Prospects of Garment Industry in Bangladesh

Prospects of Garment Industry in Bangladesh:

Financial Prospect:

Over the last fifteen years or so the garments industries have emerged as the largest source of earning foreign currency.

Employment Prospect:

After the emergence of Bangladesh radical change has come to our garment sector. Garment industries started working from the 10's of the late century. At present there are about 3500 garment industries in the country and 80 percent of them are in Dhaka. The rest are in Chittagong and Khulna. These Industries have employed fifty lacks of people and 90 percent of them are illiterate rural women. About 80 percent of our export earning comes from this sector.

Political Prospect:

With the rise of Industrialization specially RMG sector activities of many Ministry as   Ministry of Industries, Ministry of Textile & Jute, Ministry of Trade, Ministry of Foreign Affairs, Ministry of State and related Government Institutions become more pro-active in sense of overall development of the country. Many institutions raised to assist this sector like BGMEA, BKMEA, ITET and many more which act as the representative of this sector to collaborate with Government. In July 1996, 2,357 garment factories were registered with the Bangladesh Garment Manufacturers and Exporters Association (BGMEA). The growth has indeed been phenomenal, since the ready-made garment industry began modestly as late as the 1970s.

Creation of a separate ministry would unburden the ministry of industries. And the Bangladesh Garments Manufacturers and Exporters Association (BGMEA) have been justifiably pleading for long for the creation of a separate ministry to exclusively deal with RMG issues. So far, the suggestion failed to create any impact on the government.

Cultural Prospect:

In EPZ’s and in outside factories many foreign workers, technicians, engineers work with Bangladeshi related persons. Though these RMG industries we become able to enrich & expand our culture and cultural identity and trends with the whole world. So this is a great opportunity for Cultural Prospect of Bangladesh.

Social Prospect:

 

In light of growing competition among readymade garment (RMG) exporting countries and consumers' preference for products which meet internationally recognized social standards, it is essential for Bangladesh's RMG suppliers to improve social compliance in their factories. 

Training and upgrading the skills of government inspectors, social compliance trainers and especially factory staff, including midlevel managers and workers, is a necessity.

Environmental Prospect:

 

With the rise of RMG industry the utilization of nature and natural resources become more. To give back-up the RMG industry many backward linkages rise as spinning, weaving, knitting, dyeing, finishing and many others. If all these factories follow Eco-friendly technologies then Environmental Prospect can be ensured.

Prospect of Women Contributions:

 

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

These Industries have employed fifty lacks of people and 90 percent of them are illiterate rural women. About 80 percent of our export earning comes from this sector.    

Problems of Garment Industry in Bangladesh:

Political Problem: 

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

Garments industries often pay dearly for political unrest, hartal and terrorism etc. The international market has withdrawn quota advantage over garments export form Bangladesh since December 2005.

Social Problem:

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

Environmental Problem: 

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

      

Environmental problems of today are of complex character as industrialization has been diversified in quality and by regions. Environmental pollution depends on various factors like type of industry, raw materials, production technologies, location of industries, etc. For a particular type of industry, change in energy source e.g. shifting from coal to petrol/diesel, and raw materials as well, caused significant change in types of diseases as well as magnitude of damages.                                                                       

    Even before becoming industrial powers, the industrialized nations caused a variety of environmental problems. They are still confronting with serious environmental issues of water, food and air pollution. Some of them have been solved by the application of engineering techniques or by imposing legal constraints, while others still remain untouched or unresolved. They are now thinking of striking a balance between industrial development and environmental problems.

Financial Problem: 

      Though financial prospects are more in case of RMG industry than financial problem, there have some financial problem.

   Sometimes due to political unrest situation like inter-factory strike, hartal & many other causes delay or missing of garments order delivery. These things causes serious hamper in industry finance & in overall export & earnings too. 

Technological Problem:  

    Bangladesh is unique in RMG production in comparison with the other RMG producing country because of less cost of labour. For this reason, upgraded technologies are used less in this country. Beside this, for economic & quality production quite updated technologies are used. 

    For pattern & marker making Computer Aided Design (CAD) & Computer Aided Manufacturing (CAM) are using.

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Present Status of Garments Industry in Bangladesh

Present Status of Garments Industry in Bangladesh (Positive Perspectives):

Most Asian LICs are expected to record positive growth in 2009 and should see a further strengthening of activity in 2010 as global conditions continue to improve.                                                                                                                                                       

IMF forecasts suggest Asia will grow by 5.75 per cent in 2010–far higher than the 1.25 per cent predicted for the G-7 economies but well short of the 6.67 per cent average recorded for the region over the past decade. “A strong rebound in exports is unlikely, given that some of the Asian LICs’ export products including agricultural goods and garments have low responsiveness to global demand changes.”

At present there are about 3500 garment industries in the country and 75 percent of them are in Dhaka. The rest are in Chittagong and Khulna. These Industries have employed fifty lacks of people and 85 percent of them are illiterate rural women. About 76 percent of our export earning comes from this sector. The prime reason why garment industries have come out to be the champion in the field of export is obviously the cheap labor. Labor is not as cheap anywhere in the world as it is in Bangladesh.

Bangladesh exports its RMG products mainly to the United States of America and the European Union. These two destinations account for more than a 90 percent share of the country’s total earnings from garment exports. The country has achieved some product diversification in both the United States and the European Union.

Recently, the country has achieved some level of product upgrading in the European Union, but not to a significant extent in the United States. Bangladesh is less competitive compared with China or India in the United States and it is somewhat competitive in the European Union.

Present Status of Garments Industry in Bangladesh (Negative Perspectives):

   

In a recent survey, it is realized that a large portion of population are working in the RMG sector. A worker (male or female) earns at best (1000-1600) taka per month as basic. But it is a matter of close observation that a significant percentage of workers are marrying within RMG. So, both husband and wife are working in garments and earning at best 3500 taka as basic.

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

                From the law of business, we have seen that if the owner is unable to provide good working environment for the worker, it is the violation of law. Side by side the workers must get a good compensation package from the owner. This compensation package must include salary, medical service, home allowances, transportation, trainings and education.

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Garment Industry in Bangladesh

Historical Background of Garment Industry in Bangladesh

Large-scale production of readymade garments (RMG) in organized factories is a relatively new phenomenon in Bangladesh. Until early sixties, individual tailors made garments as per specifications provided by individual customers who supplied the fabrics. The domestic market for readymade garment, excepting children wears and men's knit underwear was virtually non-existent in Bangladesh until the sixties.

Since the late 1970s, the RMG industry started developing in Bangladesh primarily as an export-oriented industry although; the domestic market for RMG has been increasing fast due to increase in personal disposable income and change in life style. The sector rapidly attained high importance in terms of employment, foreign exchange earnings and its contribution to GDP. In 1999, the industry employed directly more than 1.4 million workers, about 80% of whom were female.

The hundred percent export-oriented RMG industry experienced phenomenal growth during the last 15 or so years. In 1978, there were only 9 export-oriented garment manufacturing units, which generated export earnings of hardly one million dollar. Some of these units were very small and produced garments for both domestic and export markets. Four such small and old units were Reaz Garments, Paris Garments, Jewel Garments and Baishakhi Garments. Reaz Garments, the pioneer, was established in 1960 as a small tailoring outfit, named Reaz Store in Dhaka. It served only domestic markets for about 15 years. In 1973 it changed its name to M/s Reaz Garments Ltd. and expanded its operations into export market by selling 10,000 pieces of men's shirts worth French Franc 13 million to a Paris-based firm in 1978. It was the first direct exporter of garments from Bangladesh. Desh Garments Ltd, the first non-equity joint-venture in the garment industry was established in 1979. Desh had technical and marketing collaboration with Daewoo Corporation of South Korea. It was also the first hundred percent export-oriented company. It had about 120 operators including 3 women trained in South Korea, and with these trained workers it started its production in early 1980. Another South Korean Firm, Youngones Corporation formed the first equity joint-venture garment factory with a Bangladeshi firm, Trexim Ltd. in 1980. Bangladeshi partners contributed 51% of the equity of thee new firm, named Youngones Bangladesh. It exported its first consignment of padded and non-padded jackets to Sweden in December 1980.

Within a short period, Bangladeshi entrepreneurs got familiar with the world apparel markets and marketing. They acquired the expertise of mobilizing resources to export- Foreign buyers found Bangladesh an increasingly attractive sourcing place. To take advantage of this cheap source, foreign buyers extended, in many cases, suppliers' credit under special arrangements. In some cases, local banks provided part of the equity capital. The problem of working capital was greatly solved with the introduction of back-to-back letter of credit, which also facilitated import of quality fabric, the basic raw The government assigned high priority to the development of RMG industry.

Over the last fifteen years or so the garments industries have emerged as the largest source of earning foreign currency. About half of the foreign currency from the ready-made garments is earned from European Union and the U.S.A. Besides, Canada, Japan, Australia, New Zealand; Russia etc. also are other garments importing countries. At present about 20 countries of the world are importers of our garments. Its market is being expanded in the Middle East, Russia, Japan, Australia and many other countries.

Table 1: World’s Leading Textile and Clothing Exporters
Leading Exporters of Clothing	% Share in world export				Leading Exporters of Textile	% Share in world export
	1980	1990	2000	2006		1980	1990	2000	2006
China	4.0	8.9	18.2	30.6	EU (25)	49.4	48.7	35.6	32.6
EU (25)	42.0	37.7	26.9	26.8	China	4.6	6.9	10.2	22.3
Hong Kong, China	12.3	14.2	12.2	9.1	Hong Kong, China	3.2	7.9	8.5	6.4
Turkey	0.3	3.1	3.3	3.8	US	6.8	4.8	6.9	5.8
India	1.7	2.3	3.1	3.3	Korea,	4.0	5.8	8.0	4.6
Bangladesh	0.0	0.6	2.1	2.8	Taipei, Chinese	3.2	5.9	7.5	4.5
Mexico	0.0	0.5	4.4	2.0	India	2.4	2.1	3.8	4.3
Indonesia	0.2	1.5	2.4	1.8	Turkey	0.6	1.4	2.3	3.5
US	3.1	2.4	4.4	1.6	Pakistan	1.6	2.6	2.9	3.4
Viet Nam	...	...	0.9	1.7	Japan	9.3	5.6	4.4	3.2
Source : WTO Trade Statistics

The regional flow of the T&C export shows that China is the leading world exporter whose clothing export share has immensely increased from 4.0% in 1980 to 30.6% in 2006. The other major exporters are EU (union of 25 countries), Hong Kong, Turkey, India, and Bangladesh. It is evident from the Table 1 that the share of EU in the world export of clothing has significantly declined from 42.0% in 1980 to 26.3% in 2006.While the shares of some developing countries such as China, Turkey, Bangladesh, India, Mexico, and Indonesia among others, have increased (Table 1). For instance, share of India’s clothing export has increased from 1.7% in 1980 to 3.3% in 2006.

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