The main objective of this report is to analyze the garments sector of

Bangladesh and relate the knowledge with the analysis of industries

strength, weakness, threat and opportunity. Other discussions are to
know the different aspect of garments industry, its prospects, and
problems and analyze the statistical data related to RMG industry. here
find out garments industry is the largest export industry for our country
and it contributes 75% of total export.

Introduction

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. By taking advantage of an insulated market under the provision of
Multi Fiber Agreement (MFA) of GATT, it attained a high profile in terms
of foreign exchange earnings, exports, industrialization and contribution
to GDP within a short span of time. The industry plays a key role in
employment generation and in the provision of income to the poor.
Nearly four million workers are directly and more than twelve million
inhabitants are indirectly associated with the industry. Over the past
twenty five years, the number of manufacturing units has grown from
180 to over 4000. The sector has also played a significant role in the
socio-economic development of the country.

The quota came to an end at 2004 but it continued to show robust

performance, competitive strength and, of no less importance, social
commitment. RMG’s contribution to Bangladesh economy is well-known,
well-appreciated and well-respected.

Garments industry is the largest export industry for our country and it
contributes 75% of total export. The industry is associated with its
strength, weakness, threat and opportunity.

In this study an attempt has been made to describe the overall scenario
of Bangladesh Ready Made Garments industry. At this time of free
economy everyone may be interested to know about the largest export
industry and the mechanism of doing business here. The present study
has been undertaken with consideration of this fact.
Objectives of the study

The general objective of preparing this report is to fulfill the requirement

of Internship Program as well as completion the EMBA Program through
gaining the practical job experience and view the application of
theoretical knowledge in the real life. The report focuses on two parts.
They are:

Primary Objective

The broad project objective is to analyze the garments sector of

Bangladesh and relate the knowledge with the practical experience.

Secondary Objective

In order to reach the broad objective, some specific objectives are identified.

1. To know the different aspect of garments industry, its prospects, and problems.
2. To show some statistics of RMG industry.
3. To analyze the statistical data related to RMG industry

Methodology

Sources of data

Data regarding the completion of this report are collected from both primary and
secondary sources.

Primary source:

Direct conversation with the respective officers of the company.

Secondary sources:

1. Various data source like Bangladesh bank, Export Promotion Bureau

2. Internet Browsing
3. Annual report of the company
4. Different published material. Such as books and articles.

Bangladesh RMG INDUSTRY

Agriculture has been the backbone of economy and chief source of
income for the people of Bangladesh, the country made of villages.
Government wants to decrease poverty by getting highest productivity
from agriculture and achieve self-reliance in food production. Apart from
agriculture, the country is much concerned about the growth of export
division. Bangladesh have accelerated and changed her exports
substantially from time to time. After Bangladesh came into being, jute
and tea were the most export-oriented industries. But with the continual
perils of flood, failing jute fiber prices and a considerable decline in world
demand, the role of the jute sector to the country’s economy has
deteriorated (Spin anger, 1986). After that, focus has been shifted to the
function of production sector, especially in garment industry.

An overview of Bangladesh garments industry

The RMG industry is the only multi-billion-dollar manufacturing and

export industry in Bangladesh. Whereas the industry contributed only
0.001 per cent to the country’s total export earnings in 1976, its share
increased to about 75 per cent of those earnings in 2005. Bangladesh
exported garments worth the equivalent of $6.9 billion in 2005, which
was about 2.5 per cent of the global total value ($276 billion) of garment
exports. The country’s RMG industry grew by more than 15 per cent per
annum on average during the last 15 years. The foreign exchange
earnings and employment generation of the RMG sector have been
increasing at double-digit rates from year to year. Some important issues
related to the RMG industry of Bangladesh are noted in table

Table1. Important issues related to the Bangladesh ready-made

garment industry

Year Issue

1970-1980 Early period of growth

1982-1985 Boom days

 1985 Imposition of quota restriction

1990 Knitwear sector developed significantly

1993 Child labor issue and its solution

2003 Withdrawal of Canadian quota restriction

2005 Phase out of quota restriction

2006 Riots and strike by garments labor

2007-2008 Stable growth

Source: Compiled by the databases of the Bangladesh Garment

Manufacturers and Exporters Association, and the Export Promotion
Bureau, Bangladesh.

Currently, there are more than 4,000 RMG firms in Bangladesh. More
than 95 per cent of those firms are locally owned with the exception of a
few foreign firms located in export processing zones (Gonzales, 2002).
The RMG firms are located mainly in three main cities: the capital city
Dhaka, the port city Chittagong and the industrial city Narayangonj.
Bangladesh RMG firms vary in size. Based on Bangladesh Garment
Manufacturers and Exporters Association (BGMEA) data, Mainuddin
(2000) found that in 1997 more than 75 per cent of the firms employed a
maximum of 400 employees each. Garment companies in Bangladesh
form formal or informal groups. The grouping helps to share
manufacturing activities, to diversify risks; horizontal as well as vertical
coordination can be easily found in such group activities. Ready-made
garments manufactured in Bangladesh are divided mainly into two broad
categories: woven and knit products. Shirts, T-shirts and trousers are the
main woven products and undergarments, socks, stockings, T-shirts,
sweaters and other casual and soft garments are the main knit products.
Woven garment products still dominate the garment export earnings of
the country. The share of knit garment products has been increasing
since the early 1990s; such products currently account for more than 40
per cent of the country’s total RMG export earnings (BGMEA website).
Although various types of garments are manufactured in the country,
only a few categories, such as shirts, T-shirts, trousers, jackets and
sweaters, constitute the major production-share (BGMEA website; and
Nath, 2001). Economies of scale for large-scale production and export-
quota holdings in the corresponding categories are the principal reasons
for such a narrow product concentration.

Foreign buyers are concerned about the different compliance of the law.
So, they were bothered about the child labor issue of Bangladesh. But
later on this problem is the salute and now garments are restricted to
employ child labor. In 2005 the quota facilities for Bangladesh was
withdrawn. Everybody thought it would be a great shock for garments
industry. But in reality, Bangladesh has faced this challenge with great
courage. The fact is that the export of garments product has increased
after the withdrawn of this quota. And the last two years were really good
time for the garment industry. The political situation was stable under the
country’s state of emergency and this boost the growth of the industry.

Size of the garments industry of Bangladesh

The garment industry is by far the country’s most important

manufacturer, earning around $5 billion annually and accounting for
about two thirds of all exports. Bangladesh has about 4,000 garment
factories with up to 10 million livelihoods dependent on it directly or
indirectly. In 2006 it provided jobs for 2.2 million people, accounted for
10.5% of the country’s GDP, and contributed 40% of its manufacturing
output. Exports have been growing at an impressive rate in recent years.
In 2006/07 alone, they increased by 18.2% to reach US$9.6 billion, a
record level for the fifth consecutive year. The contribution to GDP
increases at 13.25% in 2007. About 80 per cent of garment workers are
women. The Ready Made Garments sector has more potential than any
other sector to contribute to the reduction of poverty. Despite the
phenomenal success of the RMG sector the working conditions and
wages of workers in the industry are cause for serious concern.
Bangladesh’s current position as a leading garments exporting nation
needs to be consolidated. The economy-wide reverberations of failure
would be disastrous. We believe it is in everybody’s interest to sustain
this industry – an industry which changed the lives of so many people,
particularly women, in Bangladesh.

Bangladesh garments industry is now matured

Bangladesh garments industry has just woke up one morning and find
itself a matured one. If we follow DS reports on the conditions of
Bangladesh garments industries, we may as well have the same idea.
Until 1/11/2007, as per some media, everything was a mess. Now a day,
while teachers and lawyers can’t hold elections, garments industries
owners hold elections under direct government patronage. And DS must
also speak well of the teammates. Maturation of a large industry like
RMG sector in Bangladesh is not an overnight phenomenon. The
industry was trying to be in a matured stage from last ten years but the
unrest political situation was the main obstacle. Bangladesh’s garments
exports have experienced a boom from the last two years because of a
stable business climate under the country’s state of emergency. The
nation’s exports of knitted and woven items rose by nearly 17 percent to
a record 10.7 billion dollars in the financial year to June 2008. And now
the industry is at the matured stage.

Strength, Weakness, Opportunity & Threat of Garments sector of

Bangladesh at a glance

Strength

 Considerable Qualified/keen to learn workforce available at low labor

charges.
 Energy at the low price
 Easily accessible infrastructure like sea road, railroad, river, and air
communication.
 Accessibility of fundamental infrastructure, which is about 3 decades
old, mainly established by the Korean, Taiwanese and Hong Kong
Chinese industrialists.
 FDI is legally permitted.
 Moderately open Economy, particularly in the Export Promotion Zones.
  GSP under EBA (Everything But Arms) for Least Developed Country
applicable (Duty-free to EU).
 Improved GSP advantages under Regional Cumulative.
 Looking forward to Duty-Free Excess to the US, talks are on and appear
to be on hopeful track.
 Investment assured under Foreign Private Investment (Promotion and
Protection) Act, 1980 which secures all foreign investments in
Bangladesh.
 Overseas Private Investment Corporation, USA insurance and finance
agendas operable
 Bangladesh is a member of Multilateral Investment Guarantee Agency
(MIGA) under which protection and safety measures are available.
 Adjudication service of the International Centre for the Settlement of
Investment Dispute (ICSID) offered.
 The excellent Telecommunications network of E-mail, Internet, Fax,
ISD, NWD & Cellular services.
 The weakness of currency against the dollar and the condition will
persist to help exporters
 Bank interest@ 7% for financing exports
 The convenience of duty-free custom bonded w/house
 The readiness of new units to enhance systems and create
infrastructure accordant with product growth and fast reactions to
circumstances

Weakness

 Lack of marketing tactics

 The absence of easily on-hand middle management
 A small number of manufacturing methods
 Low acquiescence: there is an international pressure group to compel
the local producers and the government to implement social
acquiescence. The US GSP may be canceled and purchasing from US
& EU may decrease significantly
 M/c advancement is necessary. The machinery required to assess add
on a garment or increase competence are missing in most industries.
 Lack of training organizations for industrial workers, supervisors, and
managers.
 The 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
 Speed money culture
 Time-consuming custom clearance
 Unreliable dependability regarding Delivery/QA/Product knowledge
 Communication gap created by incomplete knowledge of English
 Subject to natural calamities

Opportunity

 EU is willing to establish industry in a big way as an option to China

particularly for knits, including sweaters
 Bangladesh is included in the Least Developed Countries with which the
US is committed to enhancing export trade
 Sweaters are very economical even with China and are the prospect for
Bangladesh
 If skilled technicians are available to instruct, the prearranged garment
is an option because labor and energy cost is inexpensive.
 Foundation garments for Ladies for the FDI promise is significant
because both, the technicians and highly developed machinery are
essential for better competence and output
 Japan to be observed, as conventionally they purchase handloom
textiles, home furniture, and garments. This section can be encouraged
and expanded with continued progress in quality.

Threat

 The exporters have to prepare themselves to harvest the advantages

offered by the opportunities.

Major market of RMG industry

The RMG industry of Bangladesh fully depends on the export. The major
importer of RMG products is USA and Europe. But there is other country
that has a contribution to the total RMG export. The following table
contains the list of major importer of our RMG products.

Table-2 : Major market of RMG industry (Tk in million)

 Country Amount

Belgium 3812.00

Canada 6218.00

France 13078.00

Germany 27008.00

India 80.00

Italy 22.00

Netherlands 10619.00

Sweden 3058.00

Turkey 2681.00

U.K. 15411.00

U.S.A 43368.00

Source: Bangladesh bank ( April to June)

Contribution to Economy

The Ready-Made Garments (RMG) industry contributes to the

Bangladesh economy in a distinctive manner. The last 20 years
witnessed unparalleled growth in this sector, which is also the largest
exporting industry in Bangladesh. It has attained a high profile in terms
of foreign exchange earnings, exports, industrialization and contribution
to GDP within a short span of time. The industry plays a significant role
in terms of employment generation. Nearly two million workers are
directly and more than ten million inhabitants are indirectly associated
with the industry. In addition to its economic contribution, the expansion
of RMG industry has caused noticeable changes by bringing more than
1.12 million women into the workforce. Hence it is quite apparent that
this sector has played a massive role in the economic development of
the country.

RMG’s contribution in terms of GDP is highly remarkable; it has reached

13 percent of GDP which was only about 3 percent in 1991. It also plays
a pivotal role to promote the development of other key sectors of the
economy like banking, insurance, shipping, hotel, tourism, road
transportation, railway container services, etc.

One of the key advantages of the RMG industry is its cheap labor force,
which provides a competitive edge over its competitors. The sector has
created employment opportunities for about two million people of which
70 percent are women who mostly come from rural areas. Thus the
industry helps in the country’s social development, women
empowerment and poverty alleviation. Currently RMG earns the lion’s
share of foreign exchange earnings.

Contribution to Export and GDP

The Bangladesh RMG industry, with its woven and knit sub-components,
is a pre-dominantly export oriented sector, with 95 per cent of the woven
and 90 per cent of the knit exports being directed to foreign markets. The
cumulative foreign currency earnings by the sector, since 1978, when
first export was registered, is estimated at 70.56 billion US dollars.
Bangladesh’s RMG export earning stood at 9.21 billion US dollars in
FY2007. In 2007 this sector contributed 75.64% of the total Bangladesh
export of 12.78 billion dollars in the same year. RMG export in FY2007
was equivalent to 13.25% of Bangladesh’s GDP over the corresponding
year. At present the local value addition by the RMG sector is estimated
to be 45%. Accordingly, local value addition by the sector in 2007 was
about 4.15 billion US dollars which was equivalent to 5.96% of GDP for
the same year. The value addition created by the sector itself is
estimated at 25% of total RMG export earnings which amounted to about
2.30 billion dollars or equivalent to 3.32% of GDP [ Appendix Table-4].

As Percentage of GDP
Macro Contribution of RMG Sector RMG Amount
Earnings
(billion US$)
Total RMG Exports 9.21 13.25%
Local Value Retention 4.15 5.96%
Direct Value-Addition by RMG Sector 2.30 3.32%

Employment Creation and Wage Bill

RMG sector is one of the major employers in the economy. Around three
million people are employed in RMG industry and about 70 per cent of
which are women. As a matter of fact in the 1990s a large part of the
incremental labor force in the manufacturing sector was absorbed by the
RMG sector. The RMG workers received USD 315.25 million as their
wage in FY 2007. This purchasing power contributed significantly to the
growth of the economy through its multiplier impact in terms of
consumption expenditure and savings.

RMG industry contribution to different sector

Growth of RMG sector has spawned a whole new set of linkage

industries and facilitated expansion of many service sector activities. The
RMG industry not only propelled the growth of spinning, weaving, dyeing
and finishing industries, production of accessories and spare parts, but
also rendered large externalities by contributing to other economic
activities in such areas as banking, insurance, real estate, packaging,
hotels and tourism, recycling, consumer goods utility services and
transportation. RMG sector has overwhelmingly high backward linkage
with textile sector providing fabrics, yarn and other ancillaries. It has
important backward linkage with utilities such as electricity, gas, and
machinery and spare parts supplying.

Banking and Insurance

Growth of the RMG sector and the related activities has contributed a lot
to the robust growth of the financial sector in Bangladesh. In FY 2007
the banking sector earned about 72.77 million dollars from business with
the RMG sector in the form of interest and charges and L/C charges.
More than one-tenth of the commercial banks’ asset portfolio belongs to
the RMG and textile sector in the country. A World Bank survey revealed
that almost all firms (98%) are the clients of the commercial banks for
working capital and procurement of machines and equipment (57%).

The RMG sector has also contributed to the growth of the country’s
insurance sector. On average, every year the premium paid by the RMG
sector to the insurance companies was about 6 million dollars. All firms
have their machines and plants insured and, additionally, 87% of
importers of input and 15% of the RMG exporters get their
imports/exports insured.

Shipping and Logistics

The RMG sector has contributed to the shipping business in Bangladesh

and stimulated setting up of several container yards, expansion of port
facilities to handle large container carrying trains, increase of cargo
handling and storage facilities. RMG manufacturers also extensively use
services of Clearing & Forwarding Agents for the purpose of customs
clearance of inputs and finished goods. It is estimated that port usage
fees earned from the RMG sector account for more than 40% of the
income of the port authority. RMG sector contributed about US$130.80
million in FY2007 to earnings of the Shipping business of the country by
way of port charges, C&F Agent’s commissions, freight charges,
forwarding charges etc.

Transport Communication

The growth and development of inland transport services to a

considerable extent owe to the growth of the RMG industry. Both wheel
transport service and railway service are widely used by RMG sector for
activities related to manufacturing and cargo movement. The concept
of covered van emerged in Bangladesh for safe transportation of the
RMG products in particular. In 2007 the inland transport industry
received about 55.27 million dollars as revenue from the RMG sector.
Contribution to Government Exchequer

The RMG sector contributes to the government exchequer both directly

and indirectly. In FY 2007 the sector paid 10.13 million dollars as stamp
and postage, license renewal fee etc. The sector also paid USD 4.61
million to the government as direct taxes in FY 2007.

Professional Services

The RMG sector extensively uses professional services from CA firms,

legal agencies, and business consultants. In FY 2007 total payment for
professional services is estimated at 7.37 million dollars.

 Engineering Sector

The RMG industry paid 28.55 million dollars to the engineering sector
which included payments to repairing and maintenance service industry
(USD 8.29 million), electrical engineering (USD 9.21 million), transport
vehicle maintenance service ( USD 5.53 Million), and machine tools
service (USD 5.52 Million).

 Utility Services

Payment of Electricity bill by the RMG industry is estimated to be 29.47

million dollars in FY2002. Utility payments for gas, WASA etc. amounted
to an additional 7.37 million dollars.

 Real Estate

Demand for real estate development by the garment industry to

accommodate offices and factories of over 4000 garment units has
generated a lot of activities in the Construction Industry. The RMG
industries paid approximately 52.50 million dollars as factory, office and
garage rent in FY 2007.

 Information and Communication Technology

The RMG sector also plays a catalytic role in the growth of the country’s
ICT sector. The services consumed by the RMG industry generated
revenue for the ICT sector. Payments for ICT services which include
communication, hardware and software services are estimated at 19.34
million dollars in FY 2007.

 Hotel and Touris

A large number of overseas apparel buyers and their representatives

visit Bangladesh every year for business purpose. In FY2007 the RMG
industry created a business of approximately 9.21 million dollars for the
country’s tourism industry.

 Waste Recycling Industry

Approximately 0.5 million people are engaged in waste (mainly, the

waste out prices of fabrics) recycling industry of the country which get
their materials from the RMG industries. With these waste materials,
they are making stuff toys, patterns, quilts, cushions etc.

 Emerging Consumer Market

The 2.2 million workers in the industry have created a large demand for
consumer goods. A regular source of earning increases the basic
consumption needs such as improved diet, better healthcare,
improvements in family utensils and housing conditions etc. The sector
has created an increasing demand for consumption of low cost
commodities, cosmetics items, dresses, footwear, fast food and other
products. A whole industry has been created to service this growing
demand and created employment opportunities for hundreds of
thousands of people.

Social impacts of the RMG Sector

 Women Empowerment

It is well recognized that women’s participation in income generation

activities lends them a better status within the family and provides them
with considerable freedom. A job ensures equitable access to household
resources (nutrition) and larger investment on female human capital
(health and education). Employment opportunities draw attention to
women’s needs for public facilities such as transportation,
communication, safety etc. and create a demand for policy response in
these areas. It also has created a demand for education and health. As
the income by the female member reduces dependency on male income
it reduces their vulnerability. It also reduces the possibility of domestic
violence against women. Expansion of women’s employment has
contributed positively to the improvement of the savings behavior of the
poor people since women tend to be better savers

Employment in the RMG industry has provided direct access to cash

income for the first time to many poor women. A survey, conducted by
the BIDS in 1997 showed that for 96 percent of the female workers in the
non-EPZ areas, work in the garment industry was the maiden wage
employment8. The survey also showed that women were taking up such
roles paying for house rents and schooling expenses for their children or
brothers and sisters. Despite the fact that they have lower incomes, the
female garment workers were spending the same amount as the male
workers on the studies of their family members. The same survey further
showed that female workers were spending their earnings on their
marriage, thus taking a big burden off their families. The independent
earnings also allow these women to have a greater share in household
decision making. Evidently, wage work at the garment industry has
empowered women and improved their status.

 Savings

Regular earning enables a large number of the garment workers to go

for some savings. Workers investments on family pension schemes etc.
create savings. A BIDS survey conducted in the early 1990s found that
21 percent of both male and female workers aged 15 years and above
had their own bank accounts. A higher proportion of workers (30
percent) had bank accounts in the EPZ. Findings showed that women
are on average better savers than men and save about 7.6 percent of
their otherwise small income.

 Child Labor

In recent years, international debate on child labor has intensified. The

elimination of child labor is also among the core labor standards in the
ILO Convention. The Harkin Bill placed at the US Senate entitled “The
Child Labor Deterrence Act of 1993” which called for the elimination of
child labor in the export oriented manufacturing and mining industries.
As a consequence many garment industries had to retrench child
workers from their factories. In many countries these retrenched children
ended up in more strenuous and less-remunerative jobs, or worst, turned
to begging in the street. The Bangladesh RMG sector set a unique
example through collective efforts which eventually led to the
development of a safety-net program for the child labors. The
BGMEA/ILO/ UNICEF Child Labor Project in the garment industry of
Bangladesh, funded by the US Development of Labor was the first of a
series of child labor programs executed by the International Program on
the Elimination of Child Labor of the ILO. This project, initiated in 1995,
is based on a Memorandum of Understanding (MOU) signed by the
BGMEA and two international organizations, the ILO and UNICEF, with
the aim of progressively phasing out child labor from more than 2,500
factories that are members of the association.

The key elements of the MOU were:

(a) A fact-finding survey to determine the extent of child labor in the

garment industry;

(b) The establishment of an education program in which identified child

workers should be enrolled;

(c) The establishment of a monitoring and verification system;

(d) The provision of income compensation in the farm of a monthly

stipend of Tk. 300, the equivalent of (at that time) US$ 7. The costs are
to be shared by on fifty-fifty basis by BGMEA, the ILO and other donors.

Many of the retrenched child workers have been placed in schools and
are receiving a monthly stipend. Football manufacturing industry of
Pakistan has been following the globally acclaimed BGMEA Model of
Child Labor Elimination. BGMEA has so far spent over 600,000 US
dollars for the project. Successfully addressing of this issue has created
a very favorable image about Bangladesh abroad and has promised
continued market access for the sector.

 Population Control
Employment opportunities especially for women created positive impact
on family planning and population control in the country. Independent
working-women are getting more conscious about the advantage of a
small family, and are exposed to modern family planning methods.
Working adolescent girls tend to avoid early marriage as they have their
own source of income and are self-dependent. The mean age at
marriage for girls working in RMG factories tend to be higher than the
national average.

Condition of workers of RMG sector

 According to BGMEA about 3 million people are employed in the RMG

sector (around 80% are female). Growing apprehension is the already
deprived garment workers may face further retrenchment which may
worsen the existing poor working and living standard of the workers.
 A “decent employment” means rising productivity and real wages by
ensuring rights to work, employment, social protection, freedom of
association and social dialogue in an integrated approach. The concept
of decent work has significant gender implications in Bangladesh RMG
sector since women constitute a vast majority of the labor force, and
women and the worst victims of violations of decent work conditions.
 Women workers are particularly deprived of their special legal rights (e.
g. maternity benefits) and remain more exposed to exploitation within
their particular spheres of work. The female workers tend to be
underpaid and exposed to physical assault by both fellow colleagues
and employers.
 Results of a study for ILO re-confirmed us the absence of decent work
in most of the RMG industries as they offer low wage, long working
hours, poor health and safety protection and in most cases there is no
formal contract for job security and social protection.
 The national labor movements are continuously demanding for National
Minimum Wage. The minimum wages rule for the garment sector,
endorsed in 2006. The minimum wage is Tk 1650.
 No formal appointment letter is issued to the employees’ contractually
defining their terms of employment. In most cases the industries do not
follow proper dismissal procedure for their workers. Since the workers
do not get any formal contract, the employers can hire and fire them at
any time without showing any reason.
  The exhaustive and prolonged work schedule of RMG industries
sometimes causes occupational disease among the workers, which
ultimately impacts negatively on their productivity.
 The recent collapse of a garment factory building at Savar shows how
insecure and vulnerable the workers are in the RMG sector. Therefore it
is now urgent to improve OSH condition at workplaces for the business
interest of the RMG owner in quota free market.
 Bangladesh does not have any national social safety net program like
contributory provident fund, medical allowances, unemployment
allowances etc. Small and one time retrenchment benefits are not
adequate for workers and their families in situations of massive income
losses. In most cases the workers do not have their own savings and
are not prepared to face any adverse situation.
 Though export-oriented apparel industry is the lifeblood of Bangladesh’s
foreign exchange earning, the basic rights, welfare issues of garment
workers are severely neglected.
 The basic problem of the ordinary workers and labor movement in
garments sector are low scope of operation, non-recognition of legally
registered unions at the factory level, long working hours and practically
no weekly holiday that left hardly anytime for workers to participate
union activities, non-compliance of existing labor laws, high
occupational accidents etc. On the other hand, creation of yellow trade
unions by the garments owners, imposition of self-made code of
conduct, apathy to active social dialogue made ordinary workers and
trade unions more vulnerable.
 Closer cooperation between employers and employees are important to
ensure the sustainability of an industry. However, it was evident that
there is a lack of adequate communication between employees and
employers and role of such social dialogue in building a healthy working
relationship at factory level are always absent. It is absolutely difficult for
workers to form legally registered in house union as a systematic tool to
carry on social dialogue with employers at workplace.

Women Seeking Accountability in the Bangladeshi Garment

Industry
The first wave of women to enter the garment industry in Bangladesh in
the early 1980s was driven by circumstances outside their control:
poverty, dispossession, male unemployment, widowhood and
abandonment. These women were generally unaware of their rights and
grateful for jobs that paid far more than they could hope to earn
elsewhere.

From an employers’ perspective, they were an ideal workforce for an

industry that sought to compete in the global economy on the basis of
cheap labour. They could be paid much less than men with equivalent
skills and be treated as a largely informal workforce to whom employers
had no obligation aside from paying their wages.

Today, things are beginning to change. Female education has gone up

steadily; there has been widespread dissemination of ideas about
women’s rights through non-governmental organizations (NGOs), state
pronouncements and the media, while microfinance has increased and
diversified employment opportunities in the countryside. Women enter
the industry not just because of poverty, but also for the prospect of
improving their family’s standard of living, sending their children to
school, saving for their dowries or supporting ageing parents. They have
been able to leverage their earnings into increased decision-making
power within their families and independent purchasing power in the
market place. They have also become increasingly visible in collective
actions in support of their rights, which have linked local and global
movements.
At the global level, campaigns have drawn attention to abuses of
workers’ rights in global supply chains and put pressure on international
corporations to take greater responsibility for employees through
corporate codes of conduct. Local employers in the Bangladesh garment
industry must now demonstrate compliance with these codes to win
orders from international buyers. The Bangladesh Garment
Manufacturers and Exporters Association (BGMEA) has formulated its
own code of conduct for the industry, in collaboration with the major
trade unions, and has set up a compliance unit that monitors labor
conditions in members’ factories. It has been known to freeze licenses of
members whose factories have made headlines for violations. Legal
success in winning favorable verdicts for workers in the labor courts also
led BGMEA to set up its own conciliation and arbitration cell, with equal
representation of employers and trade unions. This is intended to
provide a less expensive and time-consuming mechanism for settling
disputes between employers and workers.

In 2006, the Government passed a new labor code, after 12 years of

deliberation and activism. It applies to all workers, and the new sections
relevant to the garment industry include written contracts and identity
cards, timely payment of wages, revised minimum wage, paid maternity
leave and explicit laws against sexual harassment. Despite this
progress, there is still much to be done to improve women worker’s
rights.

Some tragedies of RMG sector

“It is heartbreaking that year after year women and men are killed while
making clothes for stores in our communities,” said Ineke Zeldenrust of
the Clean Clothes Campaign International Secretariat, an international
network that for years has highlighted the safety risks plaguing the
Bangladesh garment industry.

The spate of tragedies began on Thursday, February 23, 2006 when a

fire, possibly caused by an electrical short circuit, destroyed the four-
story KTS Textile Industries in Bangladesh’s port city of Chittagong.
Initial reports stated that 54 were killed and at least 60 were injured,
however other sources peg the death toll at several hundred in what
local garment workers rights’ advocates are calling the worst tragedy in
the history of the Bangladesh garment industry. Over 1,000 workers
were reportedly in the factory at the time of the 7 p.m. fire. According to
the workers, the exits were locked. In 2005 two electricians reportedly
died at this same facility, located in the Kalurghat Industrial Area, when
they were electrocuted. This facility reportedly produced for US
companies Uni Hosiery, Mermaid International, ATT Enterprise, and
VIDA Enterprise Corp. Meanwhile, authorities have apparently sealed off
three other factories connected to this facility (Vintex Fashion, Cardinal
Fashion and Arena Fashion) citing unplanned construction and
inadequate safety measures as life-threatening for their more than 6,000
workers.

Just days after the KTS fire, 19 people were reported dead and 50
injured when a five-story building collapsed in Bangladesh’s capital city
of Dhaka. The Phoenix Building in the Tejgaon industrial area collapsed
following unauthorized renovations to convert the upper stories of the
building that housed various offices and factories, including a garment
factory, into a 500-bed private hospital. One hundred fifty construction
workers and an as yet unreported number of garment workers were
reportedly in the building Saturday morning when it collapsed. Rescue
operations, hampered by lack of equipment, are still underway, as many
are feared to be trapped under tons of concrete rubble. Hundreds of
activists from workers’ rights groups marched through Dhaka on
Saturday demanding compensation for the victims families and
punishment for the factory owners. Police have reportedly been
searching for the building’s owner Deen Mohammad, also chairman of
the City Bank of Bangladesh, but have been unable to locate him.
Phoenix Garments exports clothing mainly to Europe.

That same day in Chittagong, 57 workers at the Imam Group of

Industries (reportedly housing the Moon Fashion Limited, Imam Fashion,
Moon Textile, Leading Fashion and Bimon Inda garment factories) were
injured when a transformer explodes and fearing fire, they tried to exit
through a narrow exit. Four are reportedly in critical condition following
the stampede.

There is a clear need for a long-term wide scale program to address

health and safety in the garment/textile sectors. The failure to implement
safety measures in these sectors in Bangladesh has resulted in a
conditions where the death and injury of workers has become alarmingly
routine: in 2000 53 workers died at Choudury Knitwear, 24 died in 2001
at Maico Sweater, nine died in 2004 at the Misco Supermarket building,
and 23 died at Shan Knitting and 64 died at the Spectrum-Shahriyar
factory in 2005.

Step need to be taken to minimize the risk

 A real and effective national consensus should be the prime concern to

get prepared for post MFA Bangladesh needs to prepare a time bound
national action plan to minimize the potential risks. It needs to priorities
its immediate actions from a number of possible solutions.
 As most of the labor laws have become old and not time befitting,
government should formulate a National Policy on Ready Made
Garments to establish a development trajectory for the sector to survive,
in a quota-free world.
 The growth of RMG sector was facilitated by the supply of low cost labor
and since the female workers could easily learn the sewing techniques,
the management took very limited or no effort for any further
development of its workers. The apprehension regarding the post-MFA
also discouraged the employers to arrange further training programs for
their work force. However this not only limited workers skill, but also
contributed to loss of production through lose of production time, low
labor productivity, re-working, quality inconsistence, materials wastage,
etc.
 Improved working conditions can help to increase productivity level.
Investment in human resources, e.g. training, betterment of working
conditions, maintenance of proper safety and health measures,
protection from physical and psychological harassment, freedom of
association and rights to collective bargaining at factory/enterprise level
etc will certainly improve the productivity of the workers.
 Rights and welfare of the employees working in the subcontracting
garments factories of the multinational companies should be ensured
under corporate social responsibility. The multinational companies
should be enforced to make regular visit to the subcontracting factories
to ensure core labor standards. Employers associations may works as
the watchdog of such initiative. The role of trade unions is to monitor the
implementation of CSR at both large companies and subcontractors.
The CCC believes that follow-up to these tragedies from local and
international stakeholders must include

 support for adequate rescue and relief efforts and financial

compensation for the injured workers and the families of the dead;
 full, independent and transparent investigation and follow-up for all
these incidents; and
 Immediate structural measures to prevent future, similar incidents.
 Industry, along with public authorities (at the local and international
levels) must commit to launch an immediate initiative to take on the
safety issues that plague the garment industry in Bangladesh, including
a structural review of multi-story buildings and facilities inspection
mechanisms, explained Zeldenrust.
 Introduction of Labor Standard Stickers on the exported goods, the
monitoring and issuance of such stickers may be made under joint
supervision of the government and the trade unions. The international
buyers, government, trade unions may also encourage the employers to
opt for Social Accountability.
 To protect the rights and interests of livelihood security of RMG workers,
it is necessary to set up a Social Safety Net programs (contributory
provident fund, gratuity, retrenchment fund) and compulsory Workers
Insurance. Also an effective Special Fund (easily accessible for affected
ordinary workers) can be made to deal with any adverse situation in the
post-MFA environment.
 The workers at the garment sector lives under a terrible socio-economic
condition with unstable and temporary employment, poor working
conditions, long working hours, forced overtime & sexual harassment.
 The promotion o ILO’s “decent work” program would be the most
comprehensive effort to protect the workers of RMG sector in a quota-
free world.

Possible way to Face the Coming Challenges for RMG sector in

Bangladesh:

To face the upcoming challenges in RMG sector, the country should take
the following measures:

 Formulation of a national policy on RMB industry and workers for post

MFA
  Unconditional and quick implementation of core labor standards and
labor laws at workplace of all RMGs.
 Establishing a compulsory social safety net package for RMG workers.
 Exploration of new market for RMG to protect the industry and the
workers and take maximum advantage of free excess to Canadian,
Australian and other markers.
 Capacity building training and re-training activity for employers and
workers in RMG sector to develop productivity and efficiency level.
 Develop backward linkage industries for RMG.
 Export and product diversification.
 Building alliances with likeminded neighbors and competitors within the
LDCs.
 Continuous training program to sensitize the workers about their rights
and interest should be undertaken in cooperation with and financial
assistance from the fraternal organizational abroad.

Prospects of the RMG Industry

Despite many difficulties faced by the RMG industry over the past years,
it continued to show its robust performance and competitive strength.
The resilience and bold trend in this MFA phase-out period partly reflects
the imposition of ‘safeguard quotas’ by US and similar restrictions by EU
administration on China up to 2008, which has been the largest supplier
of textiles and apparel to USA. Other factors like price competitiveness,
enhanced GSP facility, market and product diversification, cheap labor,
increased backward integration, high level of investment, and
government support are among the key factors that helped the country
to continue the momentum in export earnings in the apparel sector.
Some of these elements are reviewed below.

 Market Diversification

Bangladeshi RMG products are mainly destined to the US and EU. Back
in 1996-97, Bangladesh was the 7th and 5th largest apparel exporter to
the USA and European Union respectively. The industry was successful
in exploring the opportunities in markets away from EU and US. In FY06,
a successful turnaround was observed in exports to third countries,
which having a negative growth in FY05 rose three-fold in FY06, 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 stagnation in exports to EU requires further analysis.

Table- 3: Region-wise Share of RMG Export

Year Export Share to Export Share to Combined Share Export Share of

USA European of USA & EU (%) Other Countries
Countries (%)

2001-2002 42.67 55.43 98.10 1.90

2002-2003 38.02 57.12 95.14 4.86

2003-2004 28.64 65.42 94.06 5.94

2004-2005 30.64 64.24 94.88 5.12

2005-2006 33.67 49.77 83.43 16.57

Source: Export promotion Bureau

 Product Diversification

The growth pattern of RMG exports can be categorized into two distinct
phases. During the initial phase it was the woven category, which
contributed the most. Second phase is the emergence of knitwear
products that powered the recent double digit (year-on-year) growth
starting in FY04.

Table-4: Growth Pattern of Woven and Knitwear Categories

 Year Woven Knitwear

2002-03 4.28 13.34

2003-04 8.59 29.88

2004-05 1.70 31.26

2005-06 13.50 35.38

Source: Bangladesh Bank

In the globalize economy and ever-changing fashion world, product

diversification is the key to continuous business success. Starting with a
few items, the entrepreneurs of the RMG sector have also been able to
diversify the product base ranging from ordinary shirts, T-shirts, trousers,
shorts, pajamas, ladies and children’s wear to sophisticated high value
items like quality suits, branded jeans, jackets, sweaters, embroidered
wear etc. It is clear that value addition accrues mostly in the designer
items, and the sooner local entrepreneurs can catch on to this trend the
brighter be the RMG future.

Table-5 : Export performance of different Apparel items

(in million USD)

Year Shirt Jackets T-Shirt Trousers Sweater

2001-02 871.22 412.34 546.28 636.61 517.83

2002-03 1019.88 464.51 642.62 643.66 578.38

2003-04 1116.57 364.78 1062.11 1334.85 616.31

 2004-05 1053.34 430.28 1349.71 1667.72 893.12

2005-06 1056.87 408.97 1781.51 2165.25 1042.61

Source : Bangladesh Bank

 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.
However, this vital industry still depends heavily on imported fabrics.
After the liberalization of the quota regime some of the major textile
suppliers Thailand, India, China, Hong Kong, Indonesia and Taiwan
increased their own RMG exports.

If Bangladesh wants to enjoy increased market access created by the

global open market economy it has no alternative but to produce textile
items competitively at home through the establishment of backward
linkage with the RMG industry. To some extent the industry has foreseen
the need and has embarked on its own capacity building. The trend of
back-to-back import has been declining over the years implying a rising
contribution of domestic value addition (Figure 2). This is an optimistic
indication that a well equipped and modern backward linkage industry
may well prove cost effective and thus helping Bangladesh to meet the
challenges in the post-MFA era.

 Flow of Investment

It is plausible that domestic entrepreneurs alone may not be able to

develop the textile industry by establishing modern mills with adequate
capacity to meet the growing RMG demand. It is important to have
significant flow of investment both in terms of finance and technology.
The investment outlook in this sector is encouraging, although the
uncertainties before the MFA phase-out period caused a sluggish
investment scenario. In part the momentum in the post-MFA phase-out
period is indicative of the efforts underway towards capacity building
through backward integration. This is evident in the pace of lending to
the RMG sector and in the rising import share of RMG related
machinery. However further progress would be necessary to improve
and sustain competitiveness on a global scale.

 A Supportive Policy Regime

Government of Bangladesh has played an active role in designing policy

support to the RMG sector that includes back-to-back L/C, bonded
warehouse, cash incentives, export credit guarantee scheme, tax holiday
and related facilities. At present government operates a cash
compensation scheme through which domestic suppliers to export-
oriented RMG units receive a cash payment equivalent to 5 percent of
the net FOB value of exported garments. The FY04 budget also lowered
the corporate income tax rate for the RMG industry from 30 to 10
percent for the period up to June 30, 2006. From FY05 the tax regime
has been further changed, and a 0.25 percent tax at source will be
deducted from the value of the export proceeds of Woven and Knitwear
category. At the same time, income tax rate for textile manufacturers
were reduced to 15 percent from its earlier level for the period up to June
30, 2008. The reduced tax rates and other facilities are likely to have a
positive impact on the RMG sector.

 Lead Time

‘Lead time’ is a crucial factor maintaining export competitiveness.

Bangladesh happens to feature the longest lead time in the RMG world.
The lead time for Bangladesh is 120 days on an average, while the
corresponding period for Sri Lanka is about 19-45 days and for India it is
only about 12 days. Various factors like the distance from major markets,
importation of raw materials, port congestion, strikes, poor roads, etc.
are some of the factors responsible for this. At present the fashion
seasons are becoming short with a changing trend, it would not be
possible to compete if the lead time extends beyond 30-40 days.
Therefore, bringing down the ‘lead time’ to about 30-40 days is a major
challenge for the country’s RMG sector. Clearly more business can be
captured only if the lead time could be improved.

 Infrastructural Impediments

The existence of sound infrastructural facilities is a prerequisite for

economic development. In Bangladesh, continuing growth of the RMG
sector is dependent on the development of a strong backward linkage in
order to reduce the lead time. However, other factors constraining
competitiveness of Bangladesh’s RMG exports included the absence of
adequate physical infrastructure and utilities (e.g., transportation,
telecommunication, stable power supply, efficient seaport, political
tolerance, quality control and a smoothly functioning bureaucracy).
According to a recent World Bank-IFC publication (2006) records that a
businessman in Bangladesh needs 35 days to export and incurs USD
902 per container, whereas his counterpart in India requires 27 days and
spends USD 864 per container. The comparable figures for Pakistan, Sri
Lanka and Vietnam are 24 days and USD 996, 25 days and USD 797,
and 35 days and USD 701, respectively.

 Labor Productivity

The productive efficiency of labor is more important determinant for

gaining comparative advantage than the physical abundance of labor. In
Bangladesh, the garment workers are mostly women with little education
and training. The employment of an uneven number of unskilled labors
by the garment factories results in low productivity and comparatively
more expensive apparels. Bangladesh labor productivity is known to be
lower when compared with that of Sri Lanka, South Korea and Hong
Kong SAR. Bangladesh must look for ways to improve the productivity of
its labor force if it wants to compete regionally if not globally.

 Cheap Labor Force

The strength of a firm depends on its specific comparative advantages,

which its competitors do not possess. To date the local industry has
flourished in spite of the challenges cited above (e.g., lead time,
infrastructure, and bureaucratic red tape) on the back of cheap female
labor. The wages paid to RMG workers in Bangladesh are the lowest
even by the South Asian regional standard. Figure 4 illustrates the
comparative average hourly wages in apparel industry of selected
developed and developing countries.

 Research and Training

The country has no dedicated research institute related to the apparel

sector. RMG is highly fashion oriented and constant market research is
necessary to become successful in the business. Here India has had a
head start and Mumbai and Delhi are on line to become fashion centers
on a global scale. At present whatever design work is done in the
country, these are mostly carried out with foreign workers and experts.
BGMEA has already established an institute which offers bachelor’s
degree in fashion designing and BKMEA is planning on setting up a
research and training institute. These and related initiatives need
encouragement possibly intermediated by donor-assisted technology
and knowledge transfer. A facilitating public sector role can be very
relevant here.

Recent riots and strikes by the garments worker

Garments worker raise their voice in different times to attain their rights.
From analyzing different news it can be viewed that the bursting riots of
2006 has not created in a day. There is a long way behind this and a lot
of reasons. In July 4, 2001 the national strike took place throughout the
garment industry. The strike, planned months in advance, was called by
the NGWF and six other union federations. The garment workers called
the strike across the country demanding implementation of their six point
charter. At least 17 garment factories were damaged in the city by
elements hired by some owners, alleged the striking workers. Police
arrested 13 garment workers from Mohakhali area for their alleged
involvement in demanding the factories.

The death sparked more violence as thousands of garments workers

took to the streets in Savar, creating chaos and huge traffic deadlocks
around the capital. A section of 800-1000 violent protesters with sticks
lead by motorcycle processions resorted to widespread damage of
vehicles, attacked about 300 garments factories, and torched many of
them. Widespread lootings were also reported and finally extra security
forces were deployed to prevent this from going further.

Then Government took some initiatives to sort out the problem and
made some promise about the demand to the garments worker. As a
result the garments sector became stable again. But the demand was
not fulfilled. The worker’s demand for wage was not fulfilled. So the
protest started again.

On October 5th 2006, the Bangladesh Minimum Wage Board announced

the first raise to the minimum wage for garment workers since 1994. The
gross minimum monthly wage was announced as Tk 1,662.50 (€20.12)
including basic salary plus house rent and other allowances for entry-
level workers. Previously this was Tk 930.The announcement means the
basic wage without benefits is around Tk 1,100, far below the Tk 3,000
basic wage called for by Bangladeshi trade unions and supported by the
Clean Clothes Campaign.

Garment workers in different parts of Bangladesh have demonstrated

against this new proposal and a series of strikes was occurred. As we
previously stated, whilst garment workers and their supporters had been
demanding wage increases for several years it wasn’t until May 2006,
following the outbreak of massive labor unrest by workers unable to
tolerate the extreme exploitative conditions any longer, that any kind of
action was taken by the Bangladesh government and the minimum wage
board was formed. This riot came to an end under the state of
emergency.

Reason behind the riot

Around 2.2 million people are employed in the garments sector and
around 70% of whom is woman. From the beginning of the industry the
rights of the worker is violating. The workers wage was determined as Tk
930 for a new worker in 1994. And this rate was continued till 2006. The
other facilities like safety, healthy working environment, security etc.
were not provided to the worker. The reason behind the riot can be listed
as below.

1. A new wage structure for the garment workers on the basis of a basic
minimum wage of tk 3000 (unskilled).
2. Ensure the health and safety of garment workers.
3. Necessary steps for the development and expansion of the garment
industry and its markets.
4. Implementation of trade union rights in the garment sector. Trade union
rights for the EPZ workers.
 5. Separate industrial zones for the garments industry. Settlements,
schools and hospitals in the zones.
6. Implementation of the Memorandum of Agreement signed between the
MGMEA and the BGWUC in 1997 and 2000 (appointment letter, identity
card, service book, weekly holiday, maternity leave, etc.)

Effect of world ongoing financial crisis on Bangladesh Garments

Sector

The ongoing financial crisis has not affect the Bangladesh Garments
Industry at a large extent till now. But no one no what will happen. And
there is a controversy about the future effect of this financial crisis on
RMG sector. Some argues that it will affect the industry in a positive
manner. The arguments behind this is that the western buyers are
cutting their prices because of the financial crisis but China and other
garment manufacturing countries can’t afford the price cut, but
Bangladesh can because our labors are cheaper and they can work
overtime.

But many exporters are really worried about the effect of financial crisis
on this sector. The Bangladesh Knitwear Manufacturers Association
(BKMEA) reported a ten per cent drop in knitted items such as T-shirts
and pullovers. Buyers are now renegotiating prices and delaying orders
citing the ongoing financial turmoil.

It’s true some of the top retailers are downsizing their inventories due to
the crisis. But Bangladeshi exporters have to be careful. If they can
make shipment timely and keep the quality intact, global financial crisis
will not affect the RMG sector of Bangladesh.

RMG export growth and percentage as the total export

Table- 6: RMG export growth and percentage as the total export (In
million US$)

Year Export of RMG Total Export % of RMG Export to

Total Export
1976-77 0.012 417.00 0.02

1977-78 0.069 493.74 0.01

1978-79 0.104 618.81 0.02

1979-80 0.672 749.44 0.09

1980-81 3.36 709.85 0.47

1981-82 6.99 625.90 1.12

1982-83 10.84 686.60 1.58

1983-84 31.57 811.00 3.89

1984-85 116.20 934.43 12.44

1985-86 131.48 819.21 16.05

1986-87 298.67 1076.61 27.74

1987-88 433.92 1231.20 35.24

1988-89 471.09 1291.56 36.47

1989-90 624.16 1923.70 32.45

1990-91 866.82 1717.55 50.47

1991-92 1182.57 1993.90 59.31

1992-93 1445.02 2382.89 60.64

1993-94 1555.79 2533.90 61.40

1994-95 2228.35 3472.56 64.17

1995-96 2547.13 3882.42 65.61

1996-97 3001.25 4418.28 67.93

1997-98 3781.94 5161.20 73.28

1998-99 4019.98 5312.86 75.67

1999-00 4349.41 5752.20 75.61

2000-01 4859.83 6467.30 75.14

2001-02 4583.8 5986.09 76.57

2002-03 4900.0 6396.87 76.60

2003-04 5700.00 7600.00 76.00

2004-05 6300.00 8422.46 74.80

2005-06 7900.8 10526.2 75.06

2006-07 9211.2 12177.9 75.64

 70563.03
Source: Export
promotion Bureau

Total

This table reveals the RMG export from the initial stage of the industry till
2007 and its contribution to total export. The RMG sector enjoys a
continuous growth from the beginning of the industry but the initial level
was tough. From the last ten years it is viewed that RMG export is
contributing 75% of the total export. The following graph can give clear
view of growth in RMG export for the last 10 years.

Share of RMG Export in Country’s GDP

Table- 7 : Share of RMG Export in Country’s GDP (US$ in

Million)

Year GDP at current price RMG Export RMG export as

percentage of GDP

FY84 19636 31.57 0.16

FY85 21644 116.20 0.54

FY86 21170 131.48 0.62

FY87 23759 298.67 1.26

FY88 25604 433.92 1.69

FY89 27710 471.09 1.70

FY90 30477 624.16 2.05

FY91 30975 866.82 2.80

FY92 31335 1182.57 3.77

FY93 32031 1445.02 4.51

FY94 33853 1555.79 4.60

FY95 37940 2228.35 5.87

FY96 40726 2547.13 6.25

FY97 42319 3001.25 7.09

FY98 44034 3781.94 8.59

FY99 45713 4019.98 8.79

FY00 47125 4349.41 9.23

FY01 46934 4859.83 10.35

FY02 47374 4583.80 9.68

FY03 42975 4900.0 11.40

FY04 51227 5700.00 11.12

FY05 54516 6300.00 11.56

 FY06 61136 7900.8 12.92

FY07 69482 9211.2 13.26

Source: CPD, IRBD Database

Findings

After explaining different aspect of Bangladesh RMG sector different

issue is pointed out. The major issue related to this industry is present
here.

 The garment industry is by far the country’s most important

manufacturer, earning around $5 billion annually and accounting for
about two thirds of all exports. Bangladesh has about 4,000 garment
factories with up to 10 million livelihoods dependent on it directly or
indirectly. In 2006 it provided jobs for 2.2 million people, accounted for
10.5% of the country’s GDP, and contributed 40% of its manufacturing
output. Exports have been growing at an impressive rate in recent
years. In 2006/07 alone, they increased by 18.2% to reach US$9.6
billion, a record level for the fifth consecutive year. The contribution to
GDP increases at 13.25% in 2007. About 80 per cent of garment
workers are women and the current minimum wage is Tk.1650.
 The major strength for the garments sector of Bangladesh is the low
labor charge, free economy, infrastructural support, improved GSP, low
energy price and so on. Major weakness of this sector is lack of
marketing tactics, small number of manufacturing method, low
acquiescence, fewer process units for textile and garments, risky
working environment etc. There are also some opportunities associated
with threat that can be captured by the sector to acquire more profit.
 The major importer of RMG products are USA and Europe. But there is
other country that has a contribution to the total RMG export. The other
countries are Belgium, Canada, France, Germany, Netherlands and
more.
 The RMG industry not only propelled the growth of spinning, weaving,
dyeing and finishing industries, production of accessories and spare
parts, but also rendered large externalities by contributing to other
economic activities in such areas as banking, insurance, real estate,
packaging, hotels and tourism, recycling, consumer goods utility
 services and transportation. RMG sector has overwhelmingly high
backward linkage with textile sector providing fabrics, yarn and other
ancillaries. It has important backward linkage with utilities such as
electricity, gas, and machinery and spare parts supplying.
 The basic problem of the ordinary workers and labor movement in
garments sector are low scope of operation, non-recognition of legally
registered unions at the factory level, long working hours and practically
no weekly holiday that left hardly anytime for workers to participate
union activities, non-compliance of existing labor laws, high
occupational accidents etc. On the other hand, creation of yellow trade
unions by the garments owners, imposition of self-made code of
conduct, apathy to active social dialogue made ordinary workers and
trade unions more vulnerable.
 80% of garments workers are women. In the early stage they could be
paid much less than men with equivalent skills and be treated as a
largely informal workforce to whom employers had no obligation aside
from paying their wages. Today, things are beginning to change.
Female education has gone up steadily; there has been widespread
dissemination of ideas about women’s rights through non-governmental
organizations (NGOs), state pronouncements and the media, while
microfinance has increased and diversified employment opportunities in
the countryside. Women enter the industry not just because of poverty,
but also for the prospect of improving their family’s standard of living,
sending their children to school, saving for their dowries or supporting
ageing parents. They have been able to leverage their earnings into
increased decision-making power within their families and independent
purchasing power in the market place. They have also become
increasingly visible in collective actions in support of their rights, which
have linked local and global movements.
 The working environment of garments factory is really risky. Year after
year women and men are killed while making clothes for stores in our
communities. There is a clear need for a long-term wide scale program
to address health and safety in the garment/textile sectors. The failure
to implement safety measures in these sectors in Bangladesh has
resulted in a conditions where the death and injury of workers has
become alarmingly routine: in 2000 53 workers died at Choudury
Knitwear, 24 died in 2001 at Maico Sweater, nine died in 2004 at the
Misco Supermarket building, and 23 died at Shan Knitting and 64 died
at the Spectrum-Shahriyar factory in 2005.
 From the time series analysis it is found that RMG export will be
increased by US$ 519.15 million per year. The regression analysis
 reveals that there is a significant relationship between the RMG export
and Total export. The GDP growth and RMG export growth is also
significant at 5% significant level.
 The quota came to an end at 2004 but it continued to show robust
performance, competitive strength and, of no less importance, social
commitment. RMG’s contribution to Bangladesh economy is well-
known, well-appreciated and well-respected. In 2005-06 the industry
faced a great instability due to the protest of the worker. After that under
the state of emergency the sector enjoyed a stable growth and finally
reaches at the matured stage. The ongoing financial crisis has not affect
the Bangladesh Garments Industry at a large extent till now but it can
be. So, Bangladeshi exporters have to be careful. If they can make
shipment timely and keep the quality intact, global financial crisis will not
affect the RMG sector of Bangladesh.
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