Chapter One

Introduction

1
1.1 Background of the Study
The economy of Bangladesh is largely dependent on agriculture. However, in recent years,
the Ready Made Garments has emerged as the biggest earner of foreign currency. The
Garments Industries has experienced an exponential growth since the 1980s. The sector
contributes significantly to the GDP. It also provides employment to around 4.2 million
Bangladeshis. An overwhelming number of workers in this sector are women. This has
affected the social status of many women coming from low income families.

Bangladesh Garments Industry is the success history in the economy of Bangladesh. The
Ready Made Garments industry of Bangladesh started in the late 1970s, expanded heavily in
the 1980s and boomed in the 1990s. The basic reasons regarding this issue are The
technology is less complicated, Machineries are cheap and easy to operate & A large female
labor force that is easy to train is readily available. Besides the low cost of labor is one of the
major factors behind the success of Garments Industry. Bangladesh exports its products
mainly to the United States of America and the European Union. These two destinations
account for more than a 90 per cent share of the country’s total earnings from garment
exports. The country has achieved some product diversification in both the United States and
the European Union. Now some other countries are becoming the new international market
for Garments export. Due to the low and competitive price of readymade garments, many
companies other than Europe and US are focusing on Bangladesh for their readymade
garments imports comparing to the other competitors of Bangladesh like China, Vietnam,
Cambodia, India, Thailand, Indonesia, Laos etc.

Therefore to bring the great success in the Garments Industry it is necessary to realize the
nature of the competition, reasons of the competition, identify the ways to find out the
problems, the solution to solve these problems and need to move to the new emerging market
for its continuous growth.

2
1.2 Rational of the Study
With the continuous growth of Ready Made Garments industry of Bangladesh, now it is the
time to open its windows to new emerging international markets to get competitive benefits.
After the omitting of quota facilities, Garments business becomes more competitive and
now Bangladesh is competing with the other countries. Bangladesh Garments Industry is
very much familiar with European Market and US markets as they are working with those
regions for a long time. In Europe, the economy is going down and it affects to US as well.
Now some new markets are going very rapidly and to sustain in the Garments business, we
have to grab the opportunities of new emerging international markets.

1.3 Objective of the Study

 For gaining knowledge about the present position of our Garments Industries.

 To know the existing and the future market position strategy and

development program by our concerned authority.

 To know the planning, organizing, leading and controlling pattern for our

Garments Industries .

 To know the competitive positions of our Garments sectors in the changing

global environment.

 To know the problems and prospects of our Garments Industries .

 To find out the possible ways to solve the problems and challenges for our

Garments Industries .

3
1.4 Methodology

The report is a descriptive event. So there is no option to use statistical Tools,

paradigm and formula. For this reason the data collection method are used by the

following way.

Garments Industries in Bangladesh

Practical experience is the most useful for collecting data. I am doing my job for 3
years in Garments Industries at Dream Fashion in Narayanganj. So the practical
experience is used as the fundamental source of preparing this report.

Sample Design & Technique

A non-probabilistic sampling technique was used to collect respondents for its survey
purposes. For the first sample frame, convenient sampling was used to pick the respondents.
This was the only the respondents could be collected as majority of them have a busy
schedule and often can’t spare time. I collected responds from Mr. A. K.M. Salim Osman,
President, BKMEA published in newspaper. Also collected responds from Mr. Md. Atiqul
Islam, President, BGMEA. Some respondents was taken from BGMEA and BKMEA
officials, their comments and feedbacks are added in the project report.

Table: Contacts info of Experts & Researchers

Name of
Contact
Name Organizatio Designation Address
Number
n
Mr. Redwan BKMEA Sr. Research 233/1 01616-
Ahmed Executive Bangabandhu 956564
(Research & Road, Press Club

4
 Development Building,
Cell) Narayanganj-1400.

For the second sample frame, information was collected from the owners or management
personnel of few garments factories; we used a mixture of snowball sampling and convenient
sampling.

Data Collection
Primary Data
The primary data were collected through surveys. Beside a fixed questionnaire, in-
depth interviews of a few experts were taken to help understand the situation better
and from different angles.

Secondary Data
The data collected from both primary and secondary sources. The secondary sources
include the various national and international newspapers, journals, websites and also
published material supplied by some of the respondents.

Literature Review

I take help to develop my conceptual knowledge from Abul Quashem Haider,

“Readymade Garments in Bangladesh: The first step of Industrial revolution”, R.S

Shukla, “ How to export Garments successfully”, Board of Investment, “Bangladesh

Investment Handbook” Practical visit to BGMEA, EPB, BEPZA and so on.

5
1.5 Limitations of the Study

o Major part of the report is based on the face-to-face interviews,

which consists of view and opinions of those people. In some cases

some of them were not able to provide concrete facts or figures. In
this case as well some assumptions had to be made.
o In some garments they do not have as much employees as they

needed to serve their needs for HR Divisions.

o Some important duties are done by the entry level employees that are

not be considered their job because it can occur a lot of error.

o The officers were very busy with their daily work, they could hardly

provide little time to discuss with them.

o Finally, the nature of information of the project part is somewhat confidential and
critical to analyze. It was quite difficult to have the sufficient knowledge and
understanding in that particular field, in a short period of report making.

6
Chapter Two
Overview
of
Garments Industry
7
2.1 Historical Background of Garments

Industry of Bangladesh

The Ready-Made Garments Industry emerged in late 1970s. By 1980s about 800
factories, there was very good growth in the 1990s; about 3400 factories came into
operation. Today more than 4000 units exporting more than $7.5 billion and
contribute 48 percent of our national export earnings, about 11.33 percent of GDP.
The total number of workforce employed in this sector is 1.8 million, which is half
of the total industrial workforce of the country. Besides this, more than 15 million
people work in related industries from button makers to truckers to insurance
underwriters. Almost 85 percent of garments workers are women and most of them
have come from village. At present, garments are the largest foreign currency earners
industry in Bangladesh. Bangladesh earns Seventy six percent of total foreign
exchange from RMG. The ups and downs of the world economy have its direct
effect on it. Because, the development of this sector is depended on other allied
industries Such as: Textile sector, Sewing thread, Cartons and other accessories. So
we need to study RMG sector clearly to ensure the development of this sector in the
world competitive market.

8
2.2 Garments Industry in Bangladesh
(A Perspective Analysis)

In the beginning of the seventies, the returning from garment exports stood at
just a few cores for the whole country. This figure increased and expanded and is
likely to touch the magic figure of US dollar for our economy in the mid-nineties.
Although the competition both national and international is getting together every
day and most of the advanced countries are resorting to some kind of protectionist
practices, the impact of the law of comparative advantages bound to be felt.
Therefore, there is no reason to doubt further increases in this sector. The multi-fiber
arrangements (MFA) and the quota system are expected to undergo a drastic revision
in the coming years in a direction which will be of benefit to us, provided we are
ready to grasp the opportunity.

Yet another development of great significance is the emerging European Union with
a single currency and a single tariff on the imports and free moment of goods from
one member nation to another. For goods of a high standard and quality, this offers a
unique advantage of making the goods availability to different nations of the EU,
which have a population of over 350 million people.

Apart from the international developments, the new national policies are offering
greater opportunities to the garment exporters. The winds of globalization and
liberalization are sweeping the nation. Access to foreign markets and buyers is
getting easier. The full convertibility of taka should give a big boost.

The government is aware that garments exports are the largest net foreign exchange
earners. The money earned by garment, exports is much more than other sectors.
Fortunately, thanks to the pioneering effort of many dedicated individuals, there are

9
a number of fora, through which the government can be approached and assisted to
make a policy, which will be conductive to the garment industry and exports.

Another healthy development, which will go a long way towards the enhancement of
the capabilities of the producers and improving the quality of the exports, is the
expanding indigenous base following an increasing national demand. Our
countrymen are gradually changing their preferences and opting to buy
manufactured products rather than make a number of trips to the tailor to get their
garment stitched. Indigenous industry is therefore poised for a major breakthrough.
The biggest advantages of this development are the indirect help, which will be
available to the manufacturer exporter by way of experienced technicians and
operations.

The stage is thus set for competent and capable people to export garments to
practically all the corners of the world. Yet if you ask anyone who deals in garments,
he will tell you that garment export is not a bed of roses by any stretch of
imagination. The tough specifications of buyer, high quality requirements, scarce
availability of high quality fabric, production problems, delays in dispatches and
finally in shipment are but a few hurdles. The cut threat competition, acute scarcity
of competent managers, frequent migration of managers, supervisors and operators
to other garment organizations create mind-boggling problems.

There are however the challenges which have to be met. Do not forget that there are
thousands of firms, big and small, which are overcoming these challenges day in and
day out and carrying on their business. There are the firms, which have emerged as
the market leaders of today.

10
2.3 Competitive Advantages in Garments
Industries
We therefore, have a tailor-made scenario for a thriving business in the Garments
Industries. The important factors that are supporting and enriching our Garments
Industry are summarized in the following:

 Lower production costs, low capital intensive and employment oriented

industry.

 Availability of increasing numbers of trained operators.

 Expanding Export requirements.

 Easier availability of local fabrics and imported opportunities from our

neighbor countries like: India, China, and Japan etc.

 Government policy to encourage export.

 Recent trends on globalization and liberalization of economy.

 Reasonable availability of other Materials import of trimmings and packaging

e.g. thread levels, buttons, poly bags, shirt backers etc.

 There are a number of institutions importing tramping on different aspects.

11
2.4 Current Trend of Garments Industries

To discuss about the current position of Garments Industries in the world Market at
first we have to know the previous facilities under MFA and quota system.

After introduction of the multi-fiber Arrangement has become the world’s fur most
exporter. Initially production was concentrated in the East Asian Countries Korea,
Hong Kong, Singapore, China and Taiwan, but by the middle of the 1980s other
Asian Countries become major producers. Bangladesh, Cambodia, Nepal, Haiti,
Laos, Madagascar and Myanmar emerged as major exporters of garment
Manufactures.

Bangladesh is a good example of a country that was benefited from quota

restrictions on other countries exports under the MFA. Both MFA and general system
of preference (GSP) introduced in 1971, gave Bangladesh generous access to
European union (EU), Canada and USA markets. Within 10 years Garments
Industries had over taken the country’s leading exports of jute, tea, shrimp and
leather and developed into the countries single most important industry for
employment and foreign exchange earnings (export earnings of this sector reached
hear $8 billion in 2006-07 from 2.5 billion in 1995-96)

It is apprehended that Bangladeshi readymade garments export might decline 50%

percent in the post MFA (Multi-fiber arrangement) period beginning in 1 st January
2005. In response after 2004, our Garments Industries does not face the negative
apprehension of the exports. So far our Garments Industries is doing well day by
day.

Actually, in the period of MFA customers consider quota, price, quality and
compliance for selecting the vendor. After MFA there will be no quota, quality and

12
compliance will be taken for granted. The deciding factor will be quick delivery and
competitive price.

So far Bangladeshi garments are dependent on USA and EU markets. About 45% of
our total apparel exports to USA markets 50 percent to EU countries, 2.5 percent in
Canada and remaining 2.5 percent go to other countries.

To sustain our competitive edge, After MFA our authority emphasized on:

 Diversification of market is essential.

 Development of the product quality and design
 Changes of fashion and taste frequently
 Import of the suitable technologies etc.

As a result, implementation of above policy and other opportunities like unrestricted

duty free access under LDC initiative presently our Garments Industries exports in
USA, EU and Canada markets. Finally we can say that the current trend of our
Garments Industries is capable of competing in the global market because of our
absolute comparative advantage i.e. labor-intensive country.

13
2.5 EPZ’S Contribution to Garments Industry

Bangladesh

Government took up plan to set up EPZ early last decade for increasing foreign investment

and to increase the export income. The first EPZ was set up at Chittagong in 1983 and

consequently the EPZ was set up in Dhaka, Comilla, Mangla, and Iswardi and so on. In 1998-

99 the total investment in EPZs was 71.56 million us dollar and in the same year total export

was 452.12 million us dollar. Now the investment increased vastly in our EPZ sector, as a

result the investment and export are increasing day by day at EPZ. Foreign investors are

being attracted to invest their money at EPZs of Bangladesh. Mention that in the present

time, our government provides one stop service for the foreign investors and ensured the

security for the investors. About our EPZ, it is bad or disappointed news for our EPZ when

the Korean EPZ is being set up at Chittagong successfully. But the international conspirators

cannot tolerate this success of Bangladesh. The conspiring circle is influencing the American

lobby to press Bangladesh for starting trade union at EPZ of Bangladesh. This lobby places

their demand through the representatives of the IMF, The word bank, he USA in Bangladesh

and the high commissioner of Bangladesh. Actually environment of trade unionism in

Bangladesh has not yet been created; as yet Bangladesh is not ready for this. So we will have

to come united against this conspiracy.

14
2.6 Factors Influencing the Growth of Garments
Industries
Before investigating the level of growth that will occur in the Bangladesh Garments
Industries, it is essential to find out the factors that is causing and will determine the growth
of the sector in the new emerging international market. The following analysis given below
gives one an idea of the position of the Garments Industries and how this might fare in the
coming years.

Table : VALUE AND QUANTITY OF TOTAL APPAREL EXPORT

FISCAL YEAR BASIS (VALUE IN MN. US$ QUANTITY IN MN DOZEN)
(VALUE IN MN. US$ QUANTITY IN MN DOZEN)
YEAR TOTAL APPAREL EXPORT TOTAL APPAREL EXPORT
IN MN.US$ IN MN.DZ

WOVE KNIT TOTAL WOVEN KNIT TOTAL

N
1992-93 1240.48 204.54 1445.02 36.05 10.66 46.71
1993-94 1291.65 264.14 1555.79 34.35 10.81 45.16
1994-95 1835.09 393.26 2228.35 47.21 15.3 62.51
1995-96 1948.81 598.32 2547.13 48.82 23.18 72
1996-97 2237.95 763.3 3001.25 53.45 27.54 80.99
1997-98 2844.43 937.51 3781.94 65.59 32.6 98.19
1998-99 2984.96 1035.02 4019.98 64.79 36.66 101.45
1999-2000 3081.19 1268.22 4349.41 66.63 45.27 111.9
2000-2001 3364.32 1495.51 4859.83 71.48 52.54 124.02
2001-2002 3124.82 1458.93 4583.75 77.05 63.39 140.44
2002-2003 3258.27 1653.82 4912.09 82.83 69.18 152.01
2003-2004 3538.07 2148.02 5686.09 90.48 91.6 182.08

2004-2005 3598.2 2819.47 6417.67 92.26 120.13 212.39

2005-2006 4083.82 3816.98 7900.8 108.82 165.02 273.84

2006-2007 4657.63 4553.6 9211.23 133.08 199.54 332.62

15
2007-2008 5167.28 5532.52 10699.8 147.43 241.6 389.03

2008-2009 5918.51 6429.26 12347.77 169.59 290.92 460.51

2009-2010 6013.43 6483.29 12496.72 172.8 292.7 465.5

2010-2011 8432.4 9482.06 17914.46 247.28 441.03 688.31

2011-2012 9603.34 9486.39 19089.73 249.94 456.46 706.39

2013-2014 10709.64 10457.12 21163.05 252.49 450.91 703.40

Comparison of Woven and Knitwear exports (in mil US$) in 2013-2014

Tota Apparel Tota Apparel

Exports (Knit) in Exports (Woven) in
Mil US$; 49.69% Mil US$; 50.31%

Figure: Woven and Knitwear exports (in Mil. US$) in 2013-2014

16
 Comparison of Woven and Knitwear exports (in mil DZ) in 2013-2014

Tota Apparel Exports

(Woven) in Mil Dz
Tota Apparel Exports
46.94% (Knit) in Mil DZ
53.06%

Figure: Woven and Knitwear exports (in Mil. DZ) in 2013-2014

Table: MAIN APPAREL ITEMS EXPORTED FROM BANGLADESH (VALUE IN MN. US$)
YEAR SHIRTS TROUSERS JACKETS T-SHIRT SWEATER
1993-94 805.34 80.56 126.85 225.9 ….
1994-95 791.2 101.23 146.83 232.24 ….
1995-96 807.66 112.02 171.73 366.36 70.41
1996-97 759.57 230.98 309.21 391.21 196.6
1997-98 961.13 333.28 467.19 388.5 296.29
1998-99 1043.11 394.85 393.44 471.88 271.7
1999-2000 1021.17 484.06 439.77 563.58 325.07

2000-2001 1073.59 656.33 573.74 597.42 476.87

2001-2002 871.21 636.61 412.34 546.28 517.83
2002-2003 1019.87 643.66 464.51 642.62 578.37
2003-2004 1116.57 1334.85 364.77 1062.1 616.31

2004-2005 1053.34 1667.72 430.28 1349.71 893.12

2005-2006 1056.69 2165.25 389.52 1781.51 1044.01

2006-2007 943.44 2201.32 1005.06 2208.9 1248.09

2007-2008 915.6 2512.74 1181.52 2765.56 1474.09

2008-2009 1000.16 3007.29 1299.74 3065.86 1858.62

2009-2010 993.41 3035.35 1350.43 3145.52 1795.39

2010-2011 1566.42 4164.16 1887.5 4696.57 2488.19

17
 2011-2012 1733.54 4686.39 2231.16 4713.11 2340.34

2013-14 1869.09 4945.41 2427.74 4807.89 2621.39

Figure: Main Apparel Items Exported from Bangladesh.

Main Apparel Items Exported from Bangladesh (Value in Mil. US$) Year 2013-2014
11.04%
14.90%
SHIRTS
TROUSERS
JACKETS
T-SHIRT
29.84%
SWEATER
30.01%

14.21%

Figure: Main Apparel items exported from Bangladesh (Value in Mil. US$) for the year 2013-2014

Table: Bangladesh's Garments Industries Export to World

Million US$ Woven Knit Total

Major EU 2010-11 2011-12 2012-13 2013-14 2010-11 2011-12 2012-13 2013-14 2010-11 2011-12 2012-13 2013-14
Countries
Austria 3.01 1.93 6.36 17.5 19.2 13.87 27.75 34.49 22.21 15.8 34.11 51.99

Belgium 95.02 87.78 162.93 238.61 157.52 155.79 299.74 320.46 252.54 243.57 462.67 559.07

Bulgaria 0.38 0.41 0.21 0.54 0.39 0.47 0.97 0.68 0.77 0.88 1.18 1.23

Denmark 23.94 33.51 50.43 86.8 131.23 178.24 256.32 318.72 155.17 211.75 306.75 405.51

Finland 6.1 5.47 11.22 7.85 15.52 15.59 28.73 29.25 21.62 21.06 39.95 37.1

France 264.11 260.92 405.98 416.72 705.69 692 999.71 855.18 969.8 952.92 1405.69 1271.9

Germany 801.4 717.31 1108.91 1,358.92 1334.4 1282.77 2022.05 2039.97 2135.8 2000.08 3130.97 3398.89

Greece 8.86 8.92 9.42 8.14 29.57 20.66 20.89 21.17 38.43 29.58 30.31 29.31

Italy 153.42 161.34 236.76 291.15 368.86 379.04 525.17 571.46 522.28 540.38 761.93 862.62

Ireland 41.89 54.14 54.28 63.03 52.16 80.16 105.59 123.92 94.05 134.3 159.87 186.95

Netherlands 393.82 388.79 374.13 226.76 513.98 528.57 591.07 325.28 907.8 917.36 965.2 552.04

Portugal 6.53 4.87 6.03 6.68 24.51 23.08 32.57 25.57 31.04 27.95 38.61 32.25

Romania 3.34 3.03 3.34 4.3 7.89 4.3 4.37 7.62 11.23 7.34 7.71 11.93

Spain 141.66 136.98 253.49 410.39 404.23 384.55 595.92 660.73 545.89 521.54 849.41 1071.12

Sweden 49.18 54.98 93.91 109.07 125.74 129.89 206.86 203.87 174.92 184.86 300.78 312.94

U.K. 502.34 534.29 768.9 1,026.77 720.58 725.74 990.98 1103.3 1222.92 1260.02 1759.87 2130.07

Cyprus 0.01 0.27 0.03 0.08 0.63 0.84 1.12 1.11 0.64 1.11 1.16 1.18

18
Czech 1.84 1.24 4.31 37.99 15.66 14.59 23.98 25.77 17.5 15.83 28.29 63.75
Republic
Estonia 0 0.1 0.91 0.74 0.13 0.24 0.62 2.52 0.13 0.34 1.53 3.26

Hungary 0 0.31 0.29 0.21 0 9.98 7.01 2.14 0 10.28 7.31 2.34

Latvia 0.07 0.04 0.14 0.29 0.16 0.3 0.34 1.22 0.23 0.33 0.48 1.51

Lithuania 0 0.07 0 0.18 0.05 0.04 0.62 0.98 0.05 0.11 0.62 1.16

Malta 0.04 0 0 0.02 0.66 0.12 0.32 0.45 0.7 0.12 0.32 0.47

Poland 5.57 6.03 38.34 112.77 43.49 44.56 123.33 209.96 49.06 50.59 161.67 322.74

Slovakia 14.8 15.56 19.01 20.31 26.22 24.29 39.59 36.54 41.02 39.84 58.61 56.85

Slovenia 0.37 0.24 0.77 1.04 2.08 2.57 4.08 6.33 2.45 2.81 4.85 7.37

Sub-Total 2517.7 2478.54 3610.11 4446.87 4700.55 4712.21 6909.72 6928.69 7218.25 7190.75 10519.84 11375.56
(EU)
EU % of 42.54 41.22 42.81 46.31 73.11 72.68 72.87 73.04 58.46 57.54 58.72 59.59
World
Growth% -1.56 45.65 23.18 0.25 46.63 0.27 -0.38 46.3 8.13

USA 2733.98 2736.44 3506.12 3515.45 959.42 891.61 1119.04 1013.95 3693.4 3628.05 4625.16 4529.4

% of USA 46.19 45.51 41.58 36.61 14.92 13.75 11.8 10.69 29.91 29.03 25.82 23.73

Growth% 0.09 28.13 0.27 -7.07 25.51 -9.39 -1.77 27.48 -2.07

Canada 295 311.69 461.75 473.04 292.05 283.86 432.92 401.82 587.05 595.55 894.67 874.85

% of Canada 4.98 5.18 5.48 4.93 4.54 4.38 4.57 4.24 4.75 4.77 4.99 4.58

Growth% 5.66 48.15 2.44 -2.8 52.51 -7.18 1.45 50.23 -2.21

Non-
Traditional
Markets
Australia 13.49 25.15 49.82 94.83 35.8 60.41 143.08 212.72 49.29 85.56 192.9 307.54

Brazil 11.14 11.84 32.6 50.45 28.43 33.33 62.04 77.33 39.57 45.17 94.64 127.78

Chile 1.6 3.65 3.62 5.57 4.81 4.45 9.31 11.36 6.41 8.09 12.93 16.93

China 4.11 10.44 26.6 57.83 5.37 8.51 26.21 46.69 9.49 18.95 52.81 104.52

India 9.52 9.99 25.45 42.2 1.41 2.55 10.49 12.82 10.94 12.53 35.94 55.02

Japan 52.34 120.26 153.68 239.99 21.99 53.06 93.83 163.65 74.33 173.32 247.51 403.65

Korea Rep. 4.24 15.36 34.46 61.27 1.19 7 12.75 18.75 5.42 22.36 47.21 80.01

Mexico 41.43 25.53 30.34 36.74 40.45 35.88 50.83 61.91 81.88 61.41 81.16 98.65

Russia 4.87 6.67 9.53 27.67 11.29 13.72 42.33 48.82 16.16 20.39 51.86 76.49

South Africa 22.92 21.36 28.09 29.31 19.59 14.9 20.35 26.45 42.51 36.26 48.43 55.76

Turkey 108.43 123.76 245.79 231.2 131.11 182.52 272.52 124.73 239.54 306.27 518.32 355.93

Other 97.735 112.777 214.925 290.918 175.8 179.282 276.64 336.679 273.535 292.059 491.569 627.597
Countries
Sub-Total 371.83 486.77 854.91 1167.98 477.24 595.61 1020.38 1141.9 849.07 1082.38 1875.28 2309.88
(Non-Trad.)
% of Non- 6.28 8.09 10.14 12.16 7.42 9.19 10.76 12.04 6.88 8.66 10.47 12.1
Traditional
% Growth of 30.91 75.63 36.62 24.8 71.32 11.91 27.48 73.26 23.17
Non-
Traditional
GRAND 5918.51 6013.44 8432.89 9603.34 6429.26 6483.29 9482.06 9486.35 12347.77 12496.72 17914.95 19089.69
TOTAL
% Growth 1.6 40.23 13.88 0.84 46.25 0.05 1.21 43.36 6.56

19
Source: EPB, Compiled by: RDTI Cell, BGMEA

From the above figure and the above data, we see that Japan is the number one Garments
Industries importer country of Bangladesh in the non-traditional market. The other top
countries are: Turkey, Australia, Brazil and India.

At present, Bangladesh is the second largest Garments Industries exporter country after
China and we are providing only about 4% of Garments Industries products to the world.
Now we have to focus on the new emerging markets to increase the share of the total
Garments Industries products. Many customers are reducing orders from China and placing
those to Bangladesh. Though we have many opportunities in the new emerging markets as
well as in the existing markets, we are facing some serious problems which are related to the
compliance issues as well as the political issues. Recent political unrest and building collapse
at Savar, created negative impression of Bangladesh Garments Industries to the customers.
Some customers already stopped working with Bangladesh and many others are threatening
us to stop works if Bangladesh Garments Industries do not follow the workers safety
issues.

The Bangladesh Garments Industry is the perfect evidence of how Bangladesh grew from a
struggling economy in 1972 to one of the biggest garments exporters in Asia, rising to over
$5 billion in exports over a span of 33 years. This has been made possible by the total
commitment, determination and hard work of all the manufacturers and exporters. Today, the
Bangladeshi garments sector has earned a place on the global export market map as a strong
and mature industry whose apparels are known for their quality and price competitiveness.

Bangladesh apparels are now being exported to 90 different countries. The United States is
the single largest buyer of our apparels. Although the EU is our largest export market,
Bangladesh is now in the process of expanding its market to countries like Australia, Canada,
Japan , Norway and New Zealand in order to avail of the duty free market access and GSP
benefits provided by these countries to LDCs.

20
Total Garments Exports of 2000-2014 to the Global Market

The Bangladesh Garment Manufacturers and Exporters Association (BGMEA) is the largest
exporters’ guild in the country, with a membership of 4094, which is no mean achievement
considering its inception in 1977 with only 12 members. This spectacular progress has been
possible through its total commitment towards promoting a congenial atmosphere of
interaction and co-operation at all levels of production and marketing. This sector has
provided employment to two million workers and has put to use the invaluable talent of a
large female workforce, leading not only to their positive contribution to their family and
society, but also to their own self-realization and freedom from age-old economic overthrow.
BGMEA is harnessing all the divergent sectors of the garments industry through policy
making, marketing and overseeing the interests of the parties involved. It is also involved in
facilitating the intercommunication of its member companies with overseas trade bodies and
organizations.

2.7 Growth of Other Sector as a Result of Garments

Industries Growth

21
The forward and backward linkage industries and services such as textiles, accessories,
transportation and packaging have also been large beneficiaries. It promotes the development
of other key sectors of the economy, including textiles, banking, packaging, transportation,
and insurance and support industries. The success story also attracted foreign investors as a
result of the reputation that the garment industry created. The apparel export industries of
Bangladesh ha come to dominate the economic scene in the manufacturing and export sector
of Bangladesh in a relatively short period of time. In terms of employment, output, export
earnings and linkages. It has had an unprecedented positive impact on the economy of
Bangladesh. Almost $2 billion worth of economic activity in areas such as banking, transport,
insurance, packaging, real estate, utility services and consumer goods has been generated.
Approximately 70 percent of business at Bangladesh's Chittagong port is garment related. It
is estimated that port usage fees earned from the Garments Industries account for more
than 40 percent of the income of the port authority. Garments Industries contributed about
$65 million in fiscal year (FY2002) to earnings of the shipping business of the country by
way of port charges, c & f agents, freight charges, forwarding charges etc. banking and
insurance sector is also heavily depends on Garments Industries . More than one tenth of
the commercial bank's asset portfolio belongs to the Garments Industries and textile sector
in the country.
A World Bank survey revealed that almost all firms (98 percent) are the clients of the
commercial banks for working capital and procurement of machines and equipment (57
percent). Insurance also other beneficiary, al firms have their machines and plants insured.
Garments Industry has boosted investment climate of the country and other sectors like
shipping and logistics, real estate, professional services like utilities, CA firms, engineering
sector, and hotel and tourism. In total, the effect for the country is unique. Though enormous
growth has taken place but this could be vulnerable as Bangladesh is dependent too much on
it, as attar (2006) states: The readymade garment industry has become the lifeline of the
Bangladesh economy. It is the source of its strength and in a way could be the cause of its
vulnerability. Too much of the nation's fortune is riding on this one sector. With the two
million workforces it employs directly and another one million in linkage industries, it
supports the livelihood of some 10 million Bangladeshi who have been lifted out of poverty.

22
2.8 The Contribution to GDP by Garments
Industries
Bangladesh is an agricultural country. The industrial development is far away. Only
the RMG sector developed in our industrial sector because of our availability of low
cost labor. Actually our foreign earnings depended on Garments Industries export.
As result the industrial contribution to our GDP must be considered the Garments
Industry. In 2005-06, the agricultural contribution to GDP was 19.32% and industrial
contribution to GDP was 17.14%. But the Garments Industries contribution to GDP
is 9.5% on self of industrial contribution to GDP. So the Garments Industries must
play a great role to increase our GDP.

2.9 The Contributions to Employment by Garments

Industries
The problem of unemployment seems to be one of the most painful problems in the
modern world. Not only the underdeveloped countries are suffering from this
problem even the highly industrialized and developed countries are not free from
this difficulty. It is quite frustrating that more than 40% of the labor force is
unemployed in Bangladesh. This problem is one of the major constraints toward
economic development of our country. So it is proved that to solve this problem we
need to create working scope for the unemployed labor force. Only the Garments
Industries employed huge number of labor force at least 1.8million male & female
labor. So it is clear to us that RMG sector must have contribution to our employment
sector.

23
Mention that the wages level is very low. As a result, it creates human problem for
our labor force. But it is positive news to us that our authorities have already set up
minimum wage rates for the workers and amended of our labor law.

2.10 Key Factors for the Growth of Garments

Industries
The factors those are critical for the growth of Garments Industries, namely infrastructure,
compliance issues, information technology, capacity building and regional co-operation and
developing new market will be discussed below.

Infrastructure

Infrastructure constraints for Bangladesh are not a state secret and most commonly known as
the main bottleneck for the country’s investment and development. UNCTAD (2005) expert
meeting on textiles and clothing also emphasized that, among others, investment in
infrastructure ease process in delays in shipping and customs clearance, and the removal of
export duties and other taxes. An inadequate infrastructure, such as congestion and customs
delays at Chittagong port, inadequate telecommunications infrastructure, uneven
'professional office practices, and uncompetitive and unreliable energy supplies - all of which
contribute to high costs towards Bangladesh textile and apparel industry. The Bangladesh
ministry of commerce appointed a Swiss consultant Gherzi Textile Organization, to examine
the impact on Bangladesh post MGA, which recommended a number of comprehensive
changes in infrastructure, for instance reduction in bureaucracy, enhanced information
technology, new ports, better roads, and improved law and order enforcement.

Compliance Issues

24
Compliance is generally defined as conforming to a specification, standard or law that has
been clearly defined. In Garments Industry it is commonly enforced as "code of conduct"
by the buyers, which refers to "a list of labor standards". The compliance issues earned a
great attention from the western world particularly because the industry employed unskilled
labor: women and children. This section will be discussing compliance factor from two
perspectives: international and Bangladesh. The firms also ranked compliance as most
important to important and saw it as potential concern that created benefit than the harm it
causes.

Information Technology

The economic transformation at he mm of the 21 st spectacular development and diffusion of

modern electronics-based information technology, has been described by a variety of names,
including an innovation economy, a knowledge economy, a network economy, and digital
economy. Electronic commerce is not simply about technology; it is also about changes in
business organization, market structures, government regulations, and human experience.
Thus database also plays important role in case of any dynamic industry. Along with
database, broadly two types of information technology are considered important for the
garment: electronic communication and software for machineries and daily use.

Capacity Building

The education level in garment industry was found to be quite satisfactory. Most of the
employees in managerial level (Merchandising, commercial, accounts, administration and
Human Resources, Production and Quality Control) were graduates; some of them hold post
graduate.

The structure of education is based on rote learning rather than to being creative. On the
other hand, graduates don't want to be low paid as the garment owner offered as fresh stage,
so they often join in the company to add experience on _their resume and when they get

25
better opportunity in terms of salary, working conditions and reputation of the company they
migrate..

Training helps a company to be competitive where various roles play into the dynamics of
the industry. There is little importance placed on training and its role in improving
productivity by firms. Very often, firms don't view training as an investment and don't want
to expend their time and money on it. Garment managers favored industry based training
based training because of its in-hand approach and direct link to practical field.

2.11 Social Responsive Program

Elimination of Child Labor from the Garment Sector of Bangladesh

On 4 July 1995 Bangladesh created history by signing a MOU on elimination of child labor
from the garment sector. It was the culmination of long and arduous negotiations with ILO
and UNICEF and concentrated effort of BGMEA. BGMEA takes pride in declaring the
garment sector of Bangladesh child labor free since 1 November 1996.The main objective of
such a program of BGMEA with active collaboration of UNICEF and ILO is to establish the
basic right of the children by rehabilitating and providing elementary schools for the
underage workers eliminated from the garment factories.

Earn and Learn Program

BGMEA started a new education program for the 14 plus age group of the former child labor
students who have completed their schooling under Memorandum of Understanding (MOU)
but now willing to further continue their studies. The new program, Earn and Learn, started
from July4, 1998 on the third anniversary of signing of the historic MOU on Elimination of
Child Labor from the garment industry of Bangladesh signed among BGMEA, ILO and
UNICEF.

26
Family Welfare & Reproductive Health Program

BGMEA signed a Project Document with the Government of Bangladesh (GOB) and the
UNFPA on 28 October 1998 to provide family welfare and reproductive health education and
services to the garment workers. The objective of this technical assistance project is to
increase greater involvement of the garment workers in the garment workers in the
reproductive health practices for improving their own health, the health of their partners and
their families and also to help them prevent themselves from STD (Sexually Transmitted
Deceases) / AIDS. About one-lakh garment workers at Dhaka would be directly benefited
under this pilot project initially.

Health Centre & Annual Health Check up Program

For extending Medicare facilities to Garments Industries workers at the area of Mailbag
Chowdhurypara, Dhaka the first BGMEA Medical Centre was established at Malibag in
1994. The second BGMEA Medical Centre was established at Mirpur on 02 October 1999, as
this is another area where about 450 factories have been established. About two lac workers
will get benefit from it. BGMEA also in collaboration with BRAC undertaken a joint project
for Annual Medical Checkup of the garment workers. The goal and objectives of Annual
Health Check up program for all garment workers is to improve and sustain the health of
garment workers by reducing preventable morbidity. At the moment, 19505 workers got the
benefit of the check up. BGMEA is also working for establishing Day Care Centers for
childcare for the children of the working mothers in RMG factories.

Chapter Three
27
 Problems & Prospects

of

Garments Industry

in

Bangladesh

3.1 Problems of Garment Industry in Bangladesh

28
Political Problem

Due to political problem in the past two years around 4000 factories in Dhaka have been on
wildcat strike, 16 factories were burnt down by strikers and hundreds more ransacked and
looted, pitched battles were fought with cops and private security forces in workplaces. These
events have ignited a wave of fierce class struggle in the garment industry up and down the
country. These revolts are spreading beyond the workplace and are absorbing the wider
working class community.

Garments industries often pay dearly for political unrest, hartal and terrorism etc. The
international market has withdrawn quota advantage over garments export form Bangladesh
since December 2009.

The allegations of planned and rumour-fed violence against the garments industry should
be duly investigated. If the allegations prove to have any basis, the authorities need to find
out who are investigating the violence from time to time and why. The Chairmen of BGMEA
and the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) alleged
time and again, that the incidents, instigated from outside, were deliberate attempts to foment
unrest in the garments industry. Some unknown quarters, they say, are out to destroy the
vibrant garments industry of Bangladesh to promote their hidden agenda.

29
No aggrieved worker can do what the unknown elements are doing to damage the industry,
they say. Only outsiders, without any sense of belonging to the industry can be as unruly as
they are. Such elements smash and loot anything in the factories without any hesitation. In
the process 400 garments factories were damaged in recent years. Some of the incidents,
according to allegations, were prompted by non-government organizations (NGOs).

A separate ministry can obviously pay the needed attention to all these concerns. The
government needs to give up its indifference to create a separate ministry as suggested by
BGMEA.

Social Problem

Since freedom is the birth right of a man, mother’s milk, fathers affection and love are the
birth right of a child. Mother and father are working in garments all the day round and earn
money not enough to live together. So, they are bound keep their child in the village with
their mother, mother in law or sister in law. The child must not be growing like any other
child who lives with their father and mother. As a result, this child is becoming irrigative. Its
mental growth is downward. He or she is not getting a good environment of education. He is
always dejected. The child is growing up in an unwelcome world. In the long run, this child
will not honor the parents since relationship is not as such. What will happen after 50 years if
the children are not grown properly?

From the law of business, we have seen that if the owner is unable to provide good working
environment for the worker, it is the violation of law. Side by side the workers must get a
good compensation package from the owner. This compensation package must include salary,
medical service, home allowances, transportation, trainings and education. Many workers
have the potentialities to do something better. If they are provided training, they can go in
higher ranks and lead a good life. This opportunity also motivates them to work
spontaneously.

The recommended minimum average wages (which include Traveling Allowance, House
Rent, Medical Allowance, Maternity Benefit, Festival Bonus and Overtime Benefit) in the

30
units within the Bangladesh Export Processing Zones (BEPZ) are given about 40% lower
than outside the BEPZ. These discriminations mental strength to the unrest situation, which
creates social problems.

Environmental Problem

Environmental problems of today are of complex character as industrialization has been

diversified in quality and by regions. Environmental pollution depends on various factors like
type of industry, raw materials, production technologies, location of industries, etc. For a
particular type of industry, change in energy source e.g. shifting from coal to petrol/diesel,
and raw materials as well, caused significant change in types of diseases as well as
magnitude of damages. Even before becoming industrial powers, the industrialized nations
caused a variety of environmental problems. They are still confronting with serious
environmental issues of water, food and air pollution. Some of them have been solved by the
application of engineering techniques or by imposing legal constraints, while others still
remain untouched or unresolved. They are now thinking of striking a balance between
industrial development and environmental problems.

Photo: Industrial waste indiscriminately dumped in water body to the peril of the localities
around.

31
Till 1962 the number of industries in Dhaka was about 100, most of them of small to medium
scale and located mostly in present old Dhaka area. The important industries in the country
are textile & dyeing, leather, paper and pulp, fertilizer, sugar, steel, oil refining, chemical and
pharmaceuticals and other small scale agro-based and agro-allied industries and of course the
readymade garments.

Currently the list of polluting industries is expected to be much longer. Many industries are
located on the banks of natural streams or rivers while many others in the residential areas
causing air and water pollution through smoke emission and dumping of untreated effluent.
Monitoring results by the Department of Environment (DoE) and other research
organizations indicated alarming level of the localized air and water pollution by those
industries. The condition of Buriganga, Balu, Turag, Shitalakshya, Karnafuli, Bhairab rivers
is a glaring example of deteriorating environment.

Rapid and unplanned urbanization, commercial development along with very high
population pressure have made Dhaka an environmentally polluted city in the world. The
number of tanneries has increased to over 200 from 26 in 1975. Nearly 2000 garments
industries have been established all over the city since the early 1980s. Rapid and unplanned
establishment of industries in different places of the city is responsible for localized pollution
effects. As a result, water of those surrounding rivers and lakes has already exceeded the
national standard limit in pollution.

The concern about environmental issues, however, has been reflected in different policy
initiatives taken by the government of Bangladesh. The major policy initiatives, strategies
and plans emphasized environment and natural resources management to achieve sustainable
development. The National Environment Policy 1992, National Forest Policy 1994, National
Water Policy 1999, National Agriculture Policy 1999, National Land Use Policy, 2001 all
aimed to ensure development in harmony with the natural environment. The Wetland Policy
(Draft) puts special emphasis on the conservation of wetlands. Government along with
industry owners should come forward to minimize this problem and people from all sectors
should be concern not to pollute the environment any more.

32
Financial Problem

Though financial prospects are more in case of Garments Industries than financial problem,
there have some financial problem. Sometimes due to political unrest situation like inter-
factory strike, hartal & many other causes delay or missing of garments order delivery. These
things causes serious hamper in industry finance & in overall export & earnings too.

Another thing is now Banks & other financial institution are not showing interest in invest
noncompliance & non Accord certified factory but the number of this kind of factories are
almost 3000. So they are in existence threat. Also government imposes new rules than those
who are non composite factory they are not eligible for government incentives provided by
Bangladesh Bank.

On the other hand, these industries are causes massive environmental pollutions. And
financial losses due to these pollutions are now measuring by money. A strategic cost/benefit
analysis indicates that, with continuing increase in the urban population and ongoing
deterioration of the environment of Dhaka city consequent, losses would mount from year to
year. Without any action, the total estimated minimum financial loss (cost to the economy of
Dhaka and Bangladesh as a whole) would be US$ 51.1 billion over the next 20 years.
Contrarily, if appropriate measures are taken to clean up Dhaka, estimated net economic
benefit would be more than US$ 50.0 billion. Results of environmental protection will be
realized through increased agricultural and industrial productivity, improved human health,
increased biodiversity, etc.

Technological Problem

Bangladesh is unique in Garments production in comparison with the other Garments

Industries producing country because of less cost of labor. For this reason, upgraded
technologies are used less in this country. Beside this, for economic & quality production
quite updated technologies are used. For pattern & marker making Computer Aided Design
(CAD) & Computer Aided Manufacturing (CAM) are using.

33
In Sewing Section, which is the largest part of the garments industry using Special type of
sewing machines like Button Hole machine, Button attaching machine, Bartak machine,
Blind stitch machine etc. are using. High speed Lock stitch machine (SPM: 1500-5500),
Chain stitch machine (Stitch length: 1.5-4.5mm), Over lock machine (SPM: 6500-8500), Flat
lock machine (SPM: 6000) etc. are used in most of the modern factories. And for final
Finishing, High quality washing machines with Stone wash, Normal wash are using in
individual Washing Plants. After-all the aim is to produce Economic production by ensuring
high quality.

Problem with Women in Garments

The actual percentages of women employment in Garments Industry is around 88% on

average. After being the greatest part of this industry they are still being discriminated in
comparison with international standard of wage or salary.

Table: Average Hourly Wages in Garments Industries (Where 88% of total is women):

34
Ref: Journal of Textile & Apparel Technology & Management

Volume-8, Issue-2, Fall-2013.

Even they discriminate in comparison to men workers in the Garments Industries . More
on, the participation of women in administration is very rare. Beside this, they also faced
problem in work place due to environment of work, attitude towards them, mental & even
physical harassments too. Due to over-night duty they have to face social problems too.

Lack of Energy Supply

35
The Garments Industryis facing acute power and gas shortage, which is affecting the
industrial output tremendously and threatening the export deadline. Especially
Dyeing factories are facing energy problem. They get only half of the energy
comparing with the demand. In spite of this factories are often affected by local
people because when they use energy local people have to suffer for it.

Workers Strike

Workers strike is a common problem in Garments Industries. Workers union always

tries to make unrest situation when a factory in rush. Sometimes they ask for uneven
demand which has no lawful value but factories have to solve the problem
immediately to create workable environment. Sometimes situation gone out of
control and workers took to the streets and fought also create riot on factory compound.

36
Other Mentionable Factors

i) The Garments Industries are facing a tremendous change in the open market for
WTO agreement offer 2004. The locally produced fabrics and garments have been
facing competition in the quota and GSP free market. For the short period of lead-
time, the buyers of Ready-made garments are shifting their orders to the countries
under lead-time, which will be able to supply the orders fast. The condition of the
rapid delivery depends on getting accessories in time.

ii) Garments Industries earned 77 percent foreign exchange money or export money
for our nation. But it is mentionable that our government never takes the right
decision in the right time in favor of Garments Industries. The FDI investment
granted decision and other negotiable factors did not get maturity in the reasonable

37
time. So the govt. decision making for our FDI and Garments Industries followed
delayed mechanism.

iii) The promotional activities for our Garments Industries are very poor. For
instance under the tda-200 agreement, 72 countries of Africa, sub-Sahara Caribbean
Regions are getting facilities of quota and duty free export from USA, Bangladesh as
a developing country, should have this facility much earlier. Not only as a
developing country, Bangladesh has also been cited as an un paralleled example as a
child labor free Garments Industries exports in the world. This example was actively
one of the important points for getting the said facility from the USA. But it a matter
of regret that during the period from 1996 to 2000, No attempt was taken to get the
facility from USA and this was the main reason for not getting the said benefit.

iv) To prevent the advancement of Garments Industries , export, the international

conspire took steps one after another against Readymade Garments Industries in
Bangladesh such as closing GSP, imposing unnecessary rules, presenting negative
repot against Bangladesh by different organization.

v) The Patronesses of Garments Industries are not efficient; the Banking sectors
usually are not interested to finance sufficient money in the Garments Industries. The
cash incentives by the government are not satisfaction our Garments Industries such
as government imposes new rules than those who are non composite factory they are not
eligible for government incentives provided by Bangladesh Bank.

vi) The backward linkage of Garments Industry is very poor. Mostly the fabrics
along with the accessories required for the Garments Industries were imported from
foreign countries through back-to-back L/C. But it is true that in the present time, the
local backward industries extended by the endeavors of local exporters, extensive
assistance of foreign buyers and different effective steps of the government.

38
vii) Lack of availability of skilled manpower. Almost all are unskilled employees /
workers joined in the Garments Industries and then gradually trained themselves.
Educational system of our country is merely related with the concept of our
Garments Industries. So the technical education for our Garments Industries is
shortage to all. viii) The lack of long-term strategy of our authority for our Garments
Industries mentions that during the last 4 years. Garments Industries had to face hard
competition in the market of the USA, Canada and even EU. There is a downward
trend in the economy of the whole world on the one hard and on the other free
entrance of a good number of big buyers in world market put the garment industry of
Bangladesh in the face of great challenge.

ix) Our seaport facilities are not enough for fast delivery of Garments Industries to
the buyers and accept the exports items for the Garments Industries within our
country. The transportation of system is not scientific. Lack of central warehouse,
government sufficient incentives for our Garments Industries. Infrastructural
development needed for this sector is also very poor.

3.2 Prospects of Garment Industry in Bangladesh

Financial Prospect

Over the last fifteen years or so the garments industries have emerged as the largest source of
earning foreign currency. The following Chart will provide a better idea about it.

Table : VALUE AND QUANTITY OF TOTAL APPAREL EXPORT

FISCAL YEAR BASIS (VALUE IN MN. US$ QUANTITY IN MN DOZEN)
(VALUE IN MN. US$ QUANTITY IN MN DOZEN)
YEAR TOTAL APPAREL EXPORT TOTAL APPAREL EXPORT
IN MN.US$ IN MN.DZ

39
 WOVE KNIT TOTAL WOVEN KNIT TOTAL
N
1992-93 1240.48 204.54 1445.02 36.05 10.66 46.71
1993-94 1291.65 264.14 1555.79 34.35 10.81 45.16
1994-95 1835.09 393.26 2228.35 47.21 15.3 62.51
1995-96 1948.81 598.32 2547.13 48.82 23.18 72
1996-97 2237.95 763.3 3001.25 53.45 27.54 80.99
1997-98 2844.43 937.51 3781.94 65.59 32.6 98.19
1998-99 2984.96 1035.02 4019.98 64.79 36.66 101.45
1999-2000 3081.19 1268.22 4349.41 66.63 45.27 111.9
2000-2001 3364.32 1495.51 4859.83 71.48 52.54 124.02
2001-2002 3124.82 1458.93 4583.75 77.05 63.39 140.44
2002-2003 3258.27 1653.82 4912.09 82.83 69.18 152.01
2003-2004 3538.07 2148.02 5686.09 90.48 91.6 182.08

2004-2005 3598.2 2819.47 6417.67 92.26 120.13 212.39

2005-2006 4083.82 3816.98 7900.8 108.82 165.02 273.84

2006-2007 4657.63 4553.6 9211.23 133.08 199.54 332.62

2007-2008 5167.28 5532.52 10699.8 147.43 241.6 389.03

2008-2009 5918.51 6429.26 12347.77 169.59 290.92 460.51

2009-2010 6013.43 6483.29 12496.72 172.8 292.7 465.5

2010-2011 8432.4 9482.06 17914.46 247.28 441.03 688.31

2011-2012 9603.34 9486.39 19089.73 249.94 456.46 706.39

2013-2014 10709.64 10457.12 21163.05 252.49 450.91 703.40

Industry Sector
In the industry sector, which contributed 29.7 percent of GDP, growth rate slowed down
from 6.8 percent of FY12 to 5.9 percent in FY14. Within this sub-sector knitwear, rice
milling, dairy products, leather products, footwear, embroidery, wooden furniture, paper and
paper products, nonmetallic mineral products etc. showed substantial growth in the first six
months of FY15.

40
Despite global economic rescission, woven garments and knitwear, the country's key export
industry, showed substantial growth in FY09. Exports of woven garments and knitwear
achieved 14.5 and 16.2 percent growth respectively during FY09. The share of Garments
Industries products reached 77.17 percent in the July-November period from 77.15 percent
in July-October of the current fiscal year.

According to Export Promotion Bureau (EPB), Bangladesh, during the FY-2012-2013,

contribution of the major export items were Ready made garment (Knit-41.31%, Woven-
38.02%). In the July-November period of the current fiscal year, Bangladesh exported woven
garments worth $2.13 billion and knitwear items of $2.59 billion, with the share of garments
in national exports increasing. The share of woven garments in the total exports of the
country was 34.84 percent and that of knitwear (including sweater) was 42.34 percent.

Employment Prospect
After the emergence of Bangladesh radical change has come to our garment sector. Garment
industries started working from the 10's of the late century. At present there are about 5500
garment industries in the country and 80 percent of them are in Dhaka. The rest are in
Chittagong and Khulna. These Industries have employed fifty lacks of people and 90 percent
of them are illiterate rural women. About 80 percent of our export earning comes from this
sector.

Formal paid employment at end of March 2013 totaled 20,326, declined by 1,768 from the
comparable 2012 period. The drop was largely dominated by the decline of 1,324 in the
secondary industry followed by the declines of 544 and 12 in tertiary and primary sectors
whilst the public administration industry had increased by 111 respectively. Ready Made
Garments, for the last couple of decades, have been the life- line of Bangladesh's economy.
At the last count, the sector accounted for nearly 80 per cent of export earnings.
Consequently, it provides profits for the currently surging consumer class that drives the
economy further forward and jobs for hundreds of thousands of semi-skilled workers, mostly
women, who in turn provide livelihood for millions. And woman entrepreneurship is

41
practiced here from the very beginning. As one of the oldest export-oriented garment
factories, the Baishakhi Garment in 1977. Still our Industries have employed fifty lacks of
people and 90 percent of them are illiterate rural women. Many women hold top executive
positions in Garments Industries .

Political Prospect

With the rise of Industrialization specially Garments Industries activities of many Ministry
as Ministry of Industries, Ministry of Textile & Jute, Ministry of Trade, Ministry of Foreign
Affairs, Ministry of State and related Government Institutions become more pro-active in
sense of overall development of the country. Many institutions raised to assist this sector like
BGMEA, BKMEA, ITET and many more which act as the representative of this sector to
collaborate with Government. In July 1996, 2,357 garment factories were registered with the
Bangladesh Garment Manufacturers and Exporters Association (BGMEA).

The growth has indeed been phenomenal, since the ready-made garment industry began
modestly as late as the 1970s. Creation of a separate ministry would unburden the ministry of
industries. And the Bangladesh Garments Manufacturers and Exporters Association
(BGMEA) have been justifiably pleading for long for the creation of a separate ministry to
exclusively deal with Garments Industries issues. So far, the suggestion failed to create
any impact on the government. More on in case in joint venture projects related ministries
political activities become more meaningful with the rise of Garments Industries in
Bangladesh. Bangladesh has many joint venture projects with China, Korea, Japan, India etc.
This helping attitude, in turn, would have had a beneficial spillover effect on the political
climate, which would have improved the prospects of cooperation in other areas.

Cultural Prospect

42
In EPZ’s and in outside factories many foreign workers, technicians, engineers work with
Bangladeshi related persons. Though these Garments Industries we become able to enrich
& expand our culture and cultural identity and trends with the whole world. So this is a great
opportunity for Cultural Prospect of Bangladesh. More on, in these industries, people
tethered from all-over the country, from different parts, having different trend & culture.
Through the expansion of RMG industries, people there get opportunity to meet with
different cultural traditions. Now-a-days world of Fashion & Dresses is moving forward
rapidly. And most important contribution of this movement is the contribution of Garments
Industries. It is surely helping the Culture of Bangladesh in the way of prospect with a
strong hand.

Social Prospect

In light of growing competition among readymade garment Garments Industries )

exporting countries and consumers' preference for products which meet internationally
recognized social standards, it is essential for Bangladesh's Garments Industries suppliers
to improve social compliance in their factories. Training and upgrading the skills of
government inspectors, social compliance trainers and especially factory staff, including
midlevel managers and workers, is a necessity.

Factory Impacts
A survey revealed that in most factories where PROGRESS has trained social compliance
professionals, social compliance has improved. The following good practices were noted:
Senior factory management is involved n social compliance training, and at least one senior
officer is responsible for social compliance. The senior social compliance officers up-date
their social compliance knowledge regularly and have good relationships with supervisors
and workers. Floor supervisors and workers assisting in social compliance activities are
regularly trained and supported by the senior social compliance officer. Employees receive
special training, for instance, on reproductive health and HIV/AIDS prevention. Workers are

43
more knowledgeable about labor law issues and the handling of administrative procedures.
Workers' sense of responsibility towards their factory has increased. Communication and
relationships between management and workers has improved. Grievance handling has
improved. Protective equipment is regularly used. Housekeeping has improved. The accident
rate is low.

Environmental Prospect

With the rise of Garments Industries the utilization of nature and natural resources become
more. To give back-up the Garments Industries y many backward linkages rise as spinning,
weaving, knitting, dyeing, finishing and many others. If all these factories follow Eco-
friendly technologies then Environmental Prospect can be ensured. There is nothing more
to mention about the Environmental Prospect with the rise of any kinds of industry. But Eco-
friendly technologies like Effluent Treatment Plant (ETP) can be used to keep nature livable
to the next generations.

Prospect of Women Contributions

The Bangladesh garment industry is the largest employer of women in the formal
manufacturing sector. The conditions of the 1971 war, in fact, created the proto-capitalists,
and the post-1975 economic policies of the military regime enabled them to become
capitalists. The work has different meanings for women of different classes and these
perceptions influence gender roles and practices within the household. Women from various
class backgrounds are employed because they can be molded into compliant workers. Some
single women feel empowered by their earnings. Most married women are unable to leverage
their income into greater decision-making power. These Industries have employed fifty
lacks of people and 90 percent of them are illiterate rural women. About 80 percent of our
export earning comes from this sector.

Labor Intensive

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Comparative cost structure of doing business in the similar cities of competing
economics like Dhaka, Bangkok, Hanoi & Jakarta have also been presented. This
would enable investors to easily compare the costs of contending investment in
Garments Industries destinations and facilitate undertaking decisions. Now our
government set up minimum wages rate for the employees and workers of Garments
Industries. The minimum wages for the workers is 3000 taka per month for the
working hours under the labor law.

Attractive Investment Facilities in Garments Industries

In our Garments Industries the foreign invest is required vastly, at present our
government is providing available attractive facilities for foreign investors in our
country. So it is true that the prospects of capital gain for Garments Industries must
be reasonable.

Incorporation options to a foreign investor include:

a. Setting up a 100% foreign-owned company in Bangladesh;

b. Setting up a Joint Venture with Bangladeshi company / investor;

c. Establishing the Company's Place of Business in Bangladesh;

d. Setting up a branch or a subsidiary of a foreign company in Bangladesh;

e. Setting up a Bangladeshi Company or participate in a Bangladeshi Company

already formed

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Obtaining Utility Connections in Industrial Area

Utility connections and respective providers are:

Electricity: Power Development Board (PDB; Dhaka Electric Supply Authority

( DESA), Dhaka Electric Supply, Company (DESCO) and Rural Electrification Board
(REB).

Gas: Titas Gas Transmission & Distribution (JGTDSL) Company Ltd. (TGTDCL),
Bakhrabad Gas System Ltd. (BGSL) and Jalalabad Gas Transmission & Distribution
System Ltd.

Telephone: Bangladesh Telegraph and Telephone Board (BTTB) for Land phone
Grameenphone, Citycell, AKTEL, Bangladesh Telecom, Bangladesh Rural Telecom
Authority, Sheba Telecom, TMI etc. for cellular phone service.

Water & Sewerage: WASA or self generated.

 Entrepreneurs may apply either directly to the concerned authority for

obtaining utility services or BOI Utility Service Cell.
 BOI Utility Service Cell has been sufficiently strengthened with placement of
Senior Officials from the utility service providers.
 Investors may apply in prescribed forms for specific connectivity to BOI
Utility Service Cell (USC). The Cell arranges for necessary utility services
from the respective providers within the stipulated period.

The Existing Prospects for Garments Industries, Textiles, Composite

46
Textiles

 Bangladesh is the twelfth largest garment-manufacturing nation in the world.

 The fastest growing industry in Bangladesh with Garments Industries
accounting for more than 76% of total exports.
 Bangladesh is best placed in the region for textiles and garments because of
cheap labor, preferential trade status and advantageous global market access.
 Government incentives for the spinning and weaving industries include a
15% cash subsidy of the fabric cost to exporters sourcing fabrics locally.
 There is a huge fabric demand supply gap in the Garments Industries ,
which is being met by imports. Thus, the potential for backward linkage
industry is enormous.

Presence & Opportunities for the Foreign Investors in Garments

Industries

Asian countries top the list of majority investors in textile sector in Bangladesh.
About 38% of the investments in EPZs come from Korea, followed by 19% from
Japan, 14% from Hong Kong and minor investments from Europe. Options available
to the foreign investors are:

 Establishment of new textile / Garments Industries mill in the private

sector.
 Joint ventures with the existing textile / Garments Industries mill.
 Acquisition of public sector textile mills that are being privatized.

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 Indirect investment through financial services and / or leasing.

3.3 SWOT Analysis for the Analysis of Garments

Industries in Bangladesh:

By SWOT (Strength, Weakness, Opportunity & Threat) we can analyze the Problems &
Prospects of RGM industry.

Strengths
1. Cheap Labor – Labor cost is only 5% of production cost in developing nations whereas in
industrialized nations it is 75%. This enables the knitwear manufacturers to supply Quality
Products at Lower Price. (BKMEA)
2. Duty drawback scheme – The Garments Industry is enjoying duty free import of raw
materials for the 100% export oriented products. This is helping to reduce the price of the
product.
3. Reduced income tax rates – Govt. reduced the income tax rate for the Garments
Industries as well as the textile industries of Bangladesh.
4. Cash incentives – The government operates a Cash Compensation Scheme (CCS) through
which domestic suppliers to export-oriented RMG units receive a cash payment equivalent to
5 percent of the value added of exported garments.
5. Backward Linkage – More than 75 percent of the raw materials needed for knitwear
industries are provided by the local suppliers. (BKMEA) For woven products, the backward
linkage industry is very poor in Bangladesh. About 85% raw materials are importing from
China, India and other countries.

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6. GSP facilities in EU Market – Bangladesh gets the GSP facilities to the EU market for
producing the garments in Bangladesh. Earlier it was related on the fabrics production as
well as garments production, but at present GSP facility is available for garments production
only in Bangladesh.
7. Industrialization – The rapid industrialization of the Garments Industry has added to the
strengths.

Weaknesses
1. Low productivity of labor – Lack of skilled labor lead to low productivity.
2. Outdated equipment- Lack of auto machines & equipment.
3. High interest rates - High levels of nonperforming loans reduce the capacity of banks to
lend at reasonable interest rates, especially to small and medium-sized enterprises. China and
India are giving good amount of subsidiary in interest rests for the textile and Garments
Industries , where we have to pay a high rate of interest to lend money from banks.
4. Inadequate electricity supply – About 70 percent of companies rely on back-up
generators that supply electricity at a cost typically 50 percent higher than the price of power
from the public grid.
5. Inefficient port facilities – We have only one sea port in Chittagong and our port is very
slow in handling containers due to lack of cranes.
6. Corruption – “It often manifests itself in excessive regulation, leading to extortion and
bribery. Companies rank it as a severe obstacle to business”. (Ibid)
7. Policy induced weakness
a. Restrictions on FDI in the sector – “foreign investors bring superior technology and
managerial skills” (Ibid) and due to restricted RDI, Garments Industries has not been able
to grow more competitive.
b. A requirement to have back-to-back letters of credit (LCs) before imports can be
approved
c. “A requirement to reserve 40 percent of export cargo for domestic vessels” most of which
are inefficient.” (Ibid)

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8. Lack of market diversification – About 60% of our exports are dependent on the quota
restrained markets of EU, about 24% on the USA. Only 12% are dependent on the non-
traditional market (emerging market).
9. Failure to meet Compliance Standards – Many Garments Industries factories of
Bangladesh could not meet the compliance standards and this is leading to customer’s
dissatisfaction, so there will be great possibility of less orders.
10 .Local yarns are highly priced – The yarn price of Bangladeshi suppliers are higher than
of Indian suppliers. This high cost increases the price of the garments.

Opportunities
1. Abolition of quotas will create a more level playing ground - Quota allocation in
Bangladesh is administered under the Textile Trade & Quota Administration Rules (1991).
About 95% of the quotas are allocated to existing firms on the basis of past performance.
This system is inefficient and favors large and well-established firms at the expense of newer,
potentially more innovative firms. Although quotas are supposed to be free, sometimes the
large companies “sell” their quotas to the SMEs at a very high price. This increases the SMEs
cost of production. Abolition of quotas will help all firms in competing in a level playing
ground.
2. Sub-contracts from China - Although China is more efficient in the manufacture of

Garments Industries products, there is a probability that China will not be able to handle all
the orders it will get. It might give sub-contracts to other countries and Bangladesh, having a
long experience in this sector, is very likely to get majority of the sub-contracts from China.
Moreover, the export oriented firms of China is not being able meet the local demands of its
people. At present Bangladesh is exporting readymade garments to China as well.
3. The overall apparel trade will increase - The reduction in price of apparels will increase

the demand for Garments Industries. As a result, the global market will expand and
Bangladesh can take advantage of expanded market.
4. Preferential Market Access – “Canada has also announced that from January 2003, all

imports into Canada from Bangladesh including Garments Industries shall be duty free”.

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EU has also given duty free concessions under “Everything But Arms’ (EBA) scheme to
Bangladesh. (Quasem,2004) Moreover, recently Mexico has announced duty free access of

all Bangladeshi Garments Industries products.

5. U.S. Retailers - US buyers are considering Bangladesh one of the major source as JC
Penny, Wall Mart, GAP, K -Mart and other big buyers are coming to Bangladesh and setting
up offices. (NewAge,2013). In the quota free regime exports in US market may increase.
This is because during the post-MFA period, a restriction was put on the volume of exports to
US market.

Threats
1. Constriction of market access – “The US Department of Commerce in its report to the
Congressional Caucus, reveals that major buyers will reduce the number of countries they
source from by half of it during 20012-13 and by another third by 2014”
2. Capture of Market by China and India – “Jennifer Hillman, vice chairman of the US
International Trade Commission, said a recent study done by the trade panel showed world
textile production making a very large shift into China when the quotas end”. (The
Independent, 2014)

India is also becoming a major supplier due to more efficient production facilities. For
example, even if Bangladesh has its own yarn factories, the cotton to produce those yarns has
to be imported from India. On the other hand, India is self sufficient in producing all raw
materials ranging from cotton to dying agents. This gives India a cost advantage over
Bangladesh.
3. Bilateral agreements for political reasons – The U.S. might choose other countries over
Bangladesh for political reasons.
4. Non-tariff barriers – Bangladesh might not be able to meet “non-tariff hurdles such as
labor standards, social accountability and environmental clearance requirements”.

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5. Preferential Trade Access - US Trade Development Act 2000 enacted in the USA on May
19, 2000 provides preferential access to countries in Africa and Caribbean Basin. This will
lead to trade diversion from Bangladesh.

3.4 Questioner Used for SWOT Analysis

Name of the Factory:
Address:
Year of Establishment:

By taking permission let’s start questioning………..

[To administrative person as General Manager, Manager or others]

Question-1: Do you know about SWOT analysis of an industry? (If not) May I explain about
it?
Answers: ………………………………………………………………………………….
Question-2: What are the points you would like say about the strength of your factory?
Answers: ………………………………………………………………………………….
Question-3: What are the points you would like say about the weakness of your factory?
Answers: ………………………………………………………………………………….
Question-4: What are the points you would like say about the opportunity of your factory?
Answers: ………………………………………………………………………………….
Question-5: What are the points you would like say about the threat of your factory?
Answers: ………………………………………………………………………………….

Question-6: What do you want to tell about the recent condition of the Garments Industries
of Bangladesh?
Answers: ………………………………………………………………………………….

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Thank you for giving me time & for helping me in SWOT analysis.
Name of the person took interview:
Time taken interview:
Date taken interview:

53
Chapter Four
Findings, Recommendation
and
Conclusion

54
4.1 Findings

 Garment Industry is heavily influenced by politics.

 Wage of the workers are very low.

 Working environment is not suitable.

 Technologies are out of date.

 Workers Union not performing properly.

4.2 Recommendations

Based on the findings and its interpretation, the following recommendations can help the
Bangladesh Garments Industries and its constituent firms remain competitive in the global
market and to increase the business in the new emerging international markets:

 Government Initiatives: Bangladesh Government should take positive initiatives to

solve the barriers of the international business. The Government can sit with the
Governments of the countries of the new emerging international market to reduce the
business barriers, in reducing taxes and other charges which will affect in the price of the
products.

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 Product Diversification – Garments Industries should focus on the product
diversifications to increase the skills of the industry. This will help us to get more diversified
products from different customers.

 Market Diversification – Bangladesh should identify other potential market

segments to capture market share. It should try to promote trade relationship with other
countries and try to outsource for those countries to reduce dependency on US and EU
markets.

 Product Quality – Quality should be the key concern for any business. Quality
products are the strength of the Garments Industries factories which will increase the orders
very rapidly. Customers always want to invest more money to the RMG factories who are
maintaining more consistent level of quality of products.

 Competitive Price – Price should be competitive. If the prices become higher, then
the customers will work to choose for alternative suppliers and they will not willing to place
orders in Bangladesh.

 Increase Efficiency – The efficiency should be increased to gain more outputs with
the minimum amount of inputs. Cost minimization can be done by increasing productivity,
reducing defective outputs, by the technological development.

 Infrastructure Development – This is a must for Garments Industries to be

competitive in world market. The government has to prioritize, activate and initiate new
ports, roads, gas connections, power outages, telecom costs.

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 Relationship with customers - The companies need to improve their level of
contacts as well as marketing skills. It is very important to enhance the forward linkage of
Garments Industries, since this will bring firms closer to the markets and help them to
develop relationships with retail buyers so that they can become ‘preferred suppliers’. The
government should provide firms with a market database to raise their market awareness and
knowledge

 Compliance Requirements – Compliance issues should not be compromised. The

recent tragedies in the Garments Industries have claimed many workers’ lives. These would
become a decisive factor for buyers to choose suppliers with the stringent global compliance
policies. Firms should take into account the safety and regulatory standards in order to face
the global arena. Any action taken against failure to comply with the standards could be
drastic for Bangladesh RMG industry.

4.3 Conclusion

The contribution of readymade garment Garments Industries to the national export is

around 80%, which represents the importance of this sector. It makes scope of employment
of around 4500 million women of the country. May it not be very old sector of
industrialization, but it provides biggest contribution in national economy. It may have some
problems but prospects of this sector are so good & important that expectations from this
sector are very closely related to the fortune of the country. The Garments Industries will
overcome all the problems & expectation is that, Bangladesh will stand as the world’s largest
Garments Industries exporter as soon as possible.

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Different primary and secondary data are analyzed to show the prospects of Bangladesh
RMG industry in the new emerging international market. Different tables and figures showed
that Bangladesh Garments Industries should focus to the new emerging international
markets and pay special attention to grab the market.

Survey questionnaires were made, know their opinion about Bangladesh Garments
Industries, their plan about business in Bangladesh, problems and remedies of this sector,
their current position in the market, strength of the factories, about their current markets,
whether they are doing business with the emerging non-traditional markets or not, what are
the reasons of doing business with new emerging international market, their problems as well
as their future plans.

Bibliography
 Muhammad Shohiduzzaman, Head of Global Trade & Receivables Finance, HSBC,
Bangladesh (June, 2012). Bangladesh Apparel Industry – Strengths & Opportunities.
 Apparel Online Bangladesh, Issue: February 2013). Tracing History… A Journey Well
Clothed.
 Bangladesh Bank, Annual Reports and Economic Data (http://www.bangladesh-
bank.org),Dated:28-02-2015.
 Interviews of the owners and management personnel of the Ready Made Garments
Industries.
 Interview from sourcing manager of a Apparel Retailer on Opportunities for Bangladesh

Garments Industries business in international market

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 Bangladesh Garment Manufacturers & Exporters Association
(http://www.bgmea.com.bd),Dated:25-03-2015
 Bangladesh Knitwear Manufacturers & Exporters Association (http://www.bkmea.com)
Dated:27-03-2015
 Bangladesh’s Ready Made Garments Landscape : The Challenge of Group, McKinsey &
Company, (http://www.mckinsey.com) Dated:28-03-2015
 Export Promotion Bureau, Bangladesh (www.epb.gov.bd) Dated:29-03-2015
 Board of Investment, Bangladesh (http://www.boi.gov.bd) Dated:30-03-2015
 Wikipedia (http://en.wikipedia.org/wiki) Dated:31-03-2015

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