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Major Country Wise RMG Export Introduction: The garment industry has played a pioneering role in the development

of industrial sector of Bangladesh. The textile and clothing sector now stands at a crossroads. Trade in RMG & Textile sector has undergone a fundamental change as MFA quota system has been out on December 31, 2004. Though it took a rather late start i.e., in 1976 but it soon established its reputation in the world market within a short span of time. Resultantly garment is now one of the main export items of the country. Besides, enriching the country's economy it has played a very important role in alleviating unemployment. At present there are more than two thousand one hundred garment factories in the country employing more than 10 million labors. Once Sri-Lanka was leader in this field in South Asia and India was its competitor. After a bloody civil war resulting in the quick demise of the garments industry of Sri-Lanka and India, the international buyers and investors diverted their attention towards Bangladesh. As a result the garments industry of Bangladesh expanded with unprecedented success. History In the 1950s, labors in the Western World became highly organized; forming trade unions. This and other changes provided workers greater rights including higher pay; which resulted in higher cost of production. Retailers started searching for places where the cost of production was cheaper. Developing economies like Hong Kong, Taiwan and South Korea presented themselves as good destinations for relocations because they had open economic policies and had nonunionized and highly disciplined labor force that could produce high quality products at much cheaper costs. In order to control the level of imported RMG products from developing countries into developed countries, Multi Fibre Agreement (MFA) was made in 1974. The MFA agreement imposed an export rate 6 percent increase every year from a developing country to a developed country. It also allowed developed countries to impose quotas on countries that exported at a higher rate than the bilateral agreements. In the face of such restrictions, producers started searching for countries that were outside the umbrella of quotas and had cheap labor. This is when Bangladesh started receiving investment in the RMG sector. In the early 1980s, some Bangladeshis received free training from Korean Daewoo Company. After these workers came back to Bangladesh, many of them broke ties with the factory they were working for and started their own factories. Facts and Figures In the 1980s, there were only 50 factories employing only a few thousand people. Currently, there are 4490 manufacturing units. The RMG sector contributes around 75 percent to the total export earnings. In 2007 it earned $9.35 billion. This sector also contributes around 13 percent to the GDP, which was only around 3 percent in 1991. Of the estimated 10 million people employed in this sector, about 50 percent of them are women from rural areas. USA is the largest importer of Bangladeshi RMG products, followed by Germany, UK, France and other E.U countries. In fact, Bangladesh is the 6th largest supplier of apparels in the US market.

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Major Country Wise RMG Export Contribution to the National Economy: The role of the RMG sector in our national economy can hardly be over-emphasized. There has been a steady development in our RMG export field during at least the last decade and a half but in the last few years it has been unique. Readymade Garment (RMG) industry still remains the mainstay of export earnings for Bangladesh. About 76 percent of total export earnings of Bangladesh come from this sector. Export statistics from RMG sector in the last five years were US$ 5,686.06 million in FY 2003-04, US$ 6,417.67.67 million in FY 2004-05, US$ 7900.80 million in FY 2005-06, US$ 9,211.23 million in FY 2006-07, US$ 10,699.80 million in FY 2007-08 and US$ 12.35 billion in FY 2008-09. Development of the Export of RMG Sector: In terms of GDP, RMG’s contribution is highly remarkable; it reaches 13 percent of GDP which was only about 3 percent in FY91. This is a clear indication of the industry’s contribution to the overall economy. It also plays a pivotal role to promote the development of other key sectors of the economy like banking, insurance, shipping, hotel, tourism, road transportation, railway container services, etc. One of the key advantages of the RMG industry is its cheap labor force, which provides a competitive edge over its competitors. The garment industry is by far the country’s most important manufacturer, earning around $5 billion annually and accounting for about two thirds of all exports. Bangladesh has about 2,500 garment factories with up to 10 million livelihoods dependent on it directly or indirectly. About 80 per cent of garment workers are women.. The sector opened up employment opportunities for many more individuals through direct and indirect economic activities, which eventually helps the country’s social development, woman empowerment and poverty alleviation. Table: Comparative Statement on Export of RMG & Total Export of Bangladesh Year 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 Export of RMG (M US$) 5686.09 6417.67 7900.80 9211.23 10669.80 12347.77 Total Export of Bangladesh (M US$) 7602.99 8654.52 10526.16 12177.86 14110.80 15565.19 % of RMG to Total Export 74.79 74.15 75.06 75.64 75.83 79.33

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Major Country Wise RMG Export
Chemical Leather products 4% 1% Raw jute Jute goods 2% 5% Frozen food 6% woven garments 55% Knit wear 18%

Agri. Product 1% Others 7%

Tea 1%

Figure: Present export chart of Bangladesh

Fig: Export product of Bangladesh Exporting Condition of Garments Industry: RMG is the largest exporting industry in Bangladesh, which experienced phenomenal growth during the last 20 years. By taking advantage of an insulated market under the provision of Multi Fibre Agreement (MFA) of GATT, it attained a high profile in terms of foreign exchange earnings, exports, industrialization and contribution to GDP within a short span of time. Over the past twenty years, the number of manufacturing units has grown from 180 to over 3600. The sector has also played a significant role in the socio- economic development of the country. Table: Growth rate of garments in Bangladesh: Year 1999-00 2004-05 2005-06 2006-07 2007-08 2008-09 No of Factory 3200 4107 4250 4370 4465 4500 approx. Compound Growth rate in % 7.96 5.12 3.48 2.75 2.80 1.6

The export made by Garments Industries of Bangladesh is improving year after year except some of the year. Strike, layout, shutdown of company, political problem, economic problem, inflation etc. are the prime cause of decreasing export in this important sector. But above it, Readymade Garments Industries is the leading sector in export sector. Over the last thirty years, international trade and investment in the global textile and garment (T&G) sectors has been influenced by Multi-Fiber Agreement (MFA) quantitative restrictions (quotas) applied by the major developed country importers (the United States, the European Union, Canada and Norway) on T&G exports from (predominantly) developing countries. MFA
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Major Country Wise RMG Export quotas were negotiated bilaterally and applied on a discriminatory basis to some exporting countries but not to others, thus differing from country to country in both product coverage and the degree of restrictiveness. From 1 January 2005 all such quantitative restrictions on the trade in textiles and clothing were phased out, and finally abolished. Historically speaking that as per requirement of The ATC, all MFA quotas on T&G products be removed over a ten-year transition period split into three phases and ending on 1 January 2005, thus finally incorporating international T&G trade into general GATT rules that prohibit discriminatory measures and call for the reduction and elimination of quantitative restrictions. The quota system under the MFA has distorted international T&G trade and has resulted in global welfare losses since quota limits on the exports of selective producers have prevented an allocation of resources to the most efficient T & G producers and prevented prices in quota protected developed country markets from falling. Table-1: Exports of Knit and Woven Garments to the United States Rank Amount (Million US$) 2003 2004 2005 1 China 8690 10723 16808 2 Mexico 7098 6845 6230 3 Hong Kong 3732 3878 3523 4 India 2056 2277 3058 5 Indonesia 2155 2402 2882 6 Bangladesh 1759 1872 2268 13 Combodia 1229 1418 1702 Source; Export Promotion Bureau Origin Rate of Change (%) 2003-04 2004-05 23.39 56.75 -3.56 -8.98 3.93 -9.16 10.74 34.29 11.47 19.99 6.45 21.15 15.42 20.06

Table- 2: Exports of Knit and Woven Garments to EU Rank 1 2 3 4 5 19 Origin China Turkey Bangladesh Romania India Combodia Amount (Million US$) 2003 2004 2005 10913 13714 20334 8112 9348 9790 3471 4578 4346 4124 4572 4285 2599 3020 3988 475 643 587 Rate of Change (%) 2003-04 2004-05 25.66 48.27 15.24 4.72 31.90 -5.08 10.87 -6.28 16.23 32.02 35.27 -8.77

Source; Export Promotion Bureau Tables 1 and 2 show the trends in garment exports to the United States and EU from the five largest garment exporters and the two leading exporters among the LDCs, Bangladesh and Cambodia. It was revealed that China and India expanded garment exports to the US and EU, the world’s two largest markets. Along with China and India, Bangladesh and Cambodia have also
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Major Country Wise RMG Export increased their exports to the United States during 2005 by more than 20 percent. Though their garment exports to the EU declined between 2004 and 2005, the drops were not significant

20000 17500 15000

B C D

Million US $

12500 10000 7500 5000 2500 0 China India Bangladesh Srilanka Pakistan

Country
Export of knit and woven garments in USA(2006)

Table: Fiscal Year Basis
(Value In MN. US$ Quantity in MN Dozen) TOTAL APPAREL EXPORT IN MN.US$ YEAR WOVEN KNIT SWEATER TOTAL

2000-2001 2001-2002 2002-2003 2003-2004 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009

3364.32 3124.82 3258.27 3538.07 3598.20 4083.82 4657.63 5167.28 5918.51

1018.64 941.1 1075.45 1531.71 1926.35 2772.97 3305.51 4058.43 4570.64

476.87 517.83 578.37 616.31 893.12 1044.01 1248.09 1474.09 1858.62

4859.83 4583.75 4912.09 5686.09 6417.67 7900.8 9211.23 10699.8 12347.77

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Major Country Wise RMG Export

Major country wise export scenario of garments product from Bangladesh: The major destination of our RMG products is EU, USA, Canada, Japan, and Australia. Bangladesh is currently the 4th largest apparel exporting country to the US market, trailing behind only China, Vietnam and Indonesia. Not long ago, Mexico’s apparel exports were significantly higher than of Bangladesh which is reversed in the recent months. Bangladesh was the top export performer in the European Union market in 2009 with 6 percent growth, when all other countries, except for Qatar, suffered an export fall in the common market due to a global financial contraction. Bangladesh shipped products worth 5.8 billion euro’s to the EU in 2009, increasing from 5.7 billion euro’s in 2008, witnessing a 6.3 percent rise. During the time, Bangladesh outperformed its global competitors: China, India and Vietnam.

Table: Major Country wise export documents

Source; Export Promotion Bureau Analysis of country wise export shows that the USA is the main destination of our export. It appears from Table that in FY 2008-09, the USA secured the top position in respect of importing commodities from Bangladesh followed by UK (14.58%), Germany (9.64%) and France (6.62%). During the period under report, goods worth US$4,052.00 million were exported to the USA, which was 26.03 percent of the total export of the country. The principal commodities exported to USA are woven garments, knitwear.

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Major Country Wise RMG Export Table: Export target and performance during FY 2002-03 to 2008-09.

Source; Export Promotion Bureau

Table: Export from Bangladesh to SAARC member countries.

Source; Export Promotion Bureau

Problem: 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. Low working salary is another vital fact which makes the labor conflict. Worker made strike, layout to capture their demand. Some time bonus and the overtime salary are the important cause of crisis. As a result the production is hampered. Insufficient government policy about this sector is a great problem in Garments Company.

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Major Country Wise RMG Export 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. Prospectus of the RMG industries: Despite many difficulties faced by the RMG industry over the past years, it continued to show its robust performance and competitive strength. The resilience and bold trend in this MFA phaseout period partly reflects the imposition of ‘safeguard quotas’ by US and similar restrictions by EU administration on China up to 2008, which has been the largest supplier of textiles and apparel to USA. Other factors like price competitiveness, enhanced GSP facility, market and product diversification, cheap labor, increased backward integration, high level of investment, and government support are among the key factors that helped the country to continue the momentum in export earnings in the apparel sector. Some of these elements are reviewed below. Conclusion: The Ready-Made Garments (RMG) industry occupies a unique position in the Bangladesh economy. It is the largest exporting industry in Bangladesh, which experienced phenomenal growth during the last 25 years. By taking advantage of an insulated market under the provision of Multi Fiber Agreement (MFA) of GATT, it attained a high profile in terms of foreign exchange earnings, exports, industrialization and contribution to GDP within a short span of time. The industry plays a key role in employment generation and in the provision of income to the poor. To remain competitive in the post-MFA phase, Bangladesh needs to remove all the structural impediments in the transportation facilities, telecommunication network, and power supply, management of seaport, utility services and in the law and order situation. The government and the RMG sector would have to jointly work together to maintain competitiveness in the global RMG market. Given the remarkable entrepreneurial initiatives and the dedication of its workforce, Bangladesh can look forward to advancing its share of the global RMG market.

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