source of income and are self-dependent.

Problems Regarding With RMG

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, such as,

Low working salary is another vital fact which makes the labor conflict.

10

Worker made strike, layout to capture their demand. Some time bonus And the overtime
salary is the important cause of crisis
Insufficient government policy about this sector is a great problem in Garments Company.
lack of marketing tactics
absence of easily on-hand middle management a small number of manufacturing
lack of training organizations for industrial workers, managers and supervisors, 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

Safety Needs
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
Lack of awareness among the workers and the owners
But now the situation is much improved and we found, all the surveyed garments are
fulfilling the requirement of emergency exit. It is provided in all the cases, signage is present
and fire fighting equipments are up to date, a departure from the past. Even fire drill is held
once in a month.

Challenge:

11

China is the major contribution in garment industry and it covers approximately 40% of the
world population. European Union is in the 2nd position and Bangladesh is the 3nd position
having coverage of -4% of world population.
In 2005 Bangladeshi garments have faced problem because china have got permission to
open access (Restrictions and Quota free advantages). But that time Bangladesh have
survived because china have shifted from lower prices products to higher priced products that
facilitate Bangladesh to excess in the lower prices products. At present Bangladeshi garments
industry is in Boom position that means higher growing. But recently India is growing in
textile industry any may be overtake Bangladesh in future.
In 1980 some Bangladeshi workers have trained from Korea at Daewoo Company, and after
returning in Bangladesh they started garment business solely.

Rana Plaza Trazedy

In the year of 2013 in Bangladesh two major mascara was occurred mainly Rana Plaza and
Tazreenn Fasion held the leading passion of news comers. Tazrin fasion is situated in Amen
Bazar which wholly destroyed for fire, at mid night when the factory was fully closed but
works are inside busy with their work at the mean time a fire destroyed all factory with more
the 50 human being. Rana Plaza is a building which contains more than 3 Garments factory at
Savar. This collogued in the earth without any notice and a cause of thousand dead.

Rana Plaza Trazedy

12

Tazreenn Fasion
Both external and internal factors contributed to the phenomenal growth of RMG sector. One
external factor was the application of the GATT-approved Multifibre Arrangement (MFA)
which accelerated international relocation of garment production. Under MFA, large
importers of RMG like USA and Canada imposed quota restrictions, which limited export of
apparels from countries like Hong Kong, South Korea, Singapore, Taiwan, Thailand,
Malaysia, Indonesia, Sri Lanka and India to USA and Canada. On the other hand, application
of MFA worked as a blessing for Bangladesh. As a least developed country, Bangladesh
received preferential treatment from the USA and European Union (EU). Initially Bangladesh
was granted quota-free status. To maintain competitive edge in the world markets, the
traditionally large suppliers/producers of apparels followed a strategy of relocating RMG
factories in countries, which were free from quota restrictions and at the same time had
enough trainable cheap labour. They found Bangladesh as a promising country. So RMG
industry grew in Bangladesh. The application of MFA had negative impact on many garments
exporting countries. The countries, which were adversely affected by quotas under MFA,
created pressure to discontinue MFA by integrating textile and clothing industries into GATT
system. As a result, the Uruguay Round negotiations envisaged the phasing out of MFA by
the end of 2004. With the phasing out of MFA, the position of Bangladesh in the world
market will change as all countries including those under quota restrictions, will enjoy quota
free status. Bangladesh will have to compete with a larger number of established and
powerful suppliers of readymade garments. Bangladesh has taken some steps to face the new
challenges. Such steps include removing infrastructural bottlenecks, building additional
supply capacity, use of cost reduction strategy, and increase in value-addition through
backward integration.

13

Conclusion:
Garments industry operators in Bangladesh are feared of the present situation. The regaining
of this competitiveness involves the government extending an adequate package program of
assistance to the garments sector at the soonest. Much harm has been already caused to this
sector from not extending such assistance to it a lot earlier. But there is still opportunity for
government to limit damages in this sector by the earliest announcement of a package
program that should include at least ten per cent cash assistance, withdrawal of value added
tax (VAT), reduction of port charges, supply of diesel at subsidized prices to run generators,
decreasing interest rate on credits to a single digit, allowing the rescheduling of classified
loans on longer terms basis, etc.

14

Reference:
http://www.bgmea.com.bd
http://www.bkmea.com
http://www.epb.gov.bd
http://www.bbs.gov.bd
http://www.epzbangladesh.org.bd
http://www.nbr-bd.org
http://www.fbcci-bd.org
http://www.bdgarments.wordpress.com/history
http://www.en.wikipedia.org/wiki/Bangladeshi_RMG_Sector

15