REPORT

ON

THREATS AND CHALLENGES OF BANGLADESH “RMG” SECTOR IN NEXT

FIVE YEARS

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THREATS AND CHALLENGES OF BANGLADESH “RMG” SECTOR IN NEXT
FIVE YEARS

THIS REPORT IS SUBMITTED BY

ABDUL AHAD
ID: 111011355, Group: B, Batch: 16th
UNDER THE DEPARTMENT OF
APPAREL MANUFACTURING MANAGEMENT AND TECHNOLOGY

THIS REPORT IS SUBMITTED TO

MAHMUD WAHID
LECTURER
DEPARTMENT OF APPAREL MANUFACTURING MANAGEMENT AND TECHNOLOGY
SHANTO-MARIAM UNIVERSITY OF CREATIVE TECHNOLOGY

DATED THIS 10TH DAY OF APRIL, 2015

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 LETTER OF TRANSMITTAL

Dated: 10th April, 2015

To
Mahmud Wahid
Lecturer, Department of Apparel Manufacturing Management & Technology
Shanto-Mariam University of Creative Technology

Subject: Submission of Report on “Threats and Challenges of Bangladesh RMG Sector for Next Five
Years”
Dear Sir,
Here I am submitting my report on “Threats and Challenges of Bangladesh RMG Sector for Next Five
Years” prescribed by you in your course Environment. For this Purpose, I have gone through internet,
different books, articles, journals, and class lecture sheets for the relevant information of the assigned topic.
Please call me for any further information at your convenient time and place.

Thanking You
Abdul Ahad
ID: 111011355
Group: B
Semester: 8th
Batch: 16th

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 Letter of Authorization

Dated: 10th April, 1015

To
Mahmud Wahid
Lecturer Dept. of Apparel Manufacturing Management and Technology
Shanto-Mariam University of Creative Technology

Subject: Declaration regarding the validity of the report

Dear Sir,
This is my truthful declaration that the “Threats and Challenges of Bangladesh RMG Sector for Next Five
Years” I have been prepared is not a copy of any report previously made by any other students. I also
express my honest confirmation in support of the fact that the said “Report” has neither been used before to
fulfill any other course related purpose or it will be submitted to any other person or authority in future.

Thanking you

Abdul Ahad
ID: 111011355
Semester: 8th
Batch: 16th

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 ACKNOLEDGEMENT

At first of all I praise of Allah and his great prophet (SM) peace is upon on him. Then I thanks to my mother.
I would like to mention those names gave me encourage of support to compose this type of Report. Indeed,
it is memorable and ever acceptable working to all of us. I thank to respect honorable course teacher
MAHMUD WAHID who is very helpful to all of us.

Last of all I would like to thank its all technical and assistance who are deeply involving with it. At least I
think it is very important for all students of Shanto-Mariam University of Creative Technology and its help us
to build up career.

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 OBJECTIVE OF THE REPORT

The study was conducted to make an analysis of the Challenges and Threats of RMG sector of
Bangladesh. This report shows the future RMG situation in our country. How much it doing in present day
and in the recent future and also the problems it faces in regular basis.

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 EXECUTIVE SUMMARY

In present time it is argued that the crisis in the Ready Made Garment (RMG) sector is not only limited to
the wages and allowances of the workers. Productions and exports of the factories have decreased and the
price of the apparels is decreasing in the international market.

And also Bangladesh RMG sector have to many Challenges and Threats in future such as Raw materials
purchasing from foreign country, Political crisis is big issue for next five years, lack of training of
workers, maintaining compliance rules & regulations, to grow up from Lack of managerial knowledge,
Wages problems which is main cause of procession of garment workers, to catching low Unit labor cost for
keeping global market on the hand, Price competitiveness is very big challenge for getting more order.

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 TABLE OF CONTENT

SL Topic Page No

1 Introduction 9

2 Literature Review 10

3 Research Procedure 11

4 Data Collection 12-15

5 Summary of the Findings 16

6 Conclusion 17

7 References 18

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 INTRODUCTION

The readymade garments industry acts as the backbone of our economy and as a catalyst for the
development of our country. We take pride in the sector that has been fetching billions of dollars as export
earnings and creating jobs for millions of people in the country. The “Made in Bangladesh” tag has also
brought glory for Bangladesh, making it a prestigious brand across the globe. Bangladesh, which was once
termed by cynics a “bottomless basket” has now become a “basket full of wonders.” The country with its
limited resources has been maintaining 6% annual average GDP growth rate and has brought about
remarkable social and human development. It is really a matter of great interest to many – how the
economy of Bangladesh continues to grow at a steady pace, sometimes even when rowing against the tide.
Now we envision Bangladesh achieving the middle-income country status by 2021. We firmly believe that
our dream will come true within the stipulated time and the RMG industry will certainly play a crucial role in
materializing the dream. It is really that Bangladesh has many challenges for staying with this position in
the world market in future. And need to overcome some threats for better future of RMG sector.

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 LITERATURE REVIEW

Despite the epic growth of our RMG industry, and its bright prospects, challenges are still there. One of the
biggest challenges currently faced by our RMG industry is to ensure workplace safety and better working
conditions for the millions of garment workers. [1]

With challenges on one side, a more glittering future is waiting for the ready-made garment industry of
Bangladesh on the other side; at least facts and figures have made us believe so. A recent study jointly
conducted by the United States Fashion Industry Association (USFIA) and the University of Rhode Island
(URI) has made us more optimistic about the potentials of our RMG industry. [2]

The RMG sector is expected to grow despite the global financial crisis of 2009.[9] As China is finding it
challenging to make textile and foot wear items at cheap price, due to rising labor costs, many foreign
investors, are coming to Bangladesh to take advantage of the low labor cost. Local accessories are being
made including zippers, buttons, labels, hooks, hangers, elastic bands, thread, backboards, butterfly pins,
clips, collar stays, collarbones and cartons. [3]

There is no alternative of ample supply of raw materials in order to become self -sufficient in any industry.
The raw materials of the garment industry of Bangladesh are foreign dependent. Bangladesh has to import
raw materials of garments from abroad in order to process it in Bangladesh. About 70% of garment export
income has to be spent for the raw materials. Moreover, the export and import policy of Bangladesh is very
weak. So, the scarcity of raw materials for the garment industry’ in Bangladesh is a great threat. [4]

Increase the price of raw material: We know that the prices of raw materials are increasing day by day in
inside the country and also the international market. Because of the increasing of the price of raw materials
the cost of production of the garments products are also increases. So if the production cost increases the
price of the finish goods also increase and because of that we can’t offer the buyer at a lower price in any
garments products and for this reason there is a chance for our Garments companies to loose their position
in the international market and in this situation any body can take the chance to hold their place. So it is
one of the big challenge for Bangladesh RMG sector. [5]

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 RESEARCH PROCEDURE

I used the secondary research procedure to collect the data for this Report on “Threats and Challenges of
Bangladesh RMG Sector for Next Five Years.”

The secondary data of the study are based on some of the important websites which are related with RMG
sector. I am also using some journals, articles and some books which are related mostly with the RMG
sector.

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 DATA COLLECTION

Threats and Challenges of Bangladesh RMG Sector for Next Five Years:

Raw materials:
Bangladesh imports raw materials for garments like cotton, thread color etc. This dependence on raw
materials hampers the development of garments industry. Moreover, foreign suppliers often supply low
quality materials, which result in low quality products

Political Instability:
Bangladesh is not a stable country politically. Political instability is a great threat for any industry of our
country. Frequent strikes and hartals are great obstacles for the growth of any industry. The production cost
increases and productivity decreases because of frequent hartals and strikes. Garment producers cannot
keep their contract with buyers because of hartals and strikes. Hartals and strikes have become a common
phenomenon of Bangladesh.

Unskilled workers:
Most of the illiterate women workers employed in garments are unskilled and so their products often
become lower in quality.

Improper working environment:

Taking the advantages of workers’ poverty and ignorance the owners forced them to work in unsafe and
unhealthy work place overcrowded with workers beyond capacity of the factory floor and improper
ventilation.
Most of the garment factories in our country lack the basic amenities where our garment workers sweat
their brows from morning to evening to earn our countries the major portion of our foreign exchange.
Anybody visiting the factory the first impression he or she will have that these workers are in a roost.
Improper ventilation, stuffy situation, filthy rooms are the characteristics of the majority of our factories. The
owners profit are the first priority and this attitude has gone to such an extent that they do not care about
their lives.

Lack of managerial knowledge:

There are some other problems which are associated with this sector. Those are- lack of marketing tactics,
absence of easily on-hand middle management, a small number of manufacturing methods, lack of training
organizations for industrial workers, supervisors and managers, autocratic approach of nearly all the
investors, fewer process units for textiles and garments, sluggish backward or forward blending procedure,
incompetent ports, entry/exit complicated and loading/unloading takes much time, time-consuming custom
clearance etc.

Gendered division of labor:

In the garment industry in Bangladesh, tasks are allocated largely on the basis of gender. This determines
many of the working conditions of women workers. All the workers in the sewing section are women, while
almost all those in the cutting, ironing and finishing sections are men. Women workers are absorbed in a
variety of occupations from cutting, sewing, inserting buttons, making button holes, checking, cleaning the
threads, ironing, folding, packing and training to supervising.

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Women work mainly as helpers, machinists and less frequently, as line supervisors and quality controllers.
There are no female cutting masters. Men dominate the administrative and management level jobs.
Women are discriminated against in terms of access to higher-paid white collar and management positions.

When asked why they prefer to employee women foe sewing, the owner and managers gave several
reasons. Most felt that sewing is traditionally done by women and that women are more patient and more
controllable than men.

Wages:
The long awaited garment minimum wage 2013 gazette has finally been published by the Minimum Wage
Board on 21 November 2013. Apprentices are helpers who have been working in the garment industry for
less than three months. After three months, Apprentices are appointed as helpers. Often female helpers
are discriminated against in terms of wages levels, and these wages are also often fixed far below the
minimum wage rate. It is very big challenges for Bangladesh garments industry to give more wages to the
worker.

Unit labor cost:

Bangladesh has the cheapest unit labor cost in South Asia. It costs only 26 cents to produce a shirt in
Bangladesh, whereas it costs 48 cents costs in Vietnam. Clearly, Bangladesh’s comparative advantage lies
in having the cheapest unit labor cost.

Working hours:
Though the wages are low, the working hours are very long. The RMG factories claim to operate one eight-
hour shift six days a week. The 1965 factory Act allows women to work delivery deadlines; however,
women are virtually compelled to work after 8 o’clock. Sometimes they work until 3 o’clock in the morning
and report back to start work again five hours later ar 8 o’clock. They are asked to work whole months at a
time the Factory Act, which stipulates that no employee should work more than ten days consecutively
without a break.

Poor accommodation facilities:

As most of the garment workers come from the poor family and comes from the remote areas and they
have to attend to the duties on time, these workers have to hire a room near the factory where four to five
huddle in a room and spend life in sub human condition.

For four to five workers there is one common latrine and a kitchen for which they have to pay from Tk=2000
to Tk=2500/-.They share this amount among themselves to minimize the accommodation expense.

One cannot believe their eyes in what horrible condition they have to pass out their time after almost whole
day of hard work in the factory. After laborious job they come into their roost, cook their food and have their
dinner or lunch in unhygienic floor or bed and sleep where they take their food. They share the single bed
or sleep on the floor.

The owners of these factories must not treat the workers as animals. The owners of these factories who
drive the most luxurious car and live in most luxurious house do ever think that these are the workers who
have made their living so juicy. Will these selfish owners ever think of these workers of their better living for
the sake of humanity by providing better accommodation for these workers in addition to providing with the
job.
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Safety Problems:
Because of the carelessness of the factory management and for their arrogance factory doors used to be
kept locked for security reason defying act.
Safety need for the worker is mandatory to maintain in all the organization. But without the facility of this
necessary product a lot of accident is occur incurred every year in most of the company. Some important
cause of the accident are given below-

Routes are blocked by storage materials

Machine layout is often staggered
Lack of signage for escape route
No provision for emergency lighting
Doors, opening along escape routes, are not fire resistant
Doors are not self-closing and often do not open along the direction of escape
Adequate doors as well as adequate staircases are not provided to aid quick exit
Fire exit or emergency staircase lacks proper maintenance
Lack of proper exit route to reach the place of safety
Parked vehicles, goods and rubbish on the outside of the building obstruct exits to the open air
Fire in a Bangladesh factory is likely to spread quickly because the principle of compartmentalization is
practiced

Price competitiveness:
China and some other competitors of Bangladesh have implemented sharp price-cutting policies in
exporting garment products over the last few years, but Bangladesh has failed to respond effectively to
such policies. China was able to drop the export price of 29 garment categories by 46 per cent on average
in the United States within a year, from $6.23 per sq metre in December 2001 to $3.37 per sq metre in
December 2002. Bangladesh needs to respond to such price-cutting policies of its rivals in order to remain
competitive in the quota-free global market. [6]

Lead time:
Lead time refers to the time required for supplying the ordered garment products after the export order has
been received.
In the 1980s, the usual lead time in the garment industry was 120-150 days for the main garment supplier
countries of the world; it has been reduced to 30-40 days in the current decade.
However, in this regard the Bangladesh RMG industry has improved little; for example, the average lead
time is 90-120 days for woven garment firms and 60-80 days for knit garment firms. In China, the average
lead time is 40-60 days and 50-60 days for woven and knit products respectively; in India, it is 50-70 days
and 60-70 days for the same products respectively. Bangladesh should improve its average lead time to
compete in the international market.
The Ready-Made Garments (RMG) industry occupies a unique position in the Bangladesh economy. It is
the largest exporting industry in Bangladesh, which experienced phenomenal growth during the last 25
years.
Given the remarkable entrepreneurial initiatives and the dedication of its workforce, Bangladesh can look
forward to advancing its share of the global RMG market

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Market Diversification:
Bangladeshi RMG products are mainly destined to the US and EU. Back in 2006-2007,Bangladesh was the
1st largest apparel exporter to the USA and European Union respectively. But now Bangladesh lost her
position. The industry was successful in exploring the opportunities in markets away from EU and US. In
FY07, a successful turnaround was observed in exports to third countries, which having a negative growth
in FY06 rose three-fold in FY07, which helped to record 23.1 percent overall export growth in the RMG
sector. It is anticipated that the trend of market diversification will continue and this will help to maintain the
growth momentum of export earnings. At the same time a recent WTO review points out that Bangladesh
has not been able to exploit fully the duty free access to EU that it enjoys. While this is pointed out to be
due to stringent rules of origin (ROO) criteria, the relative stag nation in exports to EU requires further
analysis.

Compliance Issue:
In present time and for next five years Bangladesh garments industry will face challenge about compliance
issues. Foreign buyers already show the behind about to place order without the compliance. So overcome
the compliance issue is very big challenge for Bangladesh RMG sector. [7]

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 SUMMARY OF THE FINDINGS

• Purchasing the row materials from foreign country is very big challenges for Bangladesh RMG

sector.

• To overcome the Political instability

• To maintain the compliance rules & regulations

• To keep the competitive global market After increasing the wages/salaries of the workers

• To conduct the production without trained worker & produce the quality product

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 CONCLUSION

The Ready-Made Garments (RMG) industry occupies a unique position in the Bangladesh economy. It is
the largest exporting industry in Bangladesh, which experienced phenomenal growth during the last 25
years. The government and the RMG sector would have to jointly work together to maintain
competitiveness in the global RMG market and to overcome the challenges and threats of this sector.
Given the remarkable entrepreneurial initiatives and the dedication of its workforce, Bangladesh can look
forward to advancing its share of the global RMG market.

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 References

1. http://www.dhakatribune.com/long-form/2014/sep/19/rmg-industry-bangladesh-past-present-and-
future

2. http://www.dhakatribune.com/long-form/2014/sep/19/rmg-industry-bangladesh-past-present-and-
future

3. http://en.wikipedia.org/wiki/Bangladeshi_RMG_Sector

4. http://www.ast.com/science/textile/problems-prospects-readymade-garments-export-
bangladesh.html

5. http://www.ast.com/science/textile/problems-prospects-readymade-garments-export-
bangladesh.html

6. http://www.asnt.com/business/ireport-on-garments-industry-of-bangladesh-the-challenging-
ahead.html

7. http://www.bangladeshgarmentsbuyinghouseassociation.com

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