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Bangladesh Knitwear: Facts & Figures

√ Export earnings: US$ 2051.30 million up to March 2004-05 (2nd largest sector)
√ Share of Export earnings: 38.12%
√ Net Retention Amount: US$ 1230.78 million
√ Net retention rate: 60%
√ Value addition: 75%
√ Share in net export: 32% (Highest)
√ Quantity exported: 87.40 million dozen (Top sector)
√ Labor force employed:
• Direct: 0.70 million; about 70% of them are women.
• Indirect: 0.40 million

History of Development of Knitwear of Bangladesh

The RMG business started in Bangladesh in the 70s but it was then merely a casual effort. The first
consignment of knitwear export was made in 1973 and the first consignment of woven garments was
made in 1977. Though started later, but it was the woven sector that first dint a spot in the

export pie of Bangladesh. In 1981-82 the


contribution of woven garments in the total
export was 1.10%. Afterwards it is a story of
sustained success for the Bangladesh RMG
sector. Within a decade the contribution of
woven to the export basket became 42.83%
(1990-91) and the knitwear sector's
contribution was 7.64% (1990-91).

Graph 1: Changes in combination of Export


Products over time

The entrepreneurs of the knit sector stepped forward with their expertise in the late 80's. With their
earnest efforts they were able to export US$ 14.84 million in 1989-90. Out of this US$ 12.22 million
was exported to EU and US$ 2.02 million was exported to US. The trend continued in the knit sector
because of the market access opportunity provided to the LDCs under the Generalised Systems of
Preference (GSP) benefit.

This is the rejuvenated beginning of the epic story of Bangladeshi knitwear sector RMG sector that in
true sense has been able to massive industrialization in a sustainable way with effect on all probable
human development aspects which is the encouraging part of the story.

The growth of knitwear sector is increasing at an increasing rate. The cumulative average growth rate
of the sector is 27%. And it is continuously grabbing a more portion in the export pie of Bangladesh.
This is mainly attributed to the facilities provided under the EC GSP and ROO. The knitwear sector is
heavily driven by these favorable policies and took the opportunity to develop a strong backward
linkage for the sector.

Table 1: Comparative Statistics of Knit Wear & Woven Wear

Volume in Million US$


Year Knitwear Woven Wear Total Export
Volume % Share Volume % Share RMG Bangladesh
change in BD change in BD
Export Export
89-90 14.84 0 0.77 609.32 29.34 31.67 624.16 1923.70
90-91 131.20 784.00 7.64 735.62 20.73 42.83 866.82 1717.55
91-92 118.57 -9.62 5.95 1064.00 44.64 53.36 1182.57 1993.90
92-93 204.55 72.51 8.58 1240.48 16.59 52.06 1445.03 2382.89
93-94 264.14 29.13 10.42 1291.64 4.12 50.97 1555.78 2533.90
94-95 393.26 48.88 11.32 1835.09 42.07 52.85 2228.35 3472.56
95-96 598.32 52.14 15.41 1948.81 6.20 50.20 2547.13 3882.42
96-97 763.30 27.57 17.28 2237.95 14.84 50.65 3001.25 4418.28
97-98 940.31 23.19 18.22 2843.33 27.05 55.09 3783.64 5161.20
98-99 1035.36 10.11 19.49 2984.81 4.98 56.18 4020.17 5312.86
99-00 1269.83 22.64 22.08 3082.56 3.27 53.59 4352.39 5752.20
00-01 1496.23 17.83 23.14 3364.20 9.14 52.02 4860.43 6467.30
01-02 1459.24 -2.48 24.38 3124.56 -7.12 52.20 4583.80 5986.09
02-03 1653.83 13.34 25.26 3258.27 4.28 49.76 4912.10 6548.44
03-04 2148.02 29.88 28.25 3538.07 8.59 46.54 5686.09 7602.99
04-05 2051.30 38.12 33.64 2676.84 3.77 43.90 4728.14 6097.12
(up to
March)
Source: Export Promotion Bureau

EU is the main export region of Bangladeshi Knitwear constituting 83% (US$ 1780.57 million) of
total knitwear export in FY 2003-2004 followed by USA (11%, i.e. US$ 236.79 million).
This has become possible because it can
satisfy the ROO of EU as value addition
is higher (75%) in this sector. After the
adoption of the guidelines for the
application of the scheme of generalized
tariff preferences by EC knitwear export
from Bangladesh to EU rose
precipitously. The two-stage
transformation requirement of ROO in
1999 boosted market penetration in EU
further; it contributed a growth of
101.19% since 2000-2001.

Graph 2: Knitwear Export to Major Markets

Bangladesh RMG sector has successfully passed some critical tests and is now sailing with two masts:
knit and woven. The sub-sectors are now in healthy competition among themselves to take the role of
leadership within the country.

In FY 2003-04, knitwear for the first time


exceeded woven wear and became the
leader in terns of quantity exported with
91.6 million dozens. The amount of
woven export was 90.49 million dozens.
Knitwear is still leading in terms of
quantity exported and is widening the
gap day by day. The present difference in
favor of knitwear is 18.85 million dozens
In FY 2003-04, the contribution of two
RMG sub-sectors were as follows:

Graph 3: Comparison of Export Quantity

Woven Garments 47% and Knitwear 28%. In a period of just 9 months (up to March FY 2004-05) the
figures have changed dramatically, the share of woven garment to the country's export has reduced to
43.90%, on the other hand the share knitwear has increased to 33.64%. It indicates clearly that the
knitwear is performing well in both ways. In the first 9 months of FY 2004-05 the scenario is as
under:

Knitwear export increased by US$ 566.15


National export increased by US$ 676.19

Therefore the contribution of knitwear in national export increase is 83.73%

Contribution of the RMG Sector in Bangladesh


In the development history of Bangladesh, RMG sector contributed a lot in terms of employment
generation, involving women in the formal sector, increased substantial export earnings etc. One
significant aspect of the RMG's contribution in the development is the human development aspect.
The sector contributed a lot in the following areas:

√ Women empowerment
√ Gender equality
√ Improved health & nutrition
√ Reduced child marriage
√ Reduced infant mortality

The development in the sector also contributed a lot in the growth and development of the backward
linkage industry of the country.

Strength of Knitwear Sector of Bangladesh

Competitive wage rate together with easily trainable workforce, entrepreneurial skill, expanding
supply side capacity, and government policy support helped to translate the comparative advantages
into competitive advantages. The core strength of the knitwear sector is its backward linkage. The
entrepreneurs of the sector not only increased their stitching capacity overtime but also invested in the
allied industry to augment the overall capacity of the total sector with the same pace. Over the period
of time knitwear sector gradually became almost self sufficient in fabric and yarn. This improvement
has become possible because of the integrated growth of spinning factories in line of the growth of
country's stitching capacity and increased need of the yarn and fabric.

As the export increased in the knitwear


sector, the capacity of backward linkage
also gradually increased accordingly. The
result is local suppliers can provide 90% of
the total fabric requirement of the sector.
The growth of spinning mills also stepped
with the growth of knitwear exports. In
1993-94 total number of spindles was 1.38
million that supplied 10.70 million KG
yarn. In 2003-04 the number almost tripled
and it became 3.77 million that supplies
239.00 million KG yarn. As of now the
total investment in the backward linkage
industry is more than US$ 2.00 billion.
Graph 4: Comparative Consumption & Local
Supply of Fabric & Yarn

Comparative Structure of Gross & Net Exports of Bangladesh (FY 2003-04)


Graph 5: Structure of Gross Export Graph 6: Structure of Net Export

Though woven is the highest contributor (47%) in terms of gross export, but knit becomes the most
significant component if we consider net export with a share of 32%. This has resulted because of the
backward linkage industry that has grown over time which helped the knitwear sector to have the
higher value addition and there fore a much higher net retention rate.

Year 1994 2000 2004


Value Addition: 50% 70% 75%
Net Retention: 40% 55% 60%

Table 2: Year wise knitwear export and


net retention

Year Total Export Net Retention


94-95 393.26 157.30
95-96 598.32 253.69
96-97 763.30 335.85
97-98 940.31 443.83
98-99 1035.36 530.10
99-00 1269.83 695.87
00-01 1496.23 837.89
01-02 1459.24 828.85
02-03 1653.83 965.84
03-04 2148.02 1271.63
04-05 2051.30 1230.78
(up to
March)
Graph 7: Year wise knitwear export and net retention

Advantages of Bangladeshi Knitwear Sector

√ Knitwear is a near self-sufficient sector in all respect; currently Bangladeshi Knitwear


manufacturing companies are supplying 90% of the knit fabric requirements of the sector.

√ Local yarn suppliers provide around 75% of the total requirement of the sector.
√ We have more than 100 composite factories; besides the composite units many garments have
their own dying and finishing units. A separate dying and finishing industry also has grown up
over the time to support the sector.

√ Good capacity exists in the sector.


√ Bangladeshi knitwear is almost unbeatable in price advantages.
√ Bangladesh provides not only a cheap labor force which is unbeatable but they are also
unparallel in stitching capability.

√ Bangladeshi Knitwear is exported to 90 countries of the world.

Cost of Some Key Production Factors¹

1. The labor costs² incurred in the Textile Industry is the lowest


compared to its competitors.
Thailand: $1.00/Hour India: $0.60/Hour Indonesia: $0.40/Hour
Sri Lanka: $0.45/Hour Vietnam: $0.40/Hour Pakistan: $0.40/Hour
China: $0.35/Hour Bangladesh: $0.25/Hour

Energy cost³ in Bangladesh is lower compared to India and


2.
Pakistan
Pakistan: $0.08/KwH India: $0.095/ KwH Bangladesh: $0.07/ KwH

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