Significance of Readymade Garments Sector

in Bangladesh

1
 Abstract
Readymade Garments (RMG) industry is the most significant industry of Bangladesh as more
than 80% export revenue of the country is generated through this sector. The significance of this
industry on the total export revenue and GDP are undeniable. Also, the industry is arranging
employment opportunities for over 4 million people over the country and it is also helping to
ensure woman empowerment as well. Since the birth of the nation, the industry has been
flourishing. A rapid growth over last couple of decades has been seen in RMG industry.
However, the country has different drawbacks for which it has been lagging behind than other
countries. It is important to understand the issues concerning export revenue of RMG sector.
Thus, in future the importance of this sector can be understood. Also, the report will put major
focus on analyzing the impact of revenue earned in this sector on total export revenue as well as
GDP of the country.

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 Chapter 1: Introduction

1.1 Overview of the Garments Sector in Bangladesh

Readymade garments sector is one of the most significant sectors of a country. Since the
independence in 1971, Bangladesh has been improving in different sectors. However, the most is
seen in the export sector and although the major part of the country is still living below the
poverty line, it can be said that Bangladesh has came a long way from it’s inception. For a
country like Bangladesh, the significance of RMG sector is beyond words. RMG is the leading
export revenue earning as well as growing industry of Bangladesh for more than two and a half
decades. The export of RMG products of Bangladesh is appreciated all over the world. Thus, the
impact of the revenue earned from garments has a huge impact on the overall export revenue and
GDP of the nation is very significant. Also, RGM industry is making room for employment by
reducing unemployment rate over the years and woman empowerment has been significantly
executed through the RGM sector. For socio economic and the national development, RGM
sector is working relentlessly over the years. It is meeting the local demand by using the local
resources properly as well as getting profit from the foreign countries. Every year, the majority
of export revenue is generated from RMG sector. The RMG sector of Bangladesh is not only the
leading one but also, in the world, the reputation of the products produced in Bangladesh is
significant. On an average of 15% the RMG has grown over last one and a half decade. More
than four thousand garments are operating in Bangladesh and the local and foreign expectations
are met by them. Basically, Dhaka, Chittagong and Narayanganj have major number of garments
in whole country. Since the inception of BGMEA which stands for Bangladesh Garment
Manufacturers and Exporters Association in 1997, the organization has been working relentlessly
to make continuous improvement of the sector. Basically, woven and knit are the two most
significant categories in which the RMG products are produced over the country. However, it is
the woven products those are major part of this two major categories. The demand of this type of
product is very high. Between these two, woven has more or less 60% of the garments. However,
since 90’s, the demand of knit products have been rising.
The RMG sector is continuously growing over the years. The tagline of ‘Made in Bangladesh’ is
getting more and more popular and the products are getting acceptance all over the world. Both
export earnings as well as GDP are being affected significantly and compared to other countries,
the situation is comparatively better. Most of the people in Bangladesh still lives below the

3
poverty line. Also, a significant amount of people of the country is illiterate. Nonetheless, RMG
sector is helping the poor illiterate community to live a better life by giving them opportunity to
survive through employment in the given RMG sector.

One of the many significant reasons why the products of Bangladesh’s RMG sector is so much
accepted all over the world is it’s price. The price of the products produced in Bangladesh and
the labor is astonishingly low. On the other hand, the quality of the product is world standard.
Thus, the demand of the products produced through the RMG industry of Bangladesh is so very
much. However, sadly, the technical skills of the employees and R&D related aspects haven’t
been given proper importance. Thus, it is becoming a barrier. Also, frequent instability in the
political sector as well as existence of different types of natural disasters is creating drawback for
the sector. There are safety concerns which are also concerning the foreign countries to put
shades on Bangladesh. Some of the events in recent years like the destruction of Rana Plaza or
blaze of Tazin Garments have been a major talk in foreign community. However, different steps
have been taken by the Government to make betterment of the sector.
It is found that, the demand of the products of Bangladesh is most in USA and European
countries and also in different major sporting or other related events, the products of Bangladesh
is getting more acceptance than ever before.
As the country is majorly dependent on the export-oriented arena, the economy of the country
depends on how the sectors are managed and through proper implementation of RMG sector, the
country is developing. The policies those have been taken, has been taken for creating more
demand in the domestic as well as international arena. As a developing country, Bangladesh is
trying to focus on the global market in relation to the current local market. A dynamic approach
is necessary to attain expected results. The growth in RGM industry in Bangladesh is great
compared to other countries. However, in order to reach to reach at the pinnacle proper
measurements are needed to be taken. Robustness in performance is seen for producing the
readymade garment products although there have been a series of unfortunate events those took
place over the recent years.
It has been seen that the Government is supporting the industry a lot by giving different rebate
and other supports. For developing more, the Government is trying to make arrangements as well
as for ensuring woman empowerment.

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As the flagship industry of the country, RMG sector is attracting a lot of attention in recent years
as a possible area to invest from both local and foreign sectors. Thus, the improvement and
demand of the sector can be realized. The metamorphosis in social context has been seen to be a
significant one that has been seen in a bigger context through RMG sector. Throughout this
paper, different related factors will be discussed.

1.2 Purpose of the Study

Purpose of this study is very significant. The report will show the significance of RMG sector of
Bangladesh. As the leading manufacturing and exporting as well as revenue earning sector of
Bangladesh, the importance of this sector is beyond words. Thus, after completing the research,
the users will be able to understand the related factors properly. Also, the users will understand
why the RGM sector is given the most attention in the country. Also, the research study will help
a user to identify the amount of money generated as part of export revenue through garments
sector as well as the impact of the expert revenue on the total export revenue earned as well as
the GDP of the country. Also, the research will help a user to understand the underlying factors
for which the Government helps this sector so much as well as the facilities those are given by
the Government. The employment opportunity that has been created by RGM is exemplary and
thus, the woman empowerment is a major aspect. Most of the people working outside are
actually working in any garments. Thus, the woman empowerment has been seen. The research
will put a shade on the related arena. However, the contribution of Bangladesh will be compared
with another country to show the significance of this sector in this country and how much the
industry is actually contributing in this country. Thus, the purpose of this research comprises
some of the important aspects and the user will be helped through this.

1.3 Research Question

The research question actually shows specific reason why the research is made. However, both
primary and secondary research questions are used in a research. Primary and secondary research
question in relation to this study are given below-

1.3.1 Primary Research Question

The primary research question helps a user to understand the main reason and main question of a
study. The primary research question of this study is-

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 - What is the impact of the revenue earned from the RMG sector on the overall revenue
and GDP of Bangladesh?

1.3.2 Secondary Research Question

Secondary research question or questions comprise some of the related phenomenon related to
the study. The secondary research questions of this study are-

- Why is Government giving so much importance in RMG sector?

- What is the significance of RGM sector compared to any other nation?
- How is woman empowerment affected through RMG sector?

1.4 Limitations of the Research

In here, Limitations of the research refer to the obstacles or barriers to be faced while completing
the research. The biggest constraint while completing the research belongs to time limitation.
The time was very short and it was very tough to operate such a research in a very short time like
this. Also, lack of available data can be added as another significant factor in this research.

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 Chapter 2: Literature Review
RMG sector is a significant sector of Bangladesh. There has been a number of papers regarding
the significance of RMG sector. However, from the perspective of Bangladesh, the significance
of RMG sector is a lot but, first I’m going to analyze the studies made before regarding the
relationship of economic growth and export revenue. Muhammad A. Quddus and Ikram Saeed
(2005) found that there is a positive relationship between economic growth of a country and
export revenue. The study basically suggests economic factors like increase in total export
revenue, GDP etc as significant factors of economic growth. Majeed A. Hussain (2014) made a
study on the export aspect of Pakistan regarding the causative relationship between export
revenue and economic growth and he found a Granger relationship as well. Mushfica Akter
(2015) also made a research study regarding the relationship between export revenue and
economic growth and there was a positive relationship in that study. The relationship between
import and export has been tasted by T and Achchuthan.S (2013) and they showed a positive
result as well. Thus, initially, these reports show that there is a positive relationship between
economic growth and export revenue and this factor is a significant factor that is to be concerned
while understanding the following aspects.

As generally, the positive relationship between economic growth and export revenue has been
seen, it can be understood that the significance of RMG sector is beyond words. As the RMG
sector is the main sector and almost 75% of export revenue is generated from the RMG sector,
the importance is easily understandable. Robbani (2000) made a study regarding the contribution
in foreign export revenue and he showed that the dominant part of the export revenue comes
from this sector. Rehman and Hundker (2001) discussed regarding the amount of export revenue
earned and they showed even though the sector started with an export revenue of sixty nine
thousand in the 70’s, the number climbed up to four and a half billion by the start of 2002 and
that shows how far the industry has come in terms of Bangladesh. Rock (2001) explored the
inception of garments industries in Bangladesh and found out that, Desh Garment started
exploring first in 1976. Also, a study conducted by Rahman (2002) showed that a positive effect
is found on the macroeconomic factor from the perspective of RMG sector.
However, there have been some drawbacks in case of growth in RMG sector. A study conducted
by Chowdhury et al. (2005) showed that the there is inefficiency caused by lack of training and

7
thus the lack of skilled labor is causing increase in cost of production. Also, another study
conducted by Rahman and Anwar (2007) showed the weakness of infrastructures in Bangladesh
that is pushing the RMG sector behind. The recent events of Rana Plaza and Tazin Garments
show the poorness of the situation. However, it is ironical that the garments owner are also not
interested in training the employees thinking of cost but, there production cost is getting
increased anyway Berik and Rodgers (2008). The level of efficiency in RMG sector was checked
by Clark & Kanter (2011) and it was found out that the level is not satisfactory. However, the
problems were understood by Berg et al., (2011) and the significant challenges refer to –
- The infrastructures being weak
- Issues regarding compliance
- Low supplier
- Efficiency in labor
- Political stability.
The biggest challenge identified by Hasan (2013) is sustainability in the competition in
international market as the quota system has been withdrawn by MFA accord. Klaus Schwab
(2014) also marked some of the major issues regarding the infrastructure in the RMG Sector of
Bangladesh. However, there are different problems like disagreement between the owner party
and worker party as well as the infrastructure, the gas and electricity problem, inefficient labor,
political instability, quota problem etc have been identified by Islam et al. (2014).
However, the significant development in socio economic development has been seen by Md.
Salim Uddin and Mohammed Abu lahed (2007). Also, they said it has been a boom in the
economy of Bangladesh as a result of RMG sector and the major sector of revenue has been
RMG sector as well. They have complemented the RMG sector as the symbol of dynamism in
terms of economy of the world is concerned. However, the Multi Fiber Agreement has
intensified the competition in global market.
Ayesha Jamal(2013) has discussed regarding the RMG sector and the performance of the RMG
sectors and especially, the clothing have been given major focus on her study. The proper
administration in RMG sector to make further improvement has been suggested by Irshad
Rahman (2007). Md. Mustafizur Rahman(2012) revealed in his report that the transaction of
deals done through RMG sector is a win-win situation for both the client and the company.

8
However, proper administration and promotion of the related industry is very important from the
perspective of Bangladesh.

Islam (2015) expressed in his report that, initially the RMG sector is was dependent on the
import. However, with the passage of time the situation has changed and more demand has been
seen in manufacturing of clothing from Bangladesh as a result of low labor cost and high quality
of product. Rakib Ibne Habib (2009) examined that a serious issue regarding the RMG sector of
Bangladesh belongs to the backward linkage and after the success of RMG sector in Bangladesh
depends on this. However, to develop more after the MFA agreement, proper policies are needed
to be implemented. In a criticism made by Khandoker Abdul Mottaleb (2011) showed even the
RMG industry has been booming for last three decades and leading the sector in the world, the
lack of proper knowledge may lead to doomsday of the sector in the long run. Thus, proper steps
are necessary to take. In the report of Sayed Sarwer Hussain (2014), it was expressed that
Bangladesh is highly dependent on the RMG sector.
Thus, throughout this literature review, it has been seen that importance of RMG sector is
beyond words for Bangladesh. The country has been leading in the relevant sector and due to
high quality of product in a low price, the attraction in the related arena has been found.
However, different drawbacks are lagging the sector behind and proper knowledge is necessary
to spread and Government needs to take different steps to continue the boom in RMG sector of
Bangladesh.

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 Chapter 3: Research Methodology

3.1 Research Approach

Research approach is an important aspect as it considers the perspective of the research. While
conducting a research, a researcher may use deductive or inductive reasoning approach.
Inductive reasoning is the research approach where a research is conducted after the experience
from the daily life and reality is used. On the other hand, deductive reasoning is the one where
hypothesis of a particular statement is stated and developed. After developing the hypothesis, the
work is done. In this particular research study, I will be using deductive reasoning approach as
the hypothesis has already been developed and now, based on the particular statement, the
research study will be made.

3.2 Research Method

There are two research methods those are used in a research. One of the research methods is
called qualitative research method and the other research method is called quantitative research
method. Qualitative and quantitative research methods are different. Qualitative research method
is the research method in where a descriptive analysis of a particular phenomenon is made. Here,
different factors and things are analyzed and then, the researcher reaches to the final result. On
the other hand, quantitative research method is the research method in which statistical or
numerical or mathematical factors, methods and tools are used and then, depending on those
aspects, the research is completed and finally, the research makes analysis on the numbers and
gets the ultimate result as the final result is found by them. In this research study, I will be using
quantitative research method to analyze the impact of revenue generated from the garments
sector on the export revenue as well as on the GDP of Bangladesh. Utilizing the numbers found
from the GDP, export revenue and revenue generated from garments sector, the analysis will be
made. Also, a comparison will be made with another Asian country to compare recent impact of
Garments sector in between these two countries.

3.3 Data Collection

Data collection refers to collecting the numerical and descriptive aspects. There are two data
collection sources used in a research study. One is primary data collection and the other one is
secondary data collection. Primary data collection is the one in which data is collected directly

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from the source and also, in primary data, data is collected from the place in which any work is
operated or the data is kept. Secondary data on the other hand is different as it is collected from a
source in where the data has already been collected. In secondary source, the data is not collected
directly rather than indirectly from the source that has collected directly. In here, secondary data
source will be used as data will be collected from sources like papers, newspapers, internet,
journals etc. After collecting the secondary sources, the research will be made and the final
results and findings will be presented.

3.4 Sampling Method and Sampling Size

Sampling method and sampling size are two of the most significant factors in a research study as
well. Different types of sampling methods are used while conducting a research study. In here,
random sampling method is chosen. Also, as part of sampling size, last 5 years available data for
the revenue generated in garments sector as well as in the export revenue and GDP of
Bangladesh will be collected and related data will be collected from China to compare between
countries.

3.5 Ethical Considerations

Ethics refer to the standard through which a person can measure something properly that has
been developed through behavior, culture, surroundings and others over the years. While
completing this research ethical considerations will be taken into account properly to ensure
integrity in this research study. While collecting the data and analyzing all the related aspects
ethical considerations will be implemented for integrity of the study.

3.6 Validity and Reliability

Validity and reliability are two major concerns of a research study. Here, validity refers to
understanding it is examined whether the measured concept has whether or not been measured.
Reliability is however an understanding of measurement of the concept. Validity and reliability
both depend on each other and while completing this research study, particular focus will be
given to ensure validity and reliability of this research.

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 Chapter 4: Contributions of RMG sector

4.1 Exported Items from RMG Sector

Readymade garments sector is the biggest sector to earn export revenue from the perspective of
Bangladesh. The RMG sector comprises different products. Basically, the products are either
knitwear or woven. However, different types of RMG products are produced. Some of them are
described below-

- Shirt, T-shirt those are made from knitted or cotton

- Different jerseys and shorts of different national teams and clubs
- Sweater, hoodie, jacket for winter season
- Woman’s dresses including lingerie
- Men and women’s trousers, pants and other dresses

These are main RMG products exported abroad. However, a variety of other products are
exported and especially, the jerseys are world famous which are worn both by players and fans
all over the world in big events like Olympics, Fifa world cup, ICC cricket world cup and other
great tournament as well as throughout the years.

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 4.2 Prime Export Market

4.2.1 European Market

European market is one of the most significant markets of Bangladesh. Major European nations
like Spain, France, Germany, and United Kingdom etc are the main customers to purchase
different products from Bangladesh. They are very much interested in the products those
Bangladesh has to offer and they are regular buyer of products from Bangladesh. The European
countries share values and responsibilities and complies the accords and thus, they purchase the
products from Bangladesh. However, they are also focused on factors like labor right and
continuous improvement of environment surrounding the industry. The European Union helps
Bangladesh improve the condition of RMG sector and the buyers are also helpful towards
Bangladesh as well.

4.2.2 American Market

American market is another significant market as well. United States of America is the biggest
buyer of RMG products of Bangladesh. They import a significant amount of total export made
from Bangladesh. Since the 90’s, the demand of Bangladeshi RMG products is very high in
USA. However, in early 2002 the export to USA deceased and which started become increasing
slowly ever since. However, the RMG industry of Bangladesh is heavily dependent of USA and
the significance of American market from the perspective of Bangladesh is undeniable.

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 4.3 Potential Future Market of Bangladesh
Although European and American markets are the major markets for Bangladesh, there are
potentialities in other arena as well. More European countries can be focused where the products
can be exported as they can import from Bangladesh a lot. More and significant garments are set
up which are attracting interest from Bangladesh. There are green industries setting up beside
other significant industries which are attracting the customers. The green factory focuses on
sustainability of environment and employees. Thus, the customers are becoming more interested
in Bangladesh. The garments industry is improving several factors for getting customer attraction
and thus, they are becoming more interested. The Scandinavian countries can be the next big
target market as countries like Sweden, Norway etc are very lucrative place to export. Beside
them, China can be an attractive destination to export. They are a huge country with most of the
people living in it. Thus, China can be a preferred destination with multi-billion dollar
investment. Also, in recent years China has been looking towards Bangladesh as a preferred
destination in this arena as well. Thus, other continents like Africa, Latin America or Australia
can be focused more to generate revenue. So, there are a lot of areas where Bangladesh focus to
shift and generate more revenue in the long run.

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 4.4 Social Benefits of RMG Sector
As it has already been discussed, the significance of RMG sector in economy of Bangladesh has
been significantly influential. However, for different important factors, social significance
influential of RMG sector is undeniable. Beginning from the empowerment to several significant
reasons, the importance of RMG sector is very much. The significant social benefits for RMG
sector is given below-

4.4.1 Employment Opportunities

Arrangement of employment opportunities is the biggest success from the perspective of social
sector of Bangladesh. Since the inception of Garments industry in Bangladesh, it has been
reducing the unemployment rate significantly. In each company, more than thousand people are
working relentlessly to make overall improvement. The lower class community especially those
who live away from the urban area are significantly depended on this sector. Most of the people
from Savar and Narayanganj are directly or indirectly dependent on this sector. Thus, the sector
is also helping by helping the local community. Regardless the fact of inclusion of foreign
remittance, the industry is arranging opportunities for people.

4.4.2 Woman Empowerment

Woman empowerment has been a major aspect of RMG sector. It’s creating opportunities for
millions of woman living in the country. A significant proportion of woman is directly or
indirectly related with the garment sector. Since the inception of this industry, it has been
prominently first and most significant source of employment sector for women. Over last couple
of decades, the participation of women in RMG sector is increasing rapidly. They are also
participating in social decisions and their family. It has been found out that the early marriage
has decreased and the educational participation of girls has increased over the years. RMG sector
is continuously working to secure these factors and as more women are coming to these sectors,
the achievement in these sectors has been influential. Thus, dangerous issues like child labor,
child birth, early marriage, illiteracy etc has decreased for active participation in RMG sector.

4.4.3 Environment Friendly Sector

The infrastructure in RMG sector of Bangladesh is not an exemplary one. However, recent
disastrous events like Tazreen Garments and Rana Plaza have shaken Bangladesh economy and
thus, the Government have become more concerned. Thus, the focus on eco system and

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environment has been more than ever before. The Government has been strict and imposed new
laws and regulations. As a result of this, the garments are becoming more eco-friendly and they
are imposing major focus on environment. Thus, the idea of green industry has discovered. Here,
the companies try to earn profit with having environment sustainability. Thus, green factory is
built. There are touch of environment and trees and natural elements all around the factory as
well as the energy, light and power consumption is reduced to sustain the environment. Also,
different safe rules and regulations have been imposed. Also, the foreign countries also prefer the
safe and green industries as those are safe investment for them. The emission of different type of
polluted air has been restricted inside the garments and the garments are now working not to
pollute the environment. Thus, the Bangladesh Government as well as BGMEA is working hard
to make a better situation.

4.4.4 Improvement of Human Rights

A significant proportion of population of Bangladesh lives below the poverty line. Thus, basic
human rights are not achieved by a lot of them. However, the RMG sector is giving those people
an opportunity to better life. They are giving them employment opportunity. Also, they are
meeting their basic demand and reducing the social negativities indirectly. Also, the garments
factories are also very much focused about corporate social responsibility and almost all the
garments are working CSR and trying to help the people and society. Thus, to build a civil
society and improved nation, the human rights are directly or indirectly improved by the RMG
industries.

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 Chapter 5: Government Assistance to RMG sector of Bangladesh
Export sector is the most significant sector in case of earning revenue for a country like
Bangladesh. When it comes down to understanding the significance of export revenue, the first
name that pops up is certainly the RMG sector. The RMG sector of Bangladesh has been a
backbone of it’s export sector since the amount of revenue earned in this sector is the most. For
last three decades, the industry has been developing for MFA accord. From the RMG point of
view, Bangladesh exports 7th highest amount of export. Since the MFA accord made in 2005, the
competition in RMG sector has been very tough. The production cost has been increasing
continuously. As a result of this, the industry is getting less profit. Also, the price of the clothing
has decreased in recent years as well. However, the demand from the customers has been
increasing. They want quality product within a limited amount of time. Thus, the garments are
pressurized as well. As a result of these factors, the survival of the factories is threatened.
On the other hand, RMG sector is the most important sector of Bangladesh and it generates the
most amount of revenue. As a result of this, the Government is coming forward. They are
helping the garment factories. Also, they are assisting the garment industries by helping them
financially. The Government is providing financial support as well as different rebate including
tax to encourage the people come forward to be a part of this industry. Whenever needed,
depending on the situation the Government is offering the garments financial support. Also,
when a new industry is established, they are given tax rebate like other industries to foster the
growth and contribute in the economy of the country. The Government understands that this is
the precursor industry of the nation and if the nation has to generate more export revenue, they
need to encourage the sector and provide them with different facilities.
For further assistance and betterment in garments sector, the Government has launched training
program. This has been done with cooperation of Germany. By this, the woman empowerment
and efficiency of women in the garment sector will increase as a result of this. Both DWA and
MoWCA are working together to improve the condition. The newly established training facility
that is free of barrier in Gazipur is actually helping enlarging the image of women in such
industry. For growing and diversifying the industry, PSES is working with GIZ to make social
and environmental improvement. In Bangladesh, two of the main obstacles to further
development are inefficient workers and disable workers or mid level employees. Thus, these
became major drawbacks for Bangladesh. Thus, the development projects have been taken to

17
make the situation better. The training facilities and classrooms are working to make the workers
efficient and helping the disable workers to work efficiently as well. The trainers are very good
and they are helping to make more efficient employees.
Thus, it can be said that there are different steps taken by the Bangladesh Government including
financial support to the industries to encourage entrepreneurship in this industry and make more
investment from different people so that the country can generate more export revenue in the
long run.

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 Chapter 6: Quantitative Analysis of RMG Sector

6.1 Number of Garments Factory

The number of garments factory refer to the total number of garments factory existing in
Bangladesh. In here the total number of garments factory in Bangladesh will be discussed over
the years. The number of garments factories in Bangladesh for last 5 years is given below both in
table and graph-

Year Number of Garments

2013-14 4222
2014-15 4296
2015-16 4328
2016-17 4482
2017-19 4560
Source: BGMEA (bgmea.com.bd, 2019)

4600

4500

4400
2013-14
2014-15
4300
2015-16
2016-17
4200
2017-18

4100

4000
Number of Garment Factories

Interpretation: It shows that, in last five years the number of garment factories in Bangladesh has
been increasing continuously. In 2013-14, the number of garments was 4222 and it increased

19
continuously and in 2017-18, it became 4560. Thus, it shows that continuous increase in number
of garment factories.

6.2 Number of Employment in years

RMG sector is one of the most significant sectors that employ a significant amount of people
over the years. Besides earning revenue, the industry is equally important for employing a lot of
people over the years. So, the number of people employed in this sector over last five years is
given below. Here, the number of people employed by the industry is given below in millions by
both table and graph-

Year Number of People in millions

2013-14 4.00
2014-15 4.00
2015-16 4.00
2016-17 4.00
2017-18 4.00
Source: BGMEA (bgmea.com.bd, 2019)

4.5

3.5

3
2013-14
2.5 2014-15
2015-16
2
2016-17
1.5
2017-18
1

0.5

0
Number of People Employed

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Interpretation: Here, it can be seen that the industry has ensured employment opportunity for
4.00 million of people for last five years continuously. However, the number has obviously
increased over the course of five years but, as the number has been shown in millions, it showed
same numbers over the years. This is a significant number as a lot of people have been employed
through this and unemployment rate of the country has decreased because of this.

6.3 Export in RMG Sector and it’s Impact on Total Number of Export of
Bangladesh
The significance of export revenue earned from the RMG sector is undeniable as more than 80%
of export revenue is earned from this sector. Thus, it is crucial to understand the impact of the
export revenue on the overall revenue of the country. Total number of export in RMG sector and
it’s impact on Total number of export of the country are given below both in table and chart-

Year Total Number of Total Number of Percentage of Total

Export in RMG Export of the Country Number of Export
Sector in Millions in Millions
2013-14 24491.88 30186.62 81.13%
2014-15 25491.40 31208.94 81.68%
2015-16 28094.16 34257.18 82.01%
2016-17 28149.84 34655.90 81.23%
2017-18 30614.76 36668.17 83.49%
Source: BGMEA (bgmea.com.bd, 2019)

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 40000

35000

30000

25000
Number of Exports in RMG
20000 Sector
Total Number of Exports
15000

10000

5000

0
2013-14 2014-15 2015-16 2016-17 2017-18

Interpretation: Here, the results show that the dominant part of total export comes from the
export revenue earned from the garments sector. Over 81% of total revenue is generated from the
RMG sector every year and the number is increasing. Even though in 2016-17 the number
decreased, it increased significantly in the latest year. Thus, it shows the significance of RMG
sector in the total export revenue earned by the country.

6.4 Value of Total Apparel Export

As it has been already discussed, there are two types of apparels from where the export revenue
is earned by Bangladesh. Those apparels are woven and knit. Value of total apparel in both
woven and knit are given below in both table and charts to understand the significance of the
apparels differently-

Year Woven Knit Total

2013-2014 12442.07 12049.81 24491.88
2014-2015 13064.61 12426.79 25491.40
2015-2016 14738.74 13355.42 28094.16
2016-2017 14392.59 13757.25 28149.84
2017-2018 15426.25 15188.51 30614.76
Source: BGMEA (bgmea.com.bd, 2019)

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 18000

16000

14000

12000

10000
Woven
8000 Knit

6000

4000

2000

0
2013-14 2014-15 2015-16 2016-17 2017-18

Interpretation: Here, it can be seen that woven products contribute more to the Bangladesh
export and economy than knit products. In every year, the excess of woven than knit can be seen.
However, in recent years, knit products have been more important.

6.5 Export in RMG Sector and it’s Impact on GDP of Bangladesh

GDP refers to the gross domestic product of a country. Every industry has a significant impact
on the GDP of a country. As the RMG sector is the most significant industry with earning more
than 80% revenue, it is the most important sector. The number of export in RMG sector and it’s
impact on GDP of Bangladesh is given below-

Year Number of Export in Total number of GDP Percentage of Total

RMG Sector in in Billions number of GDP
Millions
2013-14 24491.88 172.9 14.17%
2014-15 25491.40 195.1 13.07%
2015-16 28094.16 221.4 12.69%
2016-17 28149.84 249.7 11.27%
2017-18 30614.76 285.817 10.71%
Source: BGMEA (bgmea.com.bd, 2019)

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 Percentage of Export in RMG Sector in GDP
16.00%

14.00%

12.00%

10.00%

8.00% Percentage of Export in RMG

Sector in GDP
6.00%

4.00%

2.00%

0.00%
2013-14 2014-15 2015-16 2016-17 2017-18

Interpretation: Here, the impact of percentage of Export in RMG sector earned on GDP of
Bangladesh shows that over the years, the percentage is decreasing. This is a good sign for the
country as the country is getting diversified and focusing on other areas. However, the total
revenue shows that the export revenue is still dominant by RMG sector and thus, it can be
understood that other factors are involved in here for which the percentage is decreasing over the
years.

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Chapter 7: Comparison of Export of RMG Sector of Bangladesh with Indian
RMG Sector
Currently Bangladesh is considered as earning second highest number of export revenue after
China. However, the economy of India is highly dependent on RMG sector as well. They are not
much behind in earning export revenue and their growth in the related sector is exemplary. A
comparison between Bangladesh and India on the export revenue is given below in billions-

Year Bangladesh India

2013-14 24.5 12.8
2014-15 25.5 14.5
2015-16 28.1 15.7
2016-17 28.2 16.5
2017-18 30.6 18
Source: BGMEA (bgmea.com.bd, 2019)

35

30

25

20
Bangladesh
15 India

10

0
2013-14 2014-15 2015-16 2016-17 2017-18

Interpretation: Here, it can be seen that the number of export revenue that is earned by
Bangladesh is almost one and a half time higher than India. It has been seen that India is also
increasing in the export in RMG sector in Global market. However, so it Bangladesh, Thus,
Bangladesh’s RMG sector is much enriched and better than India. Even if India is a bigger

25
country than Bangladesh miles away, Bangladesh has edged the country in this sector. Indian
textile and apparel products are very great. However, the products those are supplied by
Bangladesh are just too good and thus, the acceptance in the countries can be understandable.
Also, the emphasis of Bangladesh in related sector is very much and thus, the country is
improving each day. India has also been focusing on improving in the related industry and the
result can be seen as their increase in export revenue. Recently, the biggest RMG market known
as Chinese market is fallen down and the likes of Bangladesh or India in such industry can be
understandable. They are trying to capitalize this opportunity and increase more revenue. Thus,
here it can be seen that Bangladesh is doing better than India in the related sector and both
countries are continuously improving.

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 Chapter 8: Limitations of Garment Sector
While operating inside Bangladesh, a garment industry has to face different problems. Some of
the limitations are described below-

8.1 Political Instability

Political instability is maybe the biggest obstacle in line for the development of an industry in
Bangladesh. The political condition of Bangladesh is not sound. The country suffers from a big
obstacle in this course as both the ruling and opposition parties are creating chaos and thus, it’s
affecting the industries in the country. All the industries are getting negatively affected and the
biggest problem is occurring in the most important sector like RMG sector. The foreign buyers
are against buying products from the country which has instability in politics.

8.2 Inefficient Labor

Lack of efficiency in workforce is a big problem for an industry like RMG sector. Thus, it is
really crucial to understand that the industry deserves better workforce. However, the standard of
the workforce is not satisfactory. Also, for the sustainment of this industry and long term growth,
the workforce needs to be better. Also, it is important that the industry appoints a better training
facility. Thus, it will be possible to get a better situation. There will be more productive situation
for Bangladesh if the labor becomes more efficient.

8.3 Crisis of Land

Land crisis is another significant issue. The crisis of land occurs as there is not sufficient land to
build industrial infrastructure. Except for some of the common locations, there are hardly any
areas to build a proper infrastructure.

8.4 Economic Diplomacy Problem

Bangladesh is lagging behind in diplomacy all over the world. Thus, it is affecting the RMG
sector as well. The more diplomatic a country’s economy is, the better the country’s industrial
development is. For development in foreign relationship and more attraction, it is needed to
make the economic diplomacy better. Also, the private relationships with foreign countries need
to be better as well.

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 8.5 Education and Knowledge
All the people in Bangladesh don’t have proper education and thus, they do not have proper
knowledge. Lack of sufficient manpower and other problems are created for lack of education.
They do not have proper knowledge and did not learn about the factors regarding success in the
industry properly. It is important to make betterment in education system regarding RMG sector
to get even better result.

8.6 Tariff & Non-Tariff

Tariff and non-tariff are two of the major threats in garments sector as well. Different countries
have high tariff and different countries have non-tariff. Thus, it is crucial to understand that all
these factors can really affect the industry. The Government needs to take steps as different
countries have different views regarding this factor and the industry is facing problems as a
result of this.

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 Chapter 9: Conclusion
Finally it can be said that, RMG sector is the most significant sector of Bangladesh. The
economy of the country depends on the sector. In last couple of decades, the country has seen
major growth in this industry. Thus, the country has achieved second position in generating
export revenue over the world through RMG sector. Even though there are some major
drawbacks regarding the RMG sector which is actually lagging the industry behind, it is
important to understand that the industry is actually responsible for major foreign investment as
well as export. Thus, it is also crucial to understand that the industry is helping to eradicate the
unemployment rate in a big margin. The Government thus needs to take proper steps to solve the
problems. Also, the woman empowerment through this industry and the social benefits those
have been mentioned are undeniable. When the revenue of the country is compared with India, it
was seen that Bangladesh is also above them and the growth exists for both countries. Since the
independence of the country, the RMG industry is actually helping to alleviate the poverty rate.
The country has come a long way till it’s primary period of independence and now dominating
the RMG world. However, the Government and the role of law makers and people concerning
this sector is very important as they decide the way the industry will head at. For further success
in global market, the Government and the people concerning the sectors need to come forward
and take serious steps so that significant result can be found. So, finally it can be said that the
significance of RMG sector from the perspective of Bangladesh is very important.

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