Role of the Readymade Garment sector in the economic

development of Bangladesh
Abstract

Bangladesh is the 2nd largest country for its RMG products exporting country which is the
contributor to almost 30 percent of the GDP1 of the country. Almost 4.0 million people are
working in the 5000 factories. 71 percent of them are village women. The sector has earned
$30.862 billion which is $ 0.10 million more than its target had been set. It has been
contributing not only to the GDP and per capita income of the country but also has opened a
vast scope for employment opportunities for the people. Businesses of forwarding linkage
and backward linkage have been established with more employment opportunities in the
country. Though the majority of the workers are not trained and uneducated that leads to low
productivity in the sector. The sector is experiencing sustainable robust growth even in the
pandemic time through RMG workers are ill-paid and sometimes out of other admissible
benefits. Child labor, compliances, workers' safety are also big negative issues for this
sector, though the factory owners have always been denying the allegation raised by the
national and international communities. Presently RMG sector is facing some difficulties
due to labor unrest and inappropriate conditions of the buyers which are a threat to the
sector though at the same time it has earned world recognition for its green economy 3
through RMG production in the country.
Key Words: Sustainable Growth, Green Economy, Entrepreneurship, Forward and backward
Linkage
Introduction: Bangladesh is a well-known country for its RMG sector in the world for its
competitive price and related business feasibilities. History back, the Reaz Store, the pioneer
of the sector was set up in the 1960s in Dhaka (Hearle, 2016). Reaz Sore exported 10000
shirts worth 13 Franc in Paris, which is the first consignment shipment from Bangladesh
(then East Pakistan) to the outside of the country. After that the leading Desh Garments Ltd,
the first non-equity joint-venture4 in the garment industry had come forward with spirited
entrepreneurship, that was established in 1979. Desh Garment with Daewoo Corporation of

1
Gross Domestic Product
2
Information from the Export Promotion Bureau (EPB)
3
A green economy is an economy that aims at reducing environmental risks and ecological scarcities, and that
aims for sustainable development without degrading the environment.
4
In which the parties seek technical service arrangements, franchise and brand use agreements, management
contracts or rental agreements, or one-time contracts.
South Korea had proposed a Korea-Bangladesh Joint Venture Readymade Garment Unit in
which were 127 male and 3 female operators. They were trained for South Korea in RMG
production and related activities. All the garments produced by Desh Garment were a
commitment to 100 percent export and it was the first type of this bond. However, Young
One Corporation, another South Korean Firm was established for the first equity joint-
venture garment factory with a Bangladeshi organization, Trexim Ltd. in 1980. Bangladeshi
partners invested 51% of the garment factory on an equity basis and ‘Young Ones
Bangladesh’ was the name accorded by both of the parties. Its main products were jackets
and exported its first consignment of both padded and non-padded jackets to Sweden in
December 1980. In course of time, presently, Bangladesh is the 3rd largest RMG exporting
country5 in the world and there are around 4.0 million people are working in 5000 factories in
the country.
Objectives of the study:
 To add knowledge and to assess the role of RMG in the economic development of the
country.
 To evaluate the correlation between economic development and subsequent signs of
progress in the other sector of the country.
 To recommend and formulation the strategic policy for the development of the RMG
sector of Bangladesh.
Statement of the Study: This study is the evaluation of the role of the RMG section in the
economic development of Bangladesh through a secondary research tool available in the
research journals, reports, books, articles from the newspapers, and other sources like web
portals and to add the subsequent take or learnings and a critical overview on the sector.
The Rationality of the Study: Bangladesh is the 3rd largest country in the world for RMG
production and export earning 81 percent of foreign earnings which is 30 percent of the GDP.
Near about 4.0 million people are engaged in this manufacturing sector (40 percent of our
total industrial employment)6 and around 71 percent of them are women. Total almost 25.0
million people are directly and indirectly are involved in this sector.
Limitation of the Study: This paper is based on secondary data. It may have been
concentrating the research on primary data but lacking sufficient time coupling with the
pandemic situation this research couldn’t be conducted as per the desire of the researcher
(based on primary data).
5
Bangladesh has been replaced from 2nd to the 3rd position by Vietnam on 31.07.2021
6
Information from the Export Promotion Bureau (EPB)

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Research Question: What is the role of the RMG sector in the economic development of
Bangladesh?
Methodology: This study is based on secondary data collected from the available books,
research papers, and different relevant academic writings published in different journals, web
portals, newspapers at home and abroad from the inception of the sector up to the present
time. The writer has used statistics from his publications published in the Internationals
Journal with the due permission of the concerned Faculty Member. This study could have
been enriched with prefixed questionnaires authorized by the supervisor and relevant data
collection and analysis. However, that couldn’t be accomplished lacking time, and
subsequent restrictions on the public movement during the pandemic time.
Review of the Existing Literature: Noorul Quader Khan, the distinguished entrepreneur is
the pioneer of the formal RMG sector of the country, and played a pivotal role from its
inception top development of sector. He had taken the initiative to send the 130 trainees to
South Korea for training, in which technical hands-on expertise of the sector had been taken
from Bangladesh part (Reza, 2017).
RMG sector has to move with ups and downs with the global politics and the politics of
Bangladesh. There was a hidden obstruction from the renowned buyers for the issue of their
high compliance with countries' democratic power as from the inception of the RMG sector
to the 1990s, the military government was in power (Shahajada Mia, 2019). However, there
was a very slow growth in the sector nonetheless of the relentless efforts of the government.
BGMEA (Bangladesh Garments Manufacturers and Exporters Association) was formed in
1982 to work in favor of the sector. A quota challenge was imposed on Bangladesh by the
UK, France, Canada, and the USA backed by the GATT (General Agreement of Trade and
Tarif) in 1985 which also restricted the growth of the sector (Chowdhury Hossain, 2015).
However, there was only 759 RMG factory in the 1990s. After that, it has been started
gradually increasing in the democratic environment.
Bangladesh is now the third-largest apparel exporter in the world, the sixth-largest supplier in
the US market, the fifth-largest supplier of T-shirts in the EU market & second in knit
garments production (6% of world production) (Uddin, 2019). The industry has grown during
the 1990s roughly at the rate of 22% which is playing a significant role in the economic
development of the country by 81 percent of its total foreign earnings and 40 percent of the
industrial employment (Sharma, 2020). It has experienced 15.5 percent growth since its
inception (Laurent Bossavie Yoonyoung Cho, 2019) . The agri-based economy which is the
‘gamble of nature’ has gradually turned into an industrial economy, the trajectory of
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development has been changed by foreign earnings through exporting and empowerment of
women about 3.1 million, and rural unemployment of the marginal people and seasonal
laborers from Agriculture (Sharma, 2020, p. 2). Through the mass participation of women in
the economic development through their income from the RMG sector, education, poverty
elevation, entrepreneurship have been developed though, the number of women workers is
decreasing as unemployment in the country (Bhuiyan, 2012).
At the same time, backward linkage entrepreneurship like knitting, printing, dyeing,
packaging, accessories industries is increasing to open more scope of employment for the
country's people (Ashik-Uz-Zaman, 2021). As the disposable income7 of the people has been
increased other income-generating and service sectors like banking, insurance, real estate,
consumers goods transportation, and other utility services also have been boosted up (Md.
Tahidur Rahman, 2017, p. 5). Male workers and executives are appointing it this sector
competitively easier to get jobs than in other sectors of the country (ILO, 2020, p. 3). For
sectoral development, the NGOs, Banks, and other financial supporting organizations,
entrepreneurs have played a significant role as per the flexible and inspirational policy of the
government and its central bank (Bangladesh Bank) (Khan, 2017, p. 13). To sustain the
economic growth of the country, the wages of the workers especially in the RMG sector
should be increased as they are the unfortunate least payees of their same in any country in
the world (Khan, 2017, p. 4).
Regrettably, though there was a formal structure at the time of inception by the visionary
leaders of the sector like the late Nurool Quader Khan and his followers, the sector lost it to
informal growth as almost all rulers of the country had no control rather mindset was to earn
money allowing to setup RMG factories without the feasibility study that leads many
accidents and loss of its people lives (Hearle, 2016, p. 4). After easy access in the job sector,
almost the majority of the people like to switch off their jobs, especially for better payment
which leads to lower production and system losses for the sector (Bhuiyan, Md Zafar Alam,
2012). And, people almost without knowledge and education are being appointed in this
service sector by the opportunity of impoverishing payment of the factory owners. That leads
to living in the slums, without support for maximum basic needs in the city or the town areas.
It is one of the main causes of the increased migration of the population from villages to
urban areas (Bhuiyan, 2012) (Ashik-Uz-Zaman, 2021). The lacking capacity building of the
RMG workers, this sector is still suffering from the deficient skilled manpower for
competitive and quality production for the export market for a better price. Operators
7
Disposable income is total personal income minus personal current taxes

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particularly in the sewing sector are unskilled in quality products which is the main cause of
low production (Muhammad Abdus Samad, 2018, p. 121) . Effective training for the solution
has been prescribed in the same paper on p. 124. Still, child labor is a big issue in this sector
nonetheless of warnings by the buyers, humanitarian activists, organizations, and the
government of Bangladesh (ILO, 2017). Around 1.2 million children are working in the
country out of the majority from the RMG sector. Children are appointed as they are
available in a cheaper salary structure and easy to exploit (Ahamed, 2013) . Two fatal
tragedies by collapsing of Rana Plaza and Tazreen Fashion are the history of industrial
accidents that resulted in a negative outpour in the world media about the RMG sector of the
country. As many people lost their lives, all the humanitarian organizations of the world
brought events to attend and protested the impoverished condition of the sector and the rights
the safety of the sector’s people. The aftermath of the incidents was to impose accords,
conditions to improve production conditions, and the laborer’s rights in the RMG sector of
the country (Islam M. S., 2014).
At present, though the growth rate is sustainable and increasing, the RMG sector of the
country is facing many troubles both from the buyers and workers of the sector. Conditions of
the buyers cannot be fulfilled by the factory owners whenever; the worker demands their
salary increase and due payment.
From the existing literature, the glorious journey of the RMG sector has been depicted which
led to the development of the country not only in GDP but also in infrastructure development
by empowering the poor people and women though there are some negative impacts as well.

Findings: From the existing literature is clear that the RMG sector is playing an excellent
role in the development of the country by earning foreign exchanges which is the major
portion of our foreign earnings. By the initiatives of some visionary leaders headed by Noorul
Quader Khan, this sector was initiated and now almost 4.0 million workers have been
involved in this sector the majority of them are female (71 percent) and 40 percent of the total
industrial employment of the country. Nonetheless of negative constraints, it has a sustainable
growth as the cost of manufacturing is lowest in Bangladesh comparatively to other RMG
manufacturing countries in the world, due to the low wages of the workers. On the other
hand, the unskilled laborer cannot produce much as skilled workers based on both quality and
quantity which is the main cause of the low price of our products in the international market.
RMG sector is one of the unlucky sectors where safety for the workers is not ensured. For the
easy access facility, there is a lack of skilled workers in this sector. Skilled workers'

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migration or job switching is a major problem in this sector. After working in a factory as a
helper one may switch his or her job to another factory as an operator which creates a bad
impact on production. Substandard practices of management that lead to workers' abuse,
violation the human rights were noticed from the buyer's end but could not be uprooted yet
for the lacking of close supervision of the authority. Child labor is another big issue that is
still neglected in this sector. Two major accidents (collapsing of Rana Plaza and a Fire
Accident in Tazreen Fashion) were caused by the carelessness of the concerned authorities of
the factories. However, destitute women have been empowered and they have got jobs to
work for the world reputed brands which the escalation of the image of the country as a
subsequent development for the global leader in the RMG sector. On the other hand, the
infrastructure growth in Bangladesh like communication and transportation, roads and
bridges, succeeding entrepreneurship for the consumer goods, e-business, are the direct and
indirect impacts of the earnings mainly from the RMG sectors, which also are creating job
facilities and investment from home and abroad.
Analysis: Workers of the RMG sector of the country are ill-paid has been found in the
existing literature, though Bangladesh is the 2nd largest RMG product exporter, the 2nd largest
country for knit items leading China. Payment for its workers is in the lowest figure which is
the unpleasant story of the sector comparatively of RMG sector by other countries and I
think, it is somewhat logical because our workers lack education and skills. For example, an
operator of China can produce four times more than an operator of Bangladesh which is
unfortunate from our side. Miraculously, this sector is growing fast instead it suffers from the
shortage of expert manpower as the owners of the garment sector hardly allow their
employees to learn rather than engage them in production. On the other hand, at the same
time, they hire expert people from other countries like India, Korea, and China to pay high
salaries. I think this sector should be brought under automation immediately with the
technical support of the aforesaid countries to be technically sound for skilled production. A
mass hands-on training8 of the production-related people is essential to uplift the growth of
the sector and that will lead to more investment to generate more profit and contribute to the
GDP of the country.
From the existing literature it is evident that, as an informal sector, the RMG segment is yet
lacking compliance of the workers and others. Oral and even physical abuses are common
scenarios mainly in the production section. In other sections like merchandising, people are
under continuous pressure from the owners and suppliers at the same time, which creates a
8
Practical Training

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critical situation for the incumbents. People either job or business, all are under the pressure
from the buyers’ end and I have two years of practical experience being a Brand Manager of
the Bestseller Team in Oekotex Ltd.
Moreover, based on different studies cited above, timely wages payment and other admissible
benefits of the worker are other big issues in the RMG sector of the country which also are
the drawbacks of the sector that should be handled by the sector and its legislative body,
BGMEA. However, I think that BGMEA is a political setup to boost the profit of the factory
owners rather than take care of the sector and its worker's benefit.
Child labor is a big issue that should be addressed properly for the ethical standard of
production in this sector, though it is not the easiest issue to be solved overnight in respect of
our socioeconomic culture. I think it is embedded with our culture as many children have no
proper guardian to earn for them or to send them to school which is also a cause of students
dropping out from even primary education.
Bangladesh has experienced a scale economy and the latecomer advantages (as per the flying
Geese Model by Kaname Akamatsu in 1930s articles in Japanese Economics) from South
Korea and Japan as the manufacturing technologies had received from the two East Asian
Countries who had gained knowledge and technical advantages much earlier than
Bangladesh. So, the RMG sector has been playing a significant role in the development of the
country by earning foreign exchange and creating employment facilities for the people.
Conclusion: Bangladesh was under and ‘gamble of nature’ as its fate was always dependent
on the agriculture of the country. Since the inception of the RMG sector, Bangladesh has
turned its economy based on manufacturing economics gradually. In the current fiscal year,
the country has earned $30.86 billion which is $0 .10 million of its target surplus nonetheless
of intermittent lockdown to check Covid 19 invasion by the government a stoppage of export
for lack of contemporary demand from the buyers as well as the consumers' sides. RMG
sector has already turned into the main source of earnings for the country. Moreover, the
country is in the practice of a green economy by ensuring production with environmentally
friendly production processes of RMG products and it is a recognized environmental
legislative organization of the world.

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