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Thousands of workers in Bangladesh protested violently demanding an increase in wages.

Workers stitching clothes for many Western brands showed their protest, making hundreds of garment factories to shut down temporarily hindering in the delivery of garments to big retailers such as H&M, Wal-Mart, and Tesco. Minimum wage in Bangladesh is the one of the lowest; globally ranging from Tk 1,662 for a month. The entry level salary for apparel workers in Bangladesh was generally set for Tk 1,200, and was later raised by the Government to Tk 2,500, which was to take effect from November, 2010. But, this did not satisfy the workers who were negotiating for Tk 5,000 as a minimum salary. Furthermore, they also demand holiday time, official union recognition, and sick pay. There is an increasing trend in the labor, and material costs in China. Apparel workers are getting attracted towards better salaried jobs such as making electronic spare parts, and automakers. Due to this, Chinese apparel makers are currently facing a shortage of workers. Bangladesh has good potential to leap at the opportunity, and capitalize on the rising costs of China, but the prevailing labor unrest would impede the foreign companies from considering this option. The current situation of labor unrest even pose a threat to the benefits brought by the economic recovery, which was providing a 15% increase in the apparel exports during April, and May. During 2009, apparel exports from Bangladesh accounted to 80% of the total exports, proving to be a key sector. Apparel exports have also augmented the economic future of the country. The spell of workers strike has incurred a loss of Tk 7.75 billion for the apparel manufacturers. The losses include; loss of production time, higher costs for sending the products through air freight instead of sea cargo, and the damages caused due to sabotage of the factory premises, and machineries. Apart from this, the readymade garment industries will have a hard time in keeping up with their international orders. Increasing the wages to Tk 5000 will be too heavy for the apparel industry to bear, as it has been crushed by the global turmoil recently, and is only recovering gradually. Domestic manufacturers are not ready to negotiate with unions, or workers, blaming on cost cutting, and Western buyers such as H&M, Carrefour, Tesco, Wal-Mart, and Levi Strauss. On the contrary, unions argue that manufacturers make the workers to work for 10 hours in a day, and six days in a week, thereby accumulating enormous profits. Workers and the union strongly assert that, while thousands of businessmen have become millionaires due to the endowment of Bangladesh apparel industry, lakhs of apparel workers have been condemned to perpetual poverty.Labor unrest is the most crucial issue facing

the apparel sector of Bangladesh. The Government, apparel manufacturers, and the workers should reach a compromise regarding fair wages.

References: 1. 2. MITTWOCH, 21. JULI 2010 Recent unrest in garment sector in Bangladesh MediaWatch-Blog freut sich seinen LeserInnen einen Gastbeitrag aus Bangladesch präsentieren zu können, in dem die Hintergründe der jüngsten Streikwelle in der Textilindustrie des südasiatischen Landes erläutert werden. Der Blog will damit eine der vielen und alltäglichen Lücken der bundesrepublikanischen (und westlichen) Berichterstattung stopfen helfen: In diesem Fall geht es um die Zurückhaltung der Medien bei ausführlichen und mit den nötigen Hintergründen versehenen Berichten über Arbeitskämpfe (nicht nur im Ausland). Lesen Sie also einen Beitrag von Khorshed Alam Alternative Movement for Resources and Freedom Society (AMRF) The garments sector witnessed recurring violence in Bangladesh. In recent times (June-July 2010), strings of incidence had taken place. Some incidents have paralyzed the whole Dhaka city. The workers took street, ran amok. Police violently swooped on them, water canon, rubber bullets and baton charges could not stop the workers from staging spontaneous demonstration. Generally in Bangladesh, the major reasons of sudden outburst, against the backdrop of accumulated anger and immeasurable plight of the workers, are directly linked to low wage, unpaid wages and overtime.

Low wage, irregular pay and sudden closure of the factory without any prior notification compel the workers to take the street. When Wage Board is haggling over the fixation of minimum wage and the owners volubly and vehemently opposes it. Bangladesh has now around 4,500 garment factories which employ over 3 million workers. The minimum monthly wage of a garment worker is now 1,662 taka (about $24) a month. The garment industry accounts for about 40% of Bangladesh's total industrial workforce. A survey released last month by the Bangladesh Factory Inspection Department which showed that almost 15 % of employers did not pay their workers on time between January and May. Many other factory owners did not pay overtime, while several continued to pay less than the government's minimum wage. The government marks time The government is worried about global media, and how they are reporting. Government expresses concerns over irking of western companies; they are hardly worried about the causes of the workers. After the incidences, the government reacted sharply and assured the companies not to be worried.

takes time. They wanted to know . The European Union is concerned about labor unrest in the readymade garment sector. The committee also emphatically underscored that the government should take urgent measures to resolve all the other problems in the garments sector.” The Bangladesh Parliamentary Standing Committee on Labor and Employment urged the government to declare “a time befitting minimum wage structure” by July 29. met Hossain to know about the alleged „labor exploitation‟ in the export-oriented apparel industry. and a minimum wage can‟t be foisted on the workers and the industry injudiciously. A three-member team led by the head of the EU Delegation to Bangladesh.Khandker Mosharraf Hossain. EU asks if there is exploitation The European Union expressed concern over growing labor unrest in the readymade garment sector over wages... particularly on sensitive issues. Stefan Frowein.It can‟t be done hurriedly.” Hossain argued that any negotiation. “Reviewing the wages of several million workers will take time. the Labor and Employment Minister appeared in media and informed that “negotiation for raising wages is making good progress and we expect a settlement before the end of this month [July 2010].

The owners association is striving hard to keep the mark up of wage within Tk. who realized . The ambassadors also wanted to know whether the garment workers were being exploited.500 is nothing unusual …It is nothing serious if 400-500 workers out of four million stage demonstrations in any situation.what move the government has initiated to increase the minimum wages for garment workers. They [EU] have understood it. further escalation of protest by workers worried the government and the factory owners. It is apparent from the statements of the government officials and Ministers that the owners are seemingly softening their position in the wake of fear that the unrest may spark off any time. 2500 per month.000 ($29) but it was rejected outright by the workers and other stakeholders. „I told them that unrest at one or two readymade garment factories out of 3. As we came to know from various sources including media coverage that high ups of the government is exerting pressure on the owners to come down to a realistic and acceptable level of mark up of wage. if the demands of workers are undermined. 2500(US$ 35) would not be reasonable amount for the workers to appease. Government sources are in apprehension that fixing even Tk. Wage Debate The ongoing negotiation at the Minimum Wage Board for increasing the wages of garment factory workers has gained momentum after nine sittings in five months that were made fruitless by the reluctance of owners to raise wages by a reasonable extent. The minister told the delegates that included ambassadors of the Netherlands and France in Dhaka that isolated incidents of violence might take place in such a large industry as the growing garment sector in which around 4 million workers were employed.‟ the labor minister was quoted. angry protest will be triggered once again. In the beginning stage of wage negotiation the owners‟ representative even proposed that the revised minimum wage should be around Tk 2. It appears that government is trying to deny the movement as a broad spontaneous protest of workers. The flexibility that they are showing in terms of settling a threshold point of minimum wage is also as meager as it was before. After that meeting.

pointing out that the existing minimum wage of Tk 1. Many incidences in 2010 The recent incidences triggered over wage is a common and overarching demand of the workers. Even if the aforesaid amount (Tk 2. neither can be termed as a conspiracy.that an inadequate increase of wages might cause severe protests and jeopardize the whole industry.500 per month. comprising representatives of workers.000 for an entry-level worker. According to the law.000 and Tk 5000. in case of any delay in announcing revised minimum wage before the Eid Festival (September). The wage board for the garment sector. The top brass of the government wish the minimum wage to be at least Tk 3. and bills for overtime must be added to the take-home salary between Tk 4. Sometimes. a major workers‟ unrest will take place. The price hike of essentials has drastically plummeted down the real wage. The minimum wage of an entry-level Chinese worker is $166. this is not going to help climbing out of abject poverty ladder. it will have to come to a decision by the 28th of July. Statement of top brass of the government and Ministers are full with paradox. some of the high ups are also alluding .662 or $25 that was fixed in 2006. According to government prediction.500) is paid to workers. It is widely recognized that the workers movement for a livable wage cannot be undermined as stray incidents. spontaneously rise and press their demand home. can no longer sustain a person because of the constant rise in the cost of living.on the one hand they are always skeptical of recognizing the fact that workers can independently mobilize. owners and an independent member. of an Indian $130 and of a Cambodian $66. first sat on the 28th of January 2010. The owners‟ lobby is now trying hard to ensure that the minimum wage will be no more than Tk 2. Garment factory workers demand Tk 5000 fixed as minimum monthly wage of an entry-level garment worker. This is not the problem of one or two factories as Minister for Labour described to European Commission delegation. of a Vietnamese $90. One quarter of government is blaming the apparel scrap traders.

In 13 cases.July leaving hundreds of workers injured. 13 occurred in January. The notice saying that factories would remain closed until further notice. seven in March. and termination and curtailment of leave or holiday were the causes of demonstrations and unrest. The incidents left at least 988 workers injured in police actions while 45 workers were arrested and more than 10. Of the incidents. three in February. Among others. three in Rampura-Banani area. Eight incidents of unrest occurred in Mirpur zone in Dhaka city during the period while 16 incidents took place in Savar-Ashulia area including the Dhaka Export Processing Zone. Demra and Tejgaon areas. six in Chittagong and four others occurred in Comilla. A total of 41 incidents occurred in connection with the demand for payment of their dues. thousands of workers in Mirpur and Pallibi areas of Dhaka took to streets to protest at the killing of a worker inside a factory. declaration of lay-off or closure. eleven in May and sixteen occurred in June. The apparel sector experienced a severe labor unrest in the beginning of this year. Workers who came to join the factory .000 were sued and at least 78 workers were sacked. Workers from most of the factories around joined them in the demonstration. Factory was closed without paying monthly wage of the workers. 19 incidents in Gazipur-Kaliakoir area. the workers took to streets to protest at the killing or torture on their colleagues. Narsingdi. outskirts of Dhaka. As the closure was unannounced and uninformed workers who came to attend work in fine morning found a notice hanging in the factory gate and factory gate was closed. Seventy two incidents of labour unrest had taken place from January 1 to June inhuman minimum salary as cause for unrest. A series of incidents had also taken place in and outskirts of Dhaka until mid. Factories are being closed Authorities suddenly shut down the factory without notifying workers. In the first week of January. twenty-two in April. 2010. 12 in NarayanganjFatullah area.

However. Violent attempt of police to disperse the workers enraged the workers. the main slogan chanted by the workers was on fixing TK 5. Police intervened and attempted to disperse the workers using excessive force. The factories' owners complained of "panic and anarchy" and the government sent hundreds of riot police. Sudden stoppage of production of hundreds of garment factories by the authorities for the days and police action on apparel workers demonstrating for wage increase also added new dimension to the whole problem. took to street. a network has developed among the workers which is expanding and growing. The intervention of police was so brutal and heinous. where hundreds of factories are located. The workers of other factories rallied behind the demonstrators.gathered in the street. In the absence of any stewardship of movement. The cops fired rubber bullets and tear gas. Thousands of workers took the street and demonstration continued for Owners have hired their own gangs to protect their production units. The workers hit back by hurling rocks and torching cars. Companies pay hardly any attention to miseries of the workers. The police fired teargas shells and used water cannon to disperse the demonstrators. Conclusions  Rising food and essentials prices are making the garment workers plight worse. stretching a radius of 10-12 sq. Clash spread in the whole area.000 (US$70) as minimum wage. The workers of other factories of this sprawling garment belt. . The low wages have a disastrous effect on workers' livelihoods.The workers especially women are struggling to feed themselves and their kids.  Companies have broken their promises and pledges. The workers locked in clashes with police was intimidated and brutalized by the law enforcers. and their anger is boiling over.

Not a single Workers Participation Committees are allowed to function properly in the factory Labor unrest in Clothing Industry: Reasons and Solutions Clothing industry is one of the most labor-intensive sectors in the world.5000 (US$ 70)? In fact with . but the statements and arguments on fixation of wage clearly demonstrate that the government is not going to keep its promise.  The role of the labour department of government is fuzzy and dubious. Frequent labor unrest in clothing manufacturing sector. which took place over the last couple of years. Most obvious reason for the unrest is wages & increments up to a level. strikes by labors & their unions. were not respected by the Bangla Desh Garment Manufacturers and Exporters Association (BGMEA) and Government. Is it legal demand of the labors or labor unions to raise their monthly wages from Tk. which could help them to live a minimal life.1600 (US$ 25) to Tk. Being an integral part of the industry. The industry is most labor-intensive sector in Bangladesh due to very less use of technology. Government promised that workers wages would be substantially increased. labors deserve to get higher consideration by the manufacturers. resulted in present unrest. This industry is the backbone of our export economy. Unfortunately.  All the Memorandum of Understanding ( MOU) in a series of tripartite negotiations. which in turn is supported by more than 3 million workers. the manufacturers cannot take their matters into priority. low wage and non-implementation of labor laws.  Non-existence of union and organization left no option for the workers but to take streets in protest of torture. has become common in Bangladesh.

demand of increasing monthly wages is obvious. like fire security. Other most likely consequent is permanent stoppage of the clothing factories. especially in food. if the Wage Board announces minimum wage more than present limit.1600.g toplevel employees draw more than 100 times monthly salaries than low-level employees. consequently less productivity of worker by unrest in the production environment. As. Therefore. plus other company‟s benefits in the hierarchy. and possible solutions to save our billion dollar clothing industry: Bangladesh enjoys the lowest wages in clothing sector in the world. creating labor unrest. A successful organizations practice few common formulas to reduce discrimination of salaries or wages. following implementation of the announcement. create jealousness among them. we should go thorough diagnostic consideration to find out hidden problems.the high inflation in food and energy price. wage increment might lead to market inflation. but cost of living has been increasing gradually. zero payments for over time. There could be few possible outcomes. Thus. in those cases. can ask the government for monetary stimulus package to full fill higher wages. By reading the mind of the most employees and workers. This in turn develops non-motivation among the fellow workers. namely BGMEA and BKMEA. most likely at significantly higher rate in the world. then present clothing industry might get one big shock. The second factor is wages discrimination. a factory creates hierarchical organogram where wages discrimination is not visible. Could „minimum wage‟ announcement by Wage Board of Bangladesh solve the labor unrest in Bangladesh? I doubt because. no festival bonus. but they are unable to increase the wages as demanded by the labor unions. it is getting difficult for the workers to live with the present lowest monthly wage of Tk. some top and midlevel employees are more efficient in their respective job fields. The first one is the premium organizations of the sector. and pay them cash incentive secretly. and . which could lead the clothing industry of our country in the verge of destruction. the owners keep personal contact with those employees. Other reasons for the labors‟ non-satisfaction may be other mismanagement of the industry. resulting in frequent unrest of workers. They are not making such a high profit to meet their demands. Thus. Apart from this. fraction salary payment. Most of the owners of the clothing factories can realize the reality. e. so they deserve higher salaries.

As the middlemen are playing . Our clothing sector is still disorganized even after more than three decades of the commencement. the buyers are gaining in price bargaining of clothing orders! Clothing factories collect „orders‟ in two general ways. GSP facilities from the USA and European Union. like cash incentive from government. As a result. in order to keep their labor demands higher there. an individual factory earns. Buying houses could read the buyers‟ mind. the factories get ensured of the having regular working order from the respective buyers. The direct way of working with buyers is always better than working with the help of middle-men as the factories could save the commission of the is direct contact with the international clothing buyers. During this long run. and effectively communicative team in the top managementlevel. But most of the clothing factories failed to build up such a good team. despite of having no core competence. internal political environment. Visiting clothing factories personally experienced me that there are some distorted minded workers. like creating labor unions.lay off of factories without prior announcement. consistency and lead-time. regarding their demand of product quality. I like to recall about steady destruction of our labor market in mid-east countries. especially boy workers (aged 17 to 25) in almost all clothing factories who miss lead other workers to strike to enjoy break and check their influences in the existing environment. thereby international clothing buyers. national or international politics. Some experts of the sector believe. Because of the mentioned weaknesses of “Industry Owners”. thus those factories ask the „middle-men‟/buying houses to work for themwhich I describe as „indirect way‟. as our weaknesses. this national industry loses its competitiveness in profit. Workers‟ wage comes from the income. Apart from this. Consequently. the buyers who are educationally sound and master in business strategy. and the other is through „middle men‟ or „buying houses‟. ejection of which in turn could increase profit of the factories. are also contributing in unrest. buyers are interested to place orders through their liaison offices or buying houses. well converse. are using our strengths. The reasons can be identified as „due diligence‟ of the government and industry owners towards our competitors. the factory need efficient. industry waste or Jhoot trading issues etc. The commission accounts about 10% of total working value. Compatriots of India and Pakistan using mass media has tried several times to destroy images of Bangladeshi workers. including expected profit. To work directly with buyers.

And accordingly take initiative to satisfy them. 3) shortage of power and gas utilities in the industry. the top and mid-level management need not to be well conversed and communicative only. This results into lack of workers motivational in the respective factories. indirectly manipulating profit of clothing industries. lower productivity of individual labor. In addition. making labors feel as they are part of the management. Power and gas crisis. should come up with actually regular demands of power and gas in the industry as well as proposed ways to fight . We can sum up the main reasons for minimal profit in the clothing industry as: 1)„due diligence‟ of our humble people to the buyers. One of the accurate measures is to develop potential in the sector. The productivity of individual labor in clothing sector is one of the lowest in the world. as no concept of labor training exists here. including labors training and create an environment. High labor fluctuation does affect the productivity. are one among many reasons which affect profit margin of the factories. 5) seasonal natural disasters. to full fill higher wages demands? I already have pointed out some above-mentioned hurdles and appropriate measures against those hurdles must ensure higher revenues. Such an approach may result in decreasing labor strife. Lack of managerial skills of the top-management in clothing factories causes in failing on-time shipment and thus rejection of „orders‟ from buyers. are among many other reasons. 4) higher labor fluctuation. The latter matter is the best example of managerial weakness. the clothing industry‟s premium bodies like BGMEA. increase productivity of each labor. It is comparatively better to have due-diligence with their workers than the buyers. and BKMEA. resulted from managerial weakness. untrained labors. that means expected profit.leading role in export by gaining commission. At the factory level. thus higher turnover. Factory owners should avoid hard-line policy and have to have patient and listen to labors as well. through restructuring the industry. 6) volatile and unpredictable backward linkage markets. 2) presence of commission of middlemen or buying agents. To cover up with power and gas supply. the profit margin or income of the industry falls. We can restructure individual factory‟s hierarchical structure. But they should also gain expertise in understanding the needs and demands of their labors. with their respected buyers. hampering production. Now question is: how the industry creates higher revenues.

makes business competitive. Government with the consultation of respective stakeholders of the industry should create Textile and Clothing Police.the problems. counting number of garments workers in the sector. The clothing sector is not much less important for the nation than the Railway one! According to me. thus profits. The platform should be consisted not only with owners‟ and labors‟ representatives. Therefore. BIDS) should be included for better performance of the platform. Regular basis training in Training Institutes can ensures both better industrial management environment and higher productivity. the BGMEA and BKMEA would have to come up with any alternative or innovative way. It could be a step ahead in organizing the Textile & Clothing sectors. Higher productivity means high revenues. and therefore increasing „demanded wages‟ will not help to stop frequent labor unrest in the industry. if any. and low-level managements. or labor criminal activities. Issuing ID cards or ID numbers to garment labors. like Bangladesh Railway Police to protect railway sector of the country. mid-level. to tackle unrest in the sectors. and creates core competences in complete supply chain. which in turn could ensure better wages. As the crisis is a national problem. and therefore find instant better solutions. finding out life details in case of labors death. where both parties raise their problems. mismanagement. and over exploitation of labors by authority. Industrial management knowledge is most important for top and mid-level employees while proper operations of machines by operators are crucial for operators‟ productivity. we need a common platform for owners and labors. would help in many aspects like food rationing. as there is no way to create identity of each and individual worker. I believe that labor unrest is the final explosion created by uncountable mistakes. Training makes human resource efficient. registering their names and issuing them ID cards have become essential. misbehavior. There is no established training institute in the country to train their top-level. Establishment of an organization to issue ID card is getting important for our T&C sector‟s future prospects and faster growth. Thus training significantly contributes to controlling Labor Unrest! In my summery. but also experts from research organizations (like CPD. I like to summarize my writing in the following table: . Identification of real garment workers and picketers during unrests is very difficult. The sector is lagging behind in training of its stakeholders. Personally I don‟t believe that only „wages issue‟ creates labor unrest.

electrified and labor production plant accordingly. Gro up: 01( War rior) Lev el3. compulsory over-time. BGMEA. thus media could play vital role. in case of unable to ensure 24 hours doctor. could be by save themselves. labors create havoc of unrest to scrutinize them properly. sometimes creates Railway Police to guard unwanted unrest in the clothing Bangladesh Railway) manufacturing areas. They intentionally spread the news of should go depth in the matter. but fraction payment or no payment) No responsible organizations who A neutral organization to be will listen labors‟ needs and formed (taking members from demands BKMEA. (hidden cases) culty of Business Administration and Management Proposed Solutions Control food and power abnormal inflation. construct fire-smoke. Sem este rIIFa . Some believe international politics In such cases. no festival bonus. and government employee from labor ministry) who listen them. labor unrest in the industry to and thus broadcast real pictures take unprivileged advantages. keep pain for pregnant women contractual agreement with nearest doctors in the locality.Reasons for Labor Unrest Low wages Higher wages discrimination/gap in organizational hierarchy Lack of compliance (no weekly day off. Distorted minded boys/males In case of recruiting boys/males. government and willing creates labor unrest. Death of any garment labors in Train labors techniques how to the factory premises. provide incentive to deserving employees but keeping salary indiscriminate level Ensure social and environmental compliances in the clothingmanufacturing sector. press their illegal demands Local influential (could be Needs to formulate garment police mastans) trading of garment to tackle such occurrences (like wastes/jhoot. readjust wages Restructure factory hierarchy organogram. labors unions.

…….08► Company profile……………………………………………………...….…………………………………….………….. 04►Analysis Technique & Report Writing….….23 Recommendations …………………….…. 24Suggestions Regarding Fire Safety ……………………....…….. 27 6 |P a g e Chapter–1Chapter – 2Chapter – 3Chapter – 4 .……………….……….….…............Anisur Rahaman...05► Contribution of the RMG Industry ………………………………….……….02► Limitation of the Study…………………………………………. for their enthusiastic encouragements and helps during the preparation of this report us bysharing ideas regarding this subject and for their assistance in typing and proof reading this manuscript.With profound regard we gratefully acknowledge our respected course teacher M....………..…….…………..…….…. 5 |P a g e Table of Contents ► Abstract………………………………………………………………………….….. Lecturer .……..………………….……………14► Bangladesh Faces the Challenge of Globalization..………...…..…………………………...19►Prospects of the RMG Industry…………………………………………...………..…….…...….....………………….……. 26References ……………………………………………………...12► Problems Regarding With RGM………………..…………………….………..02► Literature Review……….04 Description ► The Bangladesh Garment Industry…………….…………………...……. Faculty of Business. Department of Management Studies .…….07► Exporting Condition of Garments Industry……..…………………….4 |P a g e Patuakhali Science and Technology University Acknowledgement At first we desire to express our deepest sense of gratitude of almighty Allah.…..……...…………….……. 01► Introduction………………………………………………….………………….…….…..….Administration and Management for his generous help and day to day suggestionduring preparation of the report.…………....We like to give thanks especially to our friends and many individuals.25Conclusion …………………………………………………….. 20►Supportive Government Policy……………………………………………….


……..….……………. 28 Abstract The phase-out of the quota is likely to have particular significance for the export of Bangladesh apparels to the US market. MFA’s impacts are not much related to a questionof our $2 billion exports ...Appendix …………………………………………………….

5 million females and indirectly anadditional 8 to 10 million people. The revolt began on 20 May2006 with garment workers’ strikes in the Bangladeshi capital Dhaka — beginning in a small number of factories over issues including the arrest of worker activists and non-payment of wages. The overall impact of the readymade garment exports is certainly one of the most significantsocial and economic developments in contemporary Bangladesh. Many tens of thousands of workers have gone on strike. especially the developments in the early years. Today the apparel exportsector is a multi-billion-dollar manufacturing and export industry in the country.The B an gl ade sh P l anni ng C om m i ssi on under t he Trade and Indust ri al P ol i c y (T IP ) project also commissioned several studies on the . leading to solidarity strikes from nearby workplaces and semi.Moreover Bangladesh is convulsed by fierce class struggles. Both of these studies use accepted survey and research methodologyt o an al yz e a weal t h of dat a on t he soci al a nd econom i c ba ck gr ound. it is a question of how Bangladesh’s entire economy will beaffected by the issue of quota phase out. Every day comes news of fresh strikes in a variety of industries —mainly the ready-made garment (RMG) sector. with action at a much larger number of factories and demonstrations across the city. in some cases completely blockading and creating check points for entryto Export Processing Zones. Professor Muzaffar Ahmad looks at theindustrial organization of the sector and discusses robustness and long-term viability of apparel manufacturing in Bangladesh. demonstrated. river transport workers. probl em s and prospects of female workers in the RMG sector. The global clothing trade is evolving on a continuous basisand that the phase out of quota restrictions and forming of trade blocs has become a reality. rail workers. Literature Review Several authors have analyzed aspects of the garment industry in Bangladesh. RMG exports constitute about 75% of Bangladesh’sannual export and provide direct employment to 1. centered on the country’s garment industry. One of the few studies on theBangladesh apparel industry to be published in a reputed journal in the U. the development of the apparel export industry has had farreachingimplications for the society and economy of Bangladesh. is that of Yung Whee Rhee (2003) who presents what he calls a “catalyst model” of development. fought the police and rioted in the streets. By23 May2006 this struggle had been generalized. blocked roads. With over one and a h al f m i l l i on wom en workers em pl o yed i n sem i -ski l l ed and ski l l ed j obs produci n gclothing for exports. t he p robl em s and t he wor ki ng condi t i ons of fem al e workers have received the greatest the USA. temporarily calmed things. Wiigton (2000) provides a good overview of thisindustry. or the $5 billion worth of exports made by Bangladesh globally. journalists.S. Rather. attacked factories and other buildings. lecturers and teachers. Of thevari ous aspe ct s of t he i ndust r y. but also mill workers.spontaneous demonstrations. 7 |P a g e Introduction The tremendous success of readymade garment exports from Bangladesh over the lasttwo decades has surpassed the most optimistic expectations. A massive army and police presence around garment factories. but strikes continued to take placeat numerous factories. There are several studies including theBangladesh Institute of Development Studies (BIDS) study by SalmaChowdhury and Protima Mazumdar (1991) and the Bangladesh Unnayan Parisad (1990)study on this topic.

Personalinterview technique was applied while fill up the questio nnaire on respondents. Scope of the Study This study has focused upon the various problems regarding with the garments companyand the prospect of these industries. Islam and Quddus (2006) present an overall analysis of the industry to evaluateits potential as a catalyst for the development of the rest of the Bangladesh economy. • This survey made on crisis situation of Bangladesh. so it was difficult to collect more samples. We have taken 5 garments company to gather data onthe present situation of the garments industries as well as problem regarding and thefuture of the industries. because of convenience of the field work and easy communication. Above all. Quddus (2006) presents results from a survey of apparel entrepreneurs andevaluates the performance of entrepreneurs and their contribution to the success of thisindustry. observation of the interviewers has also been an important component of analysis and discussion.TOKIO MODEL LIMITED. then the report findings may beerroneous. Thesample garments companies who are interviewed are given in a chart: Name of the Garments Company Millenium Garments Limited RAHAN GARMENTS (PVT) LTD ALAM FIBER IMPEX Ltd. Data analysis We analyzed the data by averaging the response of the sample. we go for different garmentscompany and the company who intended to talk with us is taken as a sample. Quddus (2006) presents a p rofi l e of t he appa rel sect o r i n Ban gl ad esh and di s cusses som e ot her aspe ct s of t he industry. The notable ones are as under: • The survey was conducted in a very short time so we were not able to collect moreinformation. 9 |P a g e Limitations of the Report Since our study is based on both primary and secondary data. 8 |P a g e Data Collection For the assessment. this study is weak in some points. I tried to getrid of any kind of personal biasness and taking true information. Besides. F o r t h i s w e interviewed 5 garments company through using a structured questionnaire. For the crisis condition of Bangladesh it wasdifficult for us to collect data form more samples.industry. both primary and secondary data was collected. Most of the analysis anddiscussions of this study have been made on the basis of the information obtained fromthe interview with the questionnaires. Sampling plan Garments Company of Dhaka are constitutes as the study area. there is a possibility of get t i n g fak e i nform a t i on. FABRICS AND COMMODITIES EXCHANGE LTD. Above it. Hossain and Brar (2004)consider some labor-related issues in the garment industry. If t he su rve yed personnel provi de u s wi t h an y fabri c at ed information about their opinion of their organization. .

no matter how resilient or sturdy that sector is. • The ques t i onnai re c ont ai ns som e quest i ons t hat . The sector now dominates the moderneconomy in export earnings. which could be verymuch useful. In preparing this report.Preliminary data and informal evidence indicate that this sector seems to have weatheredthe devastating floods relatively well. Despite increased dependence on air transportation. Given the dominance of the sector in the overallmodern economy of Bangladesh. Although in gross terms the sector‟s contributions to thecountry‟s export earnings is around 74 percent. Support for the apparel sector should not bereduced. in net terms the share would be much less part i al l y b ecaus e t h e backw ard l i nka ges i n t ex t il e have bee n sl ow t o devel op. Analysis Technique & Report Writing At fi rs t . where the raw material and the finished productsare shipped in and out.• Only the big and the reputed Garments Company consider here as sample. • Anot her l i m i t at i on of t hi s st ud y i s t he pe rson‟s pri vat e i nfo r m at i on were n o t disclosing some. m i ght damage the company‟s image. the readymade garment export industry has been the proverbial goose thatlays the golden eggs for over fifteen years now. • Lack of experience in this field. we approached according to the following procedure: 10 |P a g e Select the topicConduct surveySorting informationAnalysis and evaluation of the informationReport writing and presenting The Bangladesh Garment Industry For Bangladesh. however. this vulnerability should be a matter of some concern tothe policymakers in Bangladesh. This risk was unavoidable. We believe the policymakers in Bangladesh should work to reduce thisdependence by moving quickly to develop the other expo rt industries using the lessonslearned from the success of apparel exports. is a matter of policy concern. another way to reduce the vulnerability is to diversify the product and themarket mix. The Dhaka-Chittagong roadremains the main transportation link connecting the production units. secondary impact and employment generated. The industry is one hundred percent exportorientedand therefore insulated from domestic demand shocks. i f answer e d properl y. data and information for obvious reasons. It is heartening to observe that the knit products are rapidly gaining share inoverall garment exports as these products are sold in quota -free markets and reflect thestrength of Bangladeshi producers in the fully competitive global apparel markets. • Lack of proper authority to conduct the interview program. Thedependence on a single sector. mostly situated in andaround Dhaka and the port in Chittagong. it remains vulnerable todomestic supply shocks and the smooth functioning of the banking. In this type of questions. the respondents might provide socially acceptable answers. The events in1998 serve to highlight the vulnerability of this industry to both internal and externalshocks on the demand and supply side. trucks remainthe main vehicles for transporting raw materials and finished products for . In fact. transportation andother forward and backward linkage sectors of the economy. we went t o di fferent garm ent s c om pan y and col l ect i nform at i on from t he personnel.

The s ect or h as al so pl a ye d a si gni fi cant rol e i n t he soci o -economic development of the country. which 13 |P a g e experienced phenomenal growth during the last 20 years. which providesa com pet i t i ve edge over i t s com p et i t ors. RMG‟s contribution is highly remarkable. w h i c h e v e n t u a l l y h e l p s t h e c o u n t r y ‟ s s o c i a l development. Exporting Condition of Garments Industry The Ready-Made Garments (RMG) industry occupies a unique position in theBangladesh econom y. Thesector opened up employment opportunities for many more individuals through directa n d i n d i r e c t e c o n o m i c a c t i v i t i e s . aimed at . The floods disrupted the normal flow of traffic on this road.5 percent per annum. earnings reached about 8 billion USD.0 billion. It also plays a pivotal role to promote t h e development of other key sectors of the economy like banking.One of the key advantages of the RMG industry is its cheap labor force. insurance. the industry registered significant positive growththroughout this period In terms of GDP.A 1999 study found the industry supporting approximately USD 2. exports. The industry plays a key role inemployment generation and in the provision of income to the poor. pres ent l y i t 12 |P a g e contributes around 75 percent of the total export earnings. By taking advantage of aninsulated market under the provision of Multi Fibre Agreement (MFA) of GATT. Nearly two millionworkers are directly and more than ten million inhabitants are indirectly associated withthe industry. railway container services.The Agreement on Textile and Clothing (ATC) introduced in 1994. itattained a high profile in terms of foreign exchange earnings. when the value of exports stood at a little over USD 4. road transportation. etc.hotel. which was only lessthan a billion USD in FY91. This is a clear indication of the industry‟s c o n t r i b u t i o n t o the overall economy. The sect or h as cre at ed j obs for about t womillion people of which 70 percent are women who mostly come from rural areas.Bangladeshgarment exports. Excepting FY02. 11 |P a g e Picture : Garments products of Bangladesh Contribution of the RMG Industry RMG business started in the late 70s as a negligible non-traditional sector with a narrow export bas e and b y t he ye ar 1983 i t em erged as a prom i si ng ex port earni n g se ct or. shipping.0 billion worth of economic activities (Bhattacharya and Rahman). it reaches 13 percent of GDPwhich was only about 3 percent in FY91. tourism. In FY06. Over the past twenty years. It is the largest exporting industry in Bangladesh. this road link was completely severed for several days when large sections of the road went under water for a few weeks during the latter phase of the floods. Over the past one and half decade. the number of manufacturing units has grownfrom 180 t o over 3600. industrializationand contribution to GDP within a short span of time. The industry responded by callingupon the Bangladesh navy to help with trawlers and renting a plane from Thai Air that wasused to directly fly garment consignments from the Dhaka airport to the Chittagong airportseveral times a day.RMG export earnings have increased by more than 8 times with an exceptional growth rate of 16. woman empowerment and poverty alleviation.Eventually. Thisdelinking of the road connection between Dhaka and the port in Chittagong was as seriousa threat as one can imagine for the garment exporters.

75 5.57 36. In thePost-Uruguay Round period.831999 – 00 3781.98 6.The export made by Garments Industries of Bangladesh is improving year after year e x cept som e of t he ye a r.11 14 |P a g e 1998 – 99 3001.212005 – 06 5686.09 15.94 26.35 43. competition among textiles and clothing exporting countries is likely to becomeintense. 2006 Table: Quota Prices of Selected Garments Items ExportedPosition of Bangladesh is exporting product in USA is not very satisfactory but this situation is better than any other condition of the previous time.82 38. But above it. Inthese aspects we divided our finding into three main parts.02 4349.192002 – 03 4859. and subsidies will become less feasible and less relevant.491992 – 93 866.191995 – 96 1555.83 Figure: Year Export by the garments industries (in US $ million) Average Quota Prices of Selected Garments Items Exported by Bangladesh. Readymade Garments Industries is the leading sector inexport sector.02 22. First part contains the generalinformation about the garments industries of our country and the other second and third part contains the problems and the prospects of these industries sequentially. Year Export (in US $ million) Percentage change 1991 – 92 624.econom i c probl em .742003 – 04 4583.881993 – 94 1182.12 7. But if our Governmentt a k e s o m e e s s e n t i a l l a w a n d b r e a k o u t t h e w a l l o f b i a s n e s s t h e n t h e p o s i t i o n o f Bangladesh in Garments sector would be hope to better.292001 .671996 – 97 2228.25 17.431994 – 95 1445. In a liberalized traderegime. 15 |P a g e Table: Exports of Knit and Woven Garments to the United States (Source: Export Promotion Bureau of Bangladesh ) Findings 16 |P a g e From the survey we have found some tremendous information that help to build our practical knowledge about the garments industry of our country. Thesetopics are discussed belowCompany profile . pol i t i cal probl e m . The objective of this paper is to identify the prospects of RMG industry after theMFA phase out by analyzing the current scenario along with different policy measuresand the available options in order to be more competitive in the new regime. Liberalization of trade following the Uruguay Round agreement presents opportunitiesas well as challenges for a developing country like Bangladesh in RMG sector. traditional instruments of trade policy such as tariffs.bringingtextiles and clothing within the domain of WTO rules by abolishing all quotas by theend of 2004. are t he p ri m e cau se of dec reasi n g ex port i n t hi s important sector. shut down of com pa n y.79 7. S t ri ke. i nfl at i on e t c. It provides an adjustment period of 10 years. l a yout .13 14.83 11.16 32.012000 – 01 4019.41 8.quotas. so that countries affected byt he M FA coul d t ak e t he necessa r y st eps t o a dj ust t o t he new t ra di ng env i ronm ent .471997 – 98 2547. Through our survey wetry to bring out the present situation.682004 – 05 4912. problems and the prospects of these industries.

U. Germany.S. R a han st art ed m anuf ac t uri ng and ex port i ng from 1995. RAHAN GARMENTS (PVT) LTD It was founded i n 1993.We take information from five leading garments company to identify the problem of thissector.S. They demand they offer reasonable price for their products. Its production capacity is 29.000 units amonth including Knit. More than 1200 employees foundtheir working place in this organization. Based in Dhaka. Bangladesh they manufacture over 200. There stay some motto withwhi ch Al am Fi ber Im p ex wi l l i ng t o run .M anufact u rer and ex port er of al l t yp e o f appa rel s. Reliability and cost effectiveness are on the utmost prioritywhile we provide value added services to our vast growing client list. Spain. A highly qualified team of QA foresees themanufacturing process. The total working area comprises of 29. spe ci al i z ed i n under ga rm ent s . The company was established in 1990 as a Public Limited Company. U. It is another leading Garment Company of our country. And the other customer groups are Ekinsa. Woven and Sweater.7 Million. Miles. theywould like to brief with their business process and how this could be of any interest totheir organization. It is one of the leading exports Garment Company of our country. USA.Thi s gi ve se curi t y and conveni en ce f or t he t ransport at i on of goods and al l ki nds of supports needed for daily production and financial facility. established in 1990. sewing andfinishing machines supplied by mostly Singer and Brother.000 Doz/Month Approx. More than 750 employees participate here inthe manufacturing activities. It basically works w i t h t h e p r o d u c t o f .RAWJUTE (JUTE FIBER) JUTE YARN / JUTE TWINE JUTE CLOTH (HESSIAN /CBC) JUTE BAG / JUTE SACKS HANDICRAFTS READY-MADE GARMENTS .UK.W e m a i nt ai n qual i t y prope rl y.000square feet in one floor. w e neve r . Singapore.F a b r i c s & C o m m o d i t i e s E x c h a n g e L t d ‟ s a w e l l r e p u t e d G a r m e n t s E x p o r t e r s i n Bangladesh. Their plant and office is located in the central part of the city. TOKIO MODEL LIMITED. Amcobus. France. Its main market for exportingis European Countries. It was established in 1988. Etam.450 pcs of different type of cutting. Different types of modern equipment in here to 17 |P a g e run the production smoothly. Vesage.A. Accordingly as a first step of their customer familiarization process. Oven & Knitwear Items. ALAM FIBER IMPEX LIMITED 18 |P a g e Alam Fiber Impex is one of the leading Exporter and Manufacturer's agents inBangladesh. Short profile of the Company are given belowMillenium Garments Limited It is a manufacturing company. sportswear and knit & woven garments.A. Star Wear. The companyauthorized capital was in US $ 12. Such as. Vetura.

a small number of m a n u f a c t u r i n g m e t h o d s . wa ges and b ene fi t s. and C us t om er‟s satisfaction is our motto. l a c k o f t r a i n i n g o r g a n i z a t i o n s f o r i n d u s t r i a l w o r k e r s . absence of easily on-hand middle management. supervisors and managers.There are some other problems which are associated with this sector. autocratic approach of nearly all the investors. 19 |P a g e Picture : Labor. sl u ggi sh backward o r for ward bl endi n g pro ce dure. Those are. Some time bonus and the overtime salary are theimportant cause of crisis. Marketing problems1 3 1 5 2 0 % 6 0 % 2 0 % 1 0 0 % 03. Worker madestrike.l e avi ng BEP ZA i n ful l cont r ol over work condi t i ons.lack of marketing tactics. Insufficient government policy about this sector is a great problem in Garments Company. Problems Regarding With RMG The garment industry of Bangladesh has been the key export division and a main sourceof foreign exchange for the last 25 years. Machinery problem5 0 0 5 1 0 0 % - .Management conflict in Garments Industry According to our survey in five leading Company we found some problem which aregiven in a chart with their percentagePrimary Problems P r o b l e m s h i g h m e d i u m l o w t o t a l 01. layout to capture their demand. fewer processuni t s for t ex t i l es and garm ent s. Ti m el y shi pm ent i s our busi ness e t hi cs. Butwithout the proper laws the worker are demanding their various wants and as a resultconflict is began with the industry. Garm ent factories in Bangladesh provide employment to 40 percent of industrial workers.Low working salary is another vital fact which makes the labor prom i se wi t h qual i t y. entry/exit complicated and loading/unloading takes much time. National labor laws do not apply in the EPZs. incompetent ports.Rawmaterials3 2 0 5 6 0 % 4 0 % 1 0 0 % 02. time-consuming custom clearance etc.

Labor 0 1 % g e 2 5 8 0 m s u m 01. Licensing 2 % 0 1 % 0 8 0 07. Inefficient 6 0 05.1 0 0 workforce3 2 0 5 % 4 0 % 1 0 0 % problem1 1 3 5 2 0 % 6 0 0 % 06. Quota problem4 1 0 5 % 2 0 % 1 0 0 % policy3 2 0 5 % 4 0 % 1 0 0 % unrest/strike5 0 0 5 0 % 1 0 0 Chart: Primary problems of Garments Industries20 |P a 0204060801001201 3 4 6 7 PPs e )m co r r nb ae t l g e ( % m i r P e l b o y a s High Medium Low Graph: Primary problems of Garments Industries Secondary problems P r o b l e g h m e d i w t o t a l affect1 % 04. Poor government 6 08.Middle man h l i o .

Time consuming schedule2 3 0 5 4 0 % 6 0 % 1 0 0 % 05. Dependency on foreign market5 0 0 5 1 0 0 % 1 0 0 % 07. Unloading(RM) takes time2 2 1 5 4 0 % 4 0 % 2 0 % 1 0 0 % 04. Communication gap1 2 2 5 2 0 % 4 0 % 4 0 % 1 0 0 % 06. Trade block 0 2 3 5 4 0 % 6 0 % 1 0 0 % 08.3 1 5 2 0 % 6 0 % 2 0 % 1 0 0 % 02. Sluggish business linkage0 2 3 5 4 0 % 6 0 % 1 0 0 % 03. Credit problem2 3 0 5 4 0 .

24 |P a g e During the 1990s. the economy appeared to begin a transition from stabilizationto growth. signage is present and fire fighting equipments are up to date. Along withm a i n t a i n i n g e c o n o m i c s t a b i l i z a t i o n w i t h a s i g n i f i c a n t l y r e d u c e d a n d d e c l i n i n g dependence on foreign aid. goods and rubbish on the outside of the building obstruct exits to theopen air ● Fi re i n a B an gl ade sh fact or y i s l i kel y t o spread qui ckl y be cause t he pri nci pl e of compartmentalization is practiced● Lack of awareness among the workers and the ownersBut now the situation is much improved and we found. Fire safety in garments industry: Necessary Design matters 23 |P a g e Picture: Training are now providing to the workers about what they do when the fire drill isheld in garments industry. 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. Bangladesh Faces the Challenge of Globalization Bangladesh faces the challenge of achieving accelerated economic g r o w t h a n d alleviating the massive poverty that afflicts nearly two-fifths of its 135 million people.To meet this challenge. are not fire resistant. It is provided in all the cases. opening along escape routes. Even firedrill is held once in a month.● Doors are not self-closing and often do not open along the direction of escape. But withoutthe facility of this necessary product a lot of accident is occur incurred every year in most of the company. a departure from the past. all the surveyed garments arefulfilling the requirement of emergency exit. ● 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 22 |P a g e ● Parked vehicles. These reforms were particularly aimed at moving towards an open economic regime and integrating with theglobal economy. The average annual growth in per capita income had steadily accelerated . market-oriented liberalizing policy reforms were initiated in themid-1980s and were pursued much more vigorously in the 1990s.% 6 0 % 1 0 0 % Chart: Secondary problems of Garments Industries21 |P a g e 0204060801001201 2 3 4 5 6 7 8 PPs e )m co r r nb ae t l g e ( % m i r P e l b o y a s High Medium Low Graph: Secondary problems of Garments Industries Safety Problems Safety need for the worker is mandatory to maintain in all the organization. notable progress was made in economic performance.

and government support are among thekey factors that helped the country to continue the momentum in export earnings in theapparel sector. therelative stagnation in exports to EU requires further analysis.1 percent overall export growth in the RMG sector. Bangladesh is surpassed only by China and Cape Verde. which having a negative growth in FY06 rose three -fold in FY07.enhanc ed G S P faci l i t y.and will rekindle andsustain Bangladesh's economic growth.ex port i ng one. I n t e r m s o f t h e i n c r e a s e i n t h e v a l u e o f H D I b e t w e e n 1 9 9 0 a n d 2 0 0 1 . While this is pointed out to be due to stringent rules of origin (ROO) criteria. which averaged 5. The resilience and bold trend inthis MFA phase-out period partly reflects the imposition of „safeguard quotas‟ by US andsi m i l ar r est r i ct i ons b y EU adm i ni s t rat i on on Chi na up t o 2008.In the wake of the 2001 global recession. Duringthe initial phase it was the woven category. The industry was successful in exploring the opportunities in markets awayfrom EU and US. when measured by its improvement in the HumanDevelopment Index (HDI) as estimated by the United Nations Development Project ( U N D P ) .While most low-income countries depend largely on the export of primary commodities. whi ch has been t he largest supplier of textiles and apparel to USA. whichhelped to record 23. Thi s t ransi t i on has been di ct at ed b y t he coun t r y's r esourc e endowment. Bangladesh was in fact among thetop performing countries in the 1990s. it continued toshow its robust performance and competitive strength. At the same time a recent WTO review points outthat Bangladesh has not been able to exploit fully the dut y free access to EU that itenjoys. high level of investment. characterized by extreme land scarcity and a very high population density. creating jobs and markets at home.6 per cent per annum in the first half of the 1980s to 3. In FY07. Prospects of the RMG Industry Despite many difficulties faced by the RMG industry over the past years.making economic growth dependent on the export of laborintensive manufactures. m arket and produ ct di versi fi cat i on. A strong domestic sector andan i m proved ove r al l i nvest m ent envi ronm ent wi l l provi de a m ore st abl e s ource of income . Back in 1996 97. i ncre ased backward integration. Bangladesh's reliance on foreign countries as amarket for exports and as a source of remittances has become obvious. It is anticipatedthat the trend of market diversification will continue and this will help to maintain thegrowth momentum of export earnings. Second phase isthe emergence of .fromabout 1. Product Diversification The growth pattern of RMG exports can be categorized into two distinct phases. This improved performance owed itself both to a slowdown in populationgrowth and a sustained increase in the rate of GDP growth. which contributed the most. During this time.Bangladesh has made the transition from being primarily a jute-exporting country to agarm ent .Bangladesh was the 7th and 5th largest apparel exporter to the USA and European what the garment industry has provided so far . 25 |P a g e Market Diversification Bangladeshi RMG products are mainly destined to the US and EU.2 percentannually during the second half of the 1990s. it will need to strengthenits domestic economy. Some of these elements are reviewed below. a successful turnaround was observed in exports to thirdcountries. progress in the humandevelopment indicators was even more impressive. Other factors like price competitiveness.6 percent by the latter half of the 1990s. If Bangladesh isto become less vulnerable to the economic fortunes of others. che a p l abor.

T hereduced tax rates and other facilities are likely to have a positive impact on the RMGsector. At pre sent gove rnm ent oper at es a cash com p ensat i o n schem e t hrou gh w hi ch dom est i c s uppl i ers t o ex por t -oriented RMG units receive a cash payment equivalent to 5 percent of the net FOB valueof exported garments. product diversification is the key to continuous business success. bran ded j eans. cash incentives. However further progress would be necessaryto improve and sustain competitiveness on a global scale. Backward Integration RMG industry in Bangladesh has already proved itself to be a resilient industry and can be a catalyst for further industrialization in the country. jackets. bonded warehouse. short s. After the liberalization of the quota regime some of the major textile suppliers Thailand. exportcredi t gua rant e e schem e. although the uncertainties before the MFA phas e-out period caused asluggish investment scenario. this vital industry stilldepends heavily on imported fabrics. In Bangladesh. It is important to have significant flow of investment both in terms of financea n d t e c h n o l o g y . continuing growth of the RMG sector is dependent on thedevelopment of a strong backward linkage in order to reduce the lead time. 2008. income tax rate for textile manufacturers wereredu ced t o 15 per cent fr om i t s earl i er l evel for t he peri od up t o J une 30. However. Flow of Investment It is plausible that domestic entrepreneurs alone may not be able to develop the textileindustry by establishing modern mills with adequate capacity to meet the growing RMGdemand. Starting with a few items. and the sooner local entrepreneurs can catch on to this trend the brighter be the RMG future. However. paj am as. the entrepreneurs of the RMG sector have also been able to diversify the product base ran gi n g from ordi nar y shi rt s .knitwear products that powered the recent double digit (year-on-year)growth starting in FY04. In the globalized economy and ever-changing fashion world. 27 |P a g e Infrastructural Impediments The existence of sound infrastructural facilities is a prerequisite for e c o n o m i c development. l adi es andchi l dren‟s wea r t o sophi st i cat ed hi gh val ue i t em s l i k e qual i t y sui t s.other . t rousers. T o some extent theindustry has foreseen the need and has embarked on its own capacity building. Indonesia and Taiwan increased their own RMG exports. In part the momentum in the post-MFA phase-out period isi n d i c a t i v e o f t h e e f f o r t s u n d e r w a y t o w a r d s c a p a c i t y b u i l d i n g t h r o u g h b a c k w a r d integration. 26 |P a g e Figure: Trend to back-to-back linkageIf Bangladesh wants to enjoy increased market access created by the global open marketeconomy it has no alternative but to produce textile items competitively at home throughthe establishment of backward linkage with the RMG industry. embroidered wear etc. t ax hol i da y and rel at ed faci l i t i es. Figure 3 indicates that the investment outlook in this sector i s encouraging. T s hi rt s . At the same time. India. sweaters. This is evident in the pace of lending to the RMG sector an d in the risingimport share of RMG related machinery. Hong Kong. Policy Regime of Government Government of Bangladesh has played an active role in designing policy support to theRMG sector that includes back-to-back L/C. It is clear that value addition accrues mostly inthe designer items. China.

B ec ause of cheap l abo r i f our c ount r y m ak es t he l a bor product i vi t y i n t he apex posi t i on. The duties and taxes payable on the imports were kept in a suspense account. exporters were exempted from paying duties and taxes on imports used in export production at the time of importation. and also all excise duties paid on exportedfinished goods. a notional system of duty payments was adopted in 1982-83.b. The employment of anuneven number of unskilled labors by the garment factories results in low productivityand comparatively more expensive apparels. while others likethe Export Performance License (XPL) Scheme 28 |P a g e 37 were already in operation and were improved upon. value of their exports.o.exporters of manufactured goods were entitled to get refund of duties and taxes paid onimported inputs used in export production.During the 1980s. T h e s e a n d r e l a t e d i n i t i a t i v e s n e e d e n c o u r a g e m e n t p o s s i b l y intermediated by donor-assisted technology and knowledge transfer. A facilitating publicsector role can be very relevant here. For certain fast-moving items such as RMG. Supportive Government Policy In contrast to the public sector-led import-substituting industrialization strategy pursuedduring the first few years after independence. Liabilities to pay the amounts in suspense were removed on proof of exports. BGMEA has already established an institute which offers bachelor‟s de gr ee i n fas hi on desi gni n g and BKME A i s pl anni ng on set t i ng u p a rese arch and t r a i n i n g i n s t i t u t e .factors constraining competitiveness of Bangladesh‟s RMG exports included theabsence of adequate physical infrastructure and utilities. Labor Productivity The productive efficiency of labor is more important determinant for g a i n i n g comparative advantage than the physical abundance of labor. Under the XPL scheme. the industrializ ation philosophy of thegovernment changed rather dramatically from the late 1970s when the emphasis was onex port -ori ent ed gr owt h t o be spearh ea ded b y t h e pri vat e s ect or. Bangladeshmust look for ways to improve the productivity of its labor force if it wants to competere gi onal l y i f not gl obal l y. Also. but were required to keep records of raw and 21packaging materials imported. Under the Duty Drawback System.vari ous pol i c y r eform s w er e i m pl em ent ed i n t he 19 80s and 1990s. t hen we t hi nk t he f ut ure of t hi s s ect or i s hi ghl yoptimistic. RMG ishighly fashion oriented and constant market research is necessary to become successfulin the business. the garmentworkers are mostly women with little education and training. and exportfinancing was arranged. Under this system. S om e of t hesere for m ed pol i ci es cont ri b ut ed consi derabl y t o t he gro wt h of t he R M G i ndust r y i n Bangladesh. exporters of non-traditional productsreceived import licenses for specific products over and above their normal percentageallotment based on the f. South Korea and Hong Kong. two policies– the SBW facility and the back-to-back L/C system. In particular. rebates were given onimport duties and indirect taxes. a number of incentives were introduced to encourage export activities.Some of them were new like the Bonded Warehouse Facility (BWF). Bangladesh labor productivity is known to be lower when it compared with of Sri Lanka. Research and Training The country has no dedicated research institute related to the apparel sector.led to significant . In Bangladesh.The discussion in this section clearly points to the positive contribution made by policyreforms to the growth of the RMG industry in Bangladesh. there were tax reductions on export income. Tow ards t hi s end.

maintainable time schedule for the product.The MFA phase-out will lead to more efficient global realignments of the Garments andClothing industry. An d t hi s i s what ever yone does i n such a s i t uat i on.Precautionary should need to be adopted are given below:● Building should be constructed with fire resisting materials● Adequate exits and proper escape routes should be designed● Protection against fire and smoke should be ensured● Electrical wiring must be properly designed.Government also have some responsibility to improve the situation by providing. Recent data reveals that Bangladesh absorbed the shock successfully andindeed RMG exports grew significantly both in FY06 and (especially) in FY07. when necessary. r efl ect e d i n t he l eaka ge o f dut y -f ree i m port ed f abri cs i n t he dom es t i cm arket . It is the largest exporting industry in B a n g l a d e s h . installed and maintained● Escape routes should be lighted at all times. We hope by maintaining proper management and policy strategies our country will take the apex position in future. S uch as m a nagem ent l abor conf l i ct . be indicated by signs● Regular fire drills should be held● Doors should be protected and should open along the direction of escape● Doors should not open on the steps and sufficient space should be provided. The phase out was expected to have negative impact on the economyof Bangladesh. kept clear. proper strategic plan etc.To be an upper position holder in the world Garments Sector there is no way exceptfollow the above recommendations. Furthermore. By taking advantage of aninsulated market under the provision of Multi Fibre Agreement (MFA) of GATT.reduction in costof producing garments and enhanced competitiveness of Bangladesh‟s garments exports.It also allowed garment manufacturers to earn more profit which. the first thing one should do is to runawa y from i t . could be used to overcome difficulties arising from weak governance. exports. quickly loadingfacility in the port. w h i c h experienced phenomenal growth during the last 25 years. Credit must be provided when theindustry fall in need.Our Garments Industries can improve their position in th e world map by reducing theove ral l p robl em s. Due to anumber of steps taken by the industry. efficiency of the manager. Suggestions Regarding Fire Safety We need to remember that when there is a fire. . par adox i cal l y enou gh a l so hel ped t he garm ent m anufact u rers t o earn ex t ra „profit‟ and thereby enabled them to absorb the „high cost of doing businesses – a fall outof bad governance. solve the license problem. 30 |P a g e ● Smoke/Fire alarm systems must be installed● adequate number of extinguishers should be provided● Prior relationship with local Fire services should be established Conclusion The Ready-Made Garments (RMG) industry occupies a unique position in theBangladesh econom y. itattained a high profile in terms of foreign exchange earnings. providing proper environment for the work.proper policy to protect the garments industries. proper m ana gem ent pol i c y. keep the industry free 29 |P a g e from all kind of political problem and the biasness. Recommendation Bangladesh economy at present is more globally integrated than at any time in the past. But t he s i t uat i on become dangerous and tragic when the escape doorways and gates are found locked. Bangladesh still remains competitive in RMG exports even in this post phase-out period. poor gove rnanc e.

CPD and The University Press Ltd.9 . B an gl adesh needs t o rem ove al l t he st ruc t ural impediments in the transportation facilities. Vijaya and Subir Sen. G .Mlachula.4. and power supply.Centre for Policy Dialogue. No. CPD Dialog Report No. J a h a n .1 1 . 2003. A z i m . R ahm an. The industry plays a key role ine m p l o y m e n t g e n e r a t i o n a n d i n t h e p r o v i s i o n o f i n c o m e t o t h e p o o r . I n t e r n a t i o n a l E c o n o m i c s . J. “Contribution of the RMG Sector tothe Bangladesh Economy”. “Bangladesh‟s Export Apparel Industry into the 21stCentury – the NextChallenge”.6. Paper 7.Bhattacharya. J. H . D. Page102-120.10. Bha t t achar ya. Vol.“C opi ng wi t h P o s t -MF A C hal l enges: S t rat egi c R esponses for B an gl adesh R M G Sector”.3. 2006. India. Rahman. “Trade Policy Review”. “ T h e E n d o f M u l t i . Page 49-82.23. 3 & 4. Isl am . “ C h a l l e n g e s f o r G a r m e n t s S e c t o r i n Ban gl ad esh Aft e r 2004: Avenues for S urvi val and Growt h ” Ban gl ad esh Inst i t ut e of International and Strategic Studies Journal. S a r w a t . 1. V i k a s Publishing House Pvt Ltd. Foreign Trade Review. Paper 50. D and M. “The End of Textiles Quotas: A Case Study of the Impact on Bangladesh”. Gi ven t he rem a rkabl e ent rep reneu ri al i n i t i a t i v e s a n d t h e d e d i c a t i o n o f i t s w o r k f o r c e . WBI Policy Note. IMF Working Paper WP/04/08. The T ex t i l e and C l ot hi ng Indust r y o f Ban gl ad esh i n a C ha ngi n g World Economy.Bhattacharya. 1999. Page 41-69. . Bangladesh.industrializationand contribution to GDP within a short span of time. 18. Md.5. 55. S adequl . D and M. 2002. B a n g l a d e s h c a n l o o k f o r w a r d t o advancing its share of the global RMG market. 24.13. 31 |P a g e 32 |P a g e References 1. Vol.F i b e r A r r a n g e m e n t : C h a l l e n g e s a n d Opportunities for Bangladesh”. “Ex peri enc e wi t h Im pl em ent at i on of W TO -ATC and Implications for Bangladesh”.12. M .2 . utility services and in the law and order situation. Raihan. T o r e m a i n co m pet i t i ve i n t he post -MFA phas e. CPD Dialog Report No. Geneva .8. Montfort and Yongzheng Yang. 2001. “International Trade Implications a n d F u t u r e o f Ready-Made Garments Sector of Bangladesh” Journal of Business Administration. Bangladesh. Thegove rnm ent and t he R MG sect or woul d have t o j oi nt l y wo rk t oget he r t o m ai nt ai ncom pet i t i veness i n t he gl ob al R MG m arket . telecommunication network. The Asia Foundation. Dhaka. management of seaport. Dhaka.Bow. 3 & 4. 2 0 0 5 . M. XXXIV No. 2000. UNRISD Occasional Paper. M a n n u r .Abdullah. CPD Occasional Paper Series. 2 0 0 0 ( s e c o n d r e v i s e d e d i t i o n ) . 2000. CPD Occasional Paper Series. Vol. “The Textile and Clothing Industry of Bangladesh: Ina Changing World Economy”.World Trade Organization. Rahman and A. 2004.. “Female Employment Under Export-PropelledIndust ri al i z a t i on: P rospect s for Int ern al i z i ng Gl obal Opport uni t i es i n Ban gl ad esh 's Apparel Sector”.Katti. T a h l i l . 2000. No. a n d N a s i r U d d i n . . “MFA Phasing Out and Indian Textiles Industry:Selected Issues for Negotiation”. Abu Yousuf. 2 0 0 3 .7. 1997. 1999.