Ready Made Garments

Revolution for an Efficient, Productive and Better Bangladesh

Submitted to:
Md. Gaji Salah Uddin
Senior Lecturer
International Trade &Business (ITB 301)

Lecturer
Department of Business Administration

Submitted by:
Saiful Islam Sohel
ID: 2005-2-16-020
Department of Business Administration

Submission date:
December 13, 2009
Abstract
The success of readymade garment exports from Bangladesh over the past two decades has
surpassed the most optimistic expectations. The paper reviews the literature on this industry,
presents recent data on the sector's performance, and evaluates future trends in the
international and domestic clothing industry.

Acknowledgement
First thing first it has to be said that completion of this Term Paper was not a very easy task
for me. It’s a very special thank from me to my instructor Mr. Gaji Salah Uddin for his ever
kind and intimate assistance and provided freedom for working on it.

The effort for this term paper will definitely strengthen my knowledge and sense about the
related field of ITB. I strongly believe that I will be able to utilize my knowledge and senses
in the practical field.

Such type of term paper, I may make some conceptual mistakes. I offer apology for any such
unexpected mistake if done.

Finally, I wish to mention that here I tried to follow the formal guidelines and it has been
casually written all through like usual term papers. It has been done willingly for its
uniqueness subject with its field of creative construction.
Index

PART 1: Introduction -------------------------------------------- #04

1.1 Introduction
1.2 Objective # 04
1.3 Methodology # 04
1.4 Limitations # 05

PART 2: Current scenario --------------------------------------- # 06

2.1. An overview of ready made garments of Bangladesh # 06

2.2. Market Access Issues # 07
2.3. Exporters of ready made Garment products; World perspective # 07
2.4. Foreign Demand # 08

Part Three: Prospective Analysis ------------------------------------ # 12

3.1. Prospect of ready made garment industry in Bangladesh # 12

3.2 Current scenario of garment industry in Bangladesh # 16

Part Four: Analysis ------------------------------------------------------ # 19

4.1. SWOT Analysis # 19

4.2. The Future of Garment Exports and the Economy of Bangladesh # 22

Part Five: Conclusion------------------------------------------------------- # 24

Part One: Introduction

1.1 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.

1.2 Objective:
I have tried to show that how much the garments sectors contributed for the betterment of
Bangladesh. We earn more than half of the total revenue by exporting RMG products to
different countries all over the world. It can be said that the Garments sectors have brought
about the revolutionary change for Bangladesh

1.3 Methodology:
In order to supplement my theoretical knowledge regarding ready made garments with the
field practical exposure, I contacted different buying houses and collected data regarding real
life scenario. I make an over view with their income and the necessary conceptual
application.
I also tried to follow my concern course contents and necessary related materials to utilize for
an effective term paper.

1.4 Limitations
First of all, the time duration I had for this particular term paper was not appropriate. In fact I
faced little bit difficulties to collect the information regarding this particular term paper.
There were limited surveys and analysis for the development might have been the other
drawback of this report.
Part Two: Current Scenario

2.1. An overview of ready made garments of Bangladesh

For Bangladesh, the readymade garment export industry has been the proverbial goose that
lays the golden eggs for over fifteen years now. The sector now dominates the modern
economy in export earnings, secondary impact and employment generated. The events in
1998 serve to highlight the vulnerability of this industry to both internal and external shocks
on the demand and supply side. Given the dominance of the sector in the overall modern
economy of Bangladesh, this vulnerability should be a matter of some concern to the
policymakers in Bangladesh. Although in gross terms the sector’s contributions to the
country’s export earnings is around 74 percent, in net terms the share would be much less
partially because the backward linkages in textile have been slow to develop. The
dependence on a single sector, no matter how resilient or sturdy that sector is, is a matter of
policy concern. We believe the policymakers in Bangladesh should work to reduce this
dependence by moving quickly to develop the other export industries using the lessons
learned from the success of apparel exports. Support for the apparel sector should not be
reduced. In fact, another way to reduce the vulnerability is to diversify the product and the
market mix. It is heartening to observe that the knit products are rapidly gaining share in
overall garment exports as these products are sold in quota-free markets and reflect the
strength of Bangladeshi producers in the fully competitive global apparel markets.
Preliminary data and informal evidence indicate that this sector seems to have weathered the
devastating floods relatively well. The floods did create a crisis for the tightly scheduled
export industry, but to its credit the firms responded swiftly and creatively to the unexpected
dislocation and transportation disruptions. The industry is one hundred percent export-
oriented and therefore insulated from domestic demand shocks; however, it remains
vulnerable to domestic supply shocks and the smooth functioning of the banking,
transportation and other forward and backward linkage sectors of the economy. The Dhaka-
Chittagong road remains the main transportation link connecting the production units, mostly
situated in and around Dhaka and the port in Chittagong, where the raw material and the
finished products are shipped in and out. Despite increased dependence on air transportation,
trucks remain the main vehicles for transporting raw materials and finished products for
Bangladesh garment exports.

2.2. Market Access Issues:

a. Cheap labor cost: Compared to other countries Bangladesh got the advantage of cheap
labor that facilitated this particular industry to access in the global market. As it is cheaper to
purchase raw materials needed to procure the finished goods that results in the ultimate
products to be less costly.

b. Infrastructure: as this particular industry has been successfully running for two decades,
the related industries have grown quite strongly to make a supportive environment. As a
result Bangladesh has a favorable infrastructure for the garment industry to grow.

C. Government restriction: government plays an important role to grow this industry by

relaxing government taxes and other restrictions to encourage the business to invest and get
an access in the garment industry.

d. Labor insensitivity: as a labor intensive country Bangladesh naturally gets advantage in

manufacturing labor oriented products.

2.3. Exporters of ready made Garment products; World perspective:

Along side Bangladesh, there are quite a few countries exporting ready made garments
currently to meet up the world demand. Bangladesh is enjoying a healthy position as the
market leader in this sector with its comparative advantage of low cost labor resource. But
china and India are coming up creating threat for the Bangladesh. Since 2001 with the context
of open market and trade system this field has opened up with a challenge for the exporters to
grab more and more market share. Hong Kong, Vietnam and Srilanka are the other Asian
countries seek to get a chance of export.

Recently, news had emanated of the Bangladesh garment industry overtaking India, in
exports of apparels to the biggest market in the world; USA. More and more worldwide
clothing buyers are heading towards the shores of Bangladesh, since it is able to manufacture
apparels, competitive in pricing, than most other countries in Asia.
From August 2008 onwards, the exports from the RMG sector from Bangladesh have grown
by a remarkable 10 percent, while that of India fell by 3 percent. The biggest advantage
Bangladesh clothing manufacturers have vis-à-vis Indian manufacturers are the disparity in
wages given to workers, due to which the sector in Bangladesh holds an edge.

2.4. Foreign Demand:

Demand for Bangladeshi garments in Sweden is growing gradually as the consumers, facing
hardship following the financial downturn in Europe; prefer cheaper goods, businessmen
said.

“Now-a-days consumers look for cheap garments. Since the Bangladeshi products are
cheaper than that of other countries like China, they prefer that,” Ms. Halen Agervi, a
manager of the H&M’s showroom in Stockholm told the FE.
Though the flow of customers has recently shrunk due to the financial dip, those who come to
the shops usually prefer cheap garments, she said.

The Swedish H&M (Hennes & Mauritz AB), Europe’s second largest buyer of Bangladeshi
garments, imports apparel from different countries including China, Mauritius and Turkey for
selling those to more than 1000 H&M retail shops in 34 countries across the globe.

Bangladesh has so far this year supplied some 120 million pieces of knit products worth
about $300 million and 50 million pieces of woven worth about $250 million to the H&M,
said Iqbal Khan, a senior executive of the H&M Dhaka office.
“Due to financial meltdown our headquarters has asked us to offer fewer prices to the
suppliers. But the volume of orders to Bangladesh will not lessen,” Mr. Khan who was
visiting their Stockholm headquarters told the FE.

H&M pays US$2.5 per unit to the Bangladeshi knitwear products and $4.5 per unit for the
woven goods on an average.

“The orders from the H&M are increasing day by day even during this global recession,”
Amal Poddar, Managing Director of Metro Knitting and Dying Ltd, a major knitwear
supplier to the Swedish company told the FE Friday.
As the developed world is facing the financial meltdown, they prefer Bangladeshi products
for its competitive price than products from China and Turkey, he added.

Mr. Poddar said Bangladesh is slowly nudging China as the preferred choice for medium-to-
low priced ready-made garments in European markets.
“And recession in the wealthiest countries would hasten that process, as the top retailers
would desperately hunt for factories, which can offer bargain prices,” he said.

The H&M have been giving a lot of orders of knit garments especially sweater for acute cold
weather in the Scandinavian countries, Mr. Poddar who supplies about 2 million pieces of
garments per month to H&M said.

“I don’t think that our supply volume to the European market will shrink. The H&M has
recently shown us that it had a target of 150 per cent business growth during 2008-2013. The
projection has made us more bullish,” he said.

“Chinese apparels were occupying the H&M retail shops in Stockholm before the global
recession. But after the plunge, the consumers now prefer low-valued apparel. It has made a
room for the Bangladeshi products again,” said Nahid Hossain, a Bangladeshi born Swedish
citizen.

H&M Dhaka office’s Iqbal Khan said they are bullish about Bangladesh as they see the
country’s shipments gain on cheap labor and declining Chinese competitiveness despite its
major markets are on the brink of recession.

Amal Poddar said: “Bangladesh is the third largest supplier of H&M at this moment. I think it
will be able to occupy first position within 2-3 years as our supply volume to the company is
growing every month.” He said some 32 per cent of Bangladeshi exportable knit products are
imported by the Swedish company — H&M.
The US and the EU are the major destinations of Bangladeshi garment exports, accounting
for some 90 per cent of the country’s US$10.7 billion garment shipments last year.
Table 2.1. Apparel Exports to Major Markets (1997 - 1998)

TOTAL APPAREL EXPORT IN MILLION US$

WOVEN KNIT TOTAL % OF TOTAL
COUNTRY
USA 1,443.21 228.69 1,671.90 44.21%
CANADA 66.89 27.88 94.77 2.51%
AUSTRIA 12.13 5.84 17.97 0.48%
BELGIUM 78.91 60.37 139.28 3.68%
DENMARK 16.69 23.81 40.50 1.07%
FINLAND 9.55 4.23 13.78 0.36%
FRANCE 206.78 137.43 344.21 9.10%
GERMANY 352.78 130.09 482.87 12.77%
GREECE 2.40 1.41 3.81 0.10%
IRELAND 5.17 3.30 8.47 0.22%
ITALY 171.42 46.11 217.53 5.75%
NETHERLANDS 127.94 75.47 203.41 5.38%
PORTUGAL 1.97 0.83 2.80 0.07%
SPAIN 32.26 10.75 43.01 1.14%
SWEDEN 31.34 14.63 45.97 1.22%
UK 226.33 144.78 371.11 9.81%
OTHERS 58.66 21.89 80.55 2.13%
TOTAL 2,844.43 937.51 3,781.94 100.00%
Source: Export Promotion Bureaus (EPB)

Table 2.2: Top Five European Destinations for Bangladesh Apparel (July 1997- May 1998)

RANK COUNTRIES VALUE

(Millions,
$)
1 Germany 434.77
2 United Kingdom 343.89
3 France 305.72
4 Netherlands 183.63
5 Italy 195.82
Source: Export Promotion Bureaus (EPB)
Part Three: Prospective Analysis

3.1. Prospect of ready made garment industry in Bangladesh:

The apparel exporters of two neighboring countries- Bangladesh and India-have worries of
divergent nature.

Bangladesh apparel exporters are worried that their export orders have been on the decline for
a number of domestic and external reasons. Their counterparts in neighboring India are
anguished that Bangladesh is set to beat them in garment exports in the wake of an
appreciating rupee.
Bangladeshi exporters blame internal political disturbances, reduced demand in their key
markets-the USA and the European Union countries-for the decline in export growth in
recent months.

The Indian apparel manufacturers and exporters, it seems, are ashamed of the fact despite
having sufficient backup of raw materials they are lagging behind their Bangladeshi
counterparts, who are largely dependent on imported fabrics and other raw materials-- in the
international market. A recent Indian newspaper report quoted a number of apparel sector
leaders expressing their frustration over the rise of the Bangladesh apparel sector.

But the fact remains that with its low cost of labor and sufficient back-up support of raw
materials, including fabrics, apparel exporters of India-- a regional economic superpower--
should have competed with China rather than grumbling about RMG export performance by
a poor neighbor like Bangladesh.
The Indian apparel exporters must have forgotten the issue of value addition while becoming
jealous of the success of the Bangladesh RMG. The average value addition in case of woven
garment exports by Bangladesh still remains as low as 30 per cent and the same for knitwear
exports hovers around 60 to 70 per cent. Since Indian exporters do not have to depend on
imported raw materials, the value addition of their exports should be nearly 100 per cent.
Table 3.1. Export
Markets for
Bangladesh Apparels

EXPORTS TO U.S. EUROP CANADA

THE U.S. MARK EAN AND
ET UNION OTHERS
(millions, $) SHAR SHARE (%)
YEAR E (%)
(%)
1991-1992 581.1 49.14 46.62 4.23
1992-1993 703.96 48.71 46.46 4.82
1993-1994 592.46 38.08 55.96 5.95
1994-1995 1006.08 45.07 49.67 5.08
1995-1996 1001.68 39.33 54.12 6.56
1996-1997 1245.14 41.49 54.11 2.1
1997-1998 1494.02 43.6 51.26 5.14

Source: Bangladesh
Exports Promotion
Bureau (EPB)
RDTI Cell of
Bangladesh Garment
Manufacturers and
Exporters Association
(BGMEA)
Our own calculations
of monthly averages
and growth factors

There is another dark side of such unnecessary moaning by the Indian RMG exporters: It,
rightly or wrongly, lends credence to widespread suspicion that the neighbors are involved in
conspiracy to cause damage to the emerging Bangladesh garment sector. Such suspicion had
become quite strong during a persistent campaign against Bangladesh RMG in the name of
child labor, the recent workers unrest in the garment sector and the buyers' insistence on so-
called compliance issues.

The socio-economic conditions in many Indian cities are almost similar to that of Bangladesh
cities where most garment units are located. It is highly unlikely that the working conditions
or involvement of child labor in many RMG units have been very different from that of many
Bangladeshi RMG units. But has anyone ever heard a word or seen a report in the
international electronic and print media or deep concern among US trade union bodies about
the situation in apparel units in India?

However, Indian apparel exporters should have reasons to be happy to learn that the
Bangladesh RMG sector, which proved many doomsday preachers wrong following the total
phase-out of the multi-fiber arrangement (MFA) from January 1 2005 and recorded
impressive export growth, has for the first time in many years had a poor export performance
in recent months.

The country's apparel exports recorded a 31.28 per cent growth in the period between the
months of July and September of the just concluded financial year. But the average growth at
the end of May last stood at only 16.45 per cent.

Industry sources have claimed that export orders in recent months have declined by about 30
per cent. Many buyers had withdrawn from Bangladesh markets during political troubles in
the last months of 2006 and placed their import orders with apparel manufacturers in China,
the world's largest exporter of textile products having control over 70 per cent of the huge US
market, and Vietnam, an emerging apparel exporter. The Indian business leaders do need to
explore the reasons for buyers not going to India in large numbers. The appreciating rupee
may not be the only reason for that.

The political troubles that started from the month of October last took a heavy tool on
industrial production and exports. The Bangladesh exporters, who have invented their own
way of running their business operations amidst frequent shutdowns or blockades, also had
become helpless in the face of complete halt of operations at the Chittagong port, enforced by
the then opposition political activists led by mayor of Chittagong City Corporation ABM
Mohiuddin Chowdhury.

That disruption was followed by a slower demand from the buyers in the USA and the EU
countries. The intensity of cold being less than previous years during the last winter in most
EU countries, the demand for knitwear dropped this time. And in case of the USA, the
consumers decided to spend less because of the rising oil prices.

The RMG exporters view these developments as temporary and are hopeful about their
exports picking up again in coming months. But the researchers on RMG markets are seeing
some ominous signs on the horizon. They feel that the buyers, who had withdrawn from the
Bangladesh and gone to other markets, may not come back again.

However, the exporters, it seems, would have to keep their finger crossed for a major
turnaround in demand for apparels in the developed markets.

The political troubles have proved more damaging to exports than any other factor. If the
same returns to the street-nobody, however, want that-the RMG exporters would find it really
hard even to keep their existing buyers satisfied.
3.2 Current scenario of garment industry in Bangladesh
In a recent exclusive interview given to fiber 2fashion, Mr Surinder Anand, Executive
Secretary of Garment Exporter’s Association, listing out the advantages the Bangladesh
exporters have over India, had said, “First and foremost is the lower manufacturing cost due
to cheap labor and simplified labor laws”.

“Going further, economies of scale because of bigger and larger manufacturing units;
availability of fabric at competitive rates, simplified procedures, labor laws are more flexible
and conducive and last but not the least full support and blessings of their Government, while
Indian conditions are discouraging to entrepreneurs”, he added by saying.

Even in these recessionary periods, most of the garment companies had been humming with
winter clothing orders and except for may be a slight dip in orders; the Bangladeshi clothing
manufacturers are comfortably placed versus their Asian counterparts and could be among
the few countries that could be looking at a flat or marginal negative growth rate in 2009.

According to the statistics released by the Bangladesh Export Promotion Bureau, most of the
sub-sectors like woven and knitted garment have crossed their targeted figures in the period
July- December 2009. Knitted and woven garments grew by 2.16 and 2.45 percent
respectively, textile fabrics by 8.16 percent and terry towels by 10.96 percent.
Table 3.2.: Apparel Exports from Bangladesh in Value and Volume

YEAR TOTAL APPAREL TOTAL APPAREL EXPORT

EXPORT (Millions of (Thousands of dozens)
$)

Gro Grow
WOVEN KNIT TOTAL wth WOVEN KNIT TOTAL th in
in Mont
Mon hly
thly Total
Tota s
ls
T Mo Tot Mont Total Mon To Mo Mo Mo
otal nthly al hly thly tal nthly Total nthly Total nthly
199 1,240 103. 204. 17.0 1,445 120. 36,05 3,004 10,66 888.6 46,717 3,893
2-93 .48 37 54 5 .02 42 3.88 .49 3.56 3 .44 .12
1993- 1,291 107. 264. 22.0 1,555 129. 7.67 34,35 2,862 10,81 901.2 45,166 3,763 -
94 .65 64 14 1 .79 65 % 1.00 .58 5.00 5 .00 .83 3.32
%
1994- 1,835 152. 393. 32.7 2,228 185. 43.2 47,21 3,934 15,30 1,275 62,511 5,209 38.40
95 .09 92 26 7 .35 70 3% 0.00 .17 1.90 .16 .90 .33 %
1995- 1,948 162. 598. 49.8 2,547 212. 14.3 48,82 4,068 23,18 1,932 72,005 6,000 15.19
96 .81 40 32 6 .13 26 1% 0.04 .34 5.45 .12 .49 .46 %
1996- 2,237 186. 763. 63.6 3,001 250. 17.8 53,45 4,454 27,53 2,294 80,986 6,748 12.47
97 .95 50 30 1 .25 10 3% 0.33 .19 6.07 .67 .40 .87 %
1997- 2,844 237. 937. 78.1 3,781 315. 26.0 65,59 5,465 32,60 2,717 98,194 8,182 21.25
98 .43 04 51 3 .94 16 1% 0.00 .83 4.37 .03 .37 .86 %
1998-
99(JUL 561.5 280. 177. 88.6 738.7 369. 17.2 12,18 6,093 6,464. 3,232 18,650 9,325 13.96
Y- 4 77 21 1 5 38 0% 6.00 .00 00 .00 .00 .00 %
AUGU
ST)

Source: Bangladesh Exports

Promotion Bureau (EPB)
RDTI Cell of Bangladesh Garment
Manufacturers and Exporters Association
(BGMEA)
Our own calculations of
monthly averages and growth
factors

Table 3.3. Major Items of Apparel Exportedfrom Bangladesh

(Millions of $)

YEAR SHIRT T-SHIRT TROUSER JACKET SWEATER

S
Mont Mont Mon Mont Mont
Total hly Tot hly Total thly Tota hly Total hly
Aver al Aver Aver l Avera Avera
age age age ge ge
1993- 805.3 67.1 225. 18.8 80.56 6.71 126. 10.57 0.00 0.00
94 4 1 90 3 85
1994- 791.2 65.9 232. 19.3 101.2 8.44 146. 12.24 0.00 0.00
95 0 3 24 5 3 83
1995- 807.6 67.3 366. 30.5 112.0 9.34 171. 14.31 70.41 5.87
96 6 1 36 3 2 73
1996- 759.5 63.3 391. 32.6 230.9 19.2 309. 25.77 196.6 16.38
97 7 0 21 0 8 5 21 0
1997- 961.1 80.0 388. 32.3 333.2 27.7 467. 38.93 296.2 24.69
98 3 9 50 8 8 7 19 9
1998- 201.1 100. 49.0 24.5 60.51 30.2 105. 52.63 81.61 40.81
99 2 56 5 3 6 25
(JUL-
AUG)

Source: Bangladesh Exports

Promotion Bureau (EPB)
RDTI Cell of Bangladesh Garment
Manufacturers and Exporters Association
(BGMEA)
Our own calculations of monthly averages and
growth factors
Part Four: Analysis

4.1. SWOT Analysis

SWOT analysis stands for Strength, weakness, opportunities and threats respectively.
Here based on our observation we try to find out some aspects of SWOT analysis for the
ready made garment industry in Bangladesh.

4.1.1 Strength
• Considerable Qualified/keen to learn workforce available at low labour charges.
The recommended minimum average wages (which include Travelling
Allowance, House Rent, Medical Allowance, Maternity Benefit, Festival Bonus
and Overtime Benefit) in the units within the Bangladesh Export Processing
Zones (BEPZ) are given as below; on the other hand, outside the BEPZ the wages
are about 40% lower:
• Energy at low price
• Easily accessible infrastructure like sea road, railroad, river and air
communication
• Accessibility of fundamental infrastructure, which is about 3 decade old, mainly
established by the Korean, Taiwanese and Hong Kong Chinese industrialists.
• FDI is legally permitted
• Moderately open Economy, particularly in the Export Promotion Zones
• GSP under EBA (Everything But Arms) for Least Developed Country applicable
(Duty free to EU)
• Improved GSP advantages under Regional Cumulative
• Looking forward to Duty Free Excess to US, talks are on, and appear to be on
hopeful track
• Investment assured under Foreign Private Investment (Promotion and Protection)
Act, 1980 which secures all foreign investments in Bangladesh
• OPIC's (Overseas Private Investment Corporation, USA) insurance and finance
agendas operable
 • Bangladesh is a member of Multilateral Investment Guarantee Agency (MIGA)
under which protection and safety measures are available
• Adjudication service of the International Centre for the Settlement of Investment
Dispute (ICSID) offered
• Excellent Tele-communications network of E-mail, Internet, Fax, ISD, NWD &
Cellular services
• Weakness of currency against dollar and the condition will persist to help
exporters
• Bank interest@ 7% for financing exports
• Convenience of duty free custom bonded w/house
• Readiness of new units to enhance systems and create infrastructure accordant
with product growth and fast reactions to circumstances

4.1.2. Weakness
• Lack of marketing tactics
• The country is deficient in creativity
• Absence of easily on-hand middle management
• A small number of manufacturing methods
• Low acquiescence: there is an international pressure group to compel the local
producers and the government to implement social acquiescence. The US GSP
may be cancelled and purchasing from US & EU may decrease significantly
• M/c advancement is necessary. The machinery required to assess add on a
garment or increase competence are missing in most industries.
• 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
• Speed money culture
 • Time-consuming custom clearance
• Unreliable dependability regarding Delivery/QA/Product knowledge
• Communication gap created by incomplete knowledge of English
• Subject to natural calamities

4.1.3. Opportunity

• EU is willing to establish industry in a big way as an option to china particularly

for knits, including sweaters
• Bangladesh is included in the Least Developed Countries with which US is
committed to enhance export trade
• Sweaters are very economical even with china and is the prospect for Bangladesh
• If skilled technicians are available to instruct, prearranged garment is an option
because labor and energy cost are inexpensive.
• Foundation garments for Ladies for the FDI promise is significant because both,
the technicians and highly developed machinery are essential for better
competence and output
• Japan to be observed, as conventionally they purchase handloom textiles, home
furniture and garments. This section can be encouraged and expanded with
continued progress in quality

4.1.4. Threat

The exporters have to prepare themselves to harvest the advantages offered by the
opportunities.
4.2. The Future of Garment Exports and the Economy of Bangladesh

Growth in overall exports from Bangladesh peaked in 1994-1995 at 40 percent a year, but
growth has remained strong. In the July 1997-February 1998 period, total export
earnings equaled $3.3 billion or 16.4% above the exports over the same period in the
previous year.1 The garment and knitwear exports accounted for the bulk of these
exports. The knitwear sector especially has been highly dynamic in recent years. Given
the fact that this market is outside the purview of MFA and not protected by quotas, this
bodes well for the post MFA future of the industry. Bangladesh apparel exports can now
point to a proven track record of successfully competing in a non-protected global
competitive environment. Unfortunately, other potentially promising exports from
Bangladesh such as leather, jute goods, and frozen foods have not fared as well over this
period. This has accentuated the already narrow export base of the country and is
certainly a matter of concern. The excess dependence on foreign exchange earnings and
export growth on garments and knitwear calls for policy attempts to diversify the export
base of Bangladesh.

What can be said about the future performance of the apparel export industry in
Bangladesh? What are the downside risks for apparel exports from Bangladesh?
Focusing on the most recent disaster, the debilitating floods of 1998 that shaved off
several percentage points from the expected GDP growth this year, we have ignored
another major crisis the industry seems to have weathered very well. We refer to the East
Asian economic debacle of 1997-1998. The financial panic and the following economic
meltdown that afflicted scores of dynamic economies neighboring Bangladesh -
Malaysia, Indonesia, Thailand, Philippine and South Korea- certainly have been a
restraining element in the economic performance of this sector.

What are the links between the East Asian economies and garment exports from
Bangladesh? There are several avenues by which negative economic shocks from these
emerging economies have impacted Bangladesh. First, several of these nations are also
big apparel exporters to the same markets where Bangladesh sells its apparels. The steep
depreciation in their currency has made them more competitive, especially in the quota-
free apparel markets. Even in the markets protected by quotas, this would be a
deflationary force pulling down the unit prices and the profit margins for Bangladesh
exporters. Second, using the time-tested formula, most of these economies are trying to
export themselves out of their severe recessions. This has greatly increased competition
for Bangladesh exports. Third, to assist them in their time of need, the U.S. and other
developed nations have already relaxed quota restrictions on exports from the worst
affected economies, making the playing field less level for Bangladeshi exporters.
Fourth, prior to this crisis some of these nations were potentially big investors in
Bangladesh in the textile and infrastructure projects. Their economic troubles have
meant a dramatic scaling back in their direct investments in Bangladesh.
Part Five: Conclusion

Conclusion:
At the starting verge of the twenty first century it is not possible for a country to move
ahead grabbing the agriculture based economy. Garment industry in Bangladesh has
helped Bangladesh to take it through and has been contributing significantly for the
sustainable development. It has created employment for the young women in Bangladesh
with the world of hope to be independent. Bangladesh can secure even a far better
situation utilizing its advantage of low labor cost to capture more markets across wide
world keeping its compotators behind. For that, government has to come forward to build
up a stronger infrastructure and communication.
1

References :

www.alibaba.com
www.tradeindia.com
www.countryinformation.org
http://www.unescap.org/tid/publication/aptir2456_haider.pdf