At present garments is the largest foreign currency earner industry in Bangladesh, exporting approximately five billion US dollar and employing approximately two million workers. The largest export sector, contributing 47.59% of total export of the country. The Multi Fiber Arrangeirient (MFA) and quotas will be phased out on January 1, 2005. As a result, major Changes in the garments industries all over the world are anticipated. the year 2013 expected to be the most crucial year including Divesting of Rana Plaza and Tazrin Fashion. Consequently some countries will lose and some will gain. Bangladesh is so far predicted as one of the major losers.
Structure and growth :
The ready-made garments (RMG) sector emerged in late 1 970s. By I 980s about 800 factories. There was very good growth in the l990s; about 3400 factories came into operation. Today more than 4000 units exporting more than 5 billion and contribute about 48 percent of our national export earnings, 16% of GDP. The total number of workforce employed in this Sector is 3.6 million, which is half of the total industrial workforce of the country. Besides this, more than 15 million people work in related industries from button-makers to truckers to insurance underwriters. Almost 8% percent of garments workers are Women and most of them have come from villages.
Bangladesh’s RMG growth formula
Strong Starting position
- Increase in sourcing value by EU,
US, and emerging markets.
- Overcoming the Challenges of growth
- Potential for rapid growth of Bangladesh’s RMG industry
Contribution to Total Employment of the Labor Force and Women Empowerment:
The economy of Bangladesh is largely dependent on agriculture. However, in recent
years , the Ready–Made Garments (RMG) sector has emerged as the biggest earner of foreign
currency. The ready-made garment (RMG) sector has experienced an exponential growth since
the 1980s. The sector contributes significantly to the GDP. It also provides employment to
around 4.2 million Bangladeshis, mainly women from low income families which affects their
social status. In the 1980s, there were only 50 factories employing only a few thousand people.
Currently, there are 4490 manufacturing units. The RMG sector contributes around 76 percent to
the total export earnings. In 2007 it earned $9.35 billion. This sector also contributes around 13
percent to the GDP, which was only around 3 percent in 1991. Of the estimated 4.2 million
people employed in this sector, about 50 percent of them are women from rural areas. In 2000,
the industry consisting of some 3000 factories employed directly more than 1.5 million workers
of whom almost 80% were female. USA is the largest importer of Bangladeshi RMG products,
Women in the garment industry
Garment sector is the largest employer of women in Bangladesh. The garment sector has
provided employment opportunities to women from the rural areas that previously did not have
any opportunity to be part of the formal workforce. This has given women the chance to be
financially independent and have a voice in the family because now they contribute financially.
However, the women workers are facing many problems. Most women come from low income
families. Low wage of women workers and their compliance have enabled the industry to
compete with the world market. Women are paid far less than men mainly due to their lack
education. Women are reluctant to unionize because factory owners threaten to fire them. Even
though trade unionization is banned inside the Export processing Zones (EPZ), the working
environment is better than that of the majority of garment factories that operate outside the EPZs.
But, pressure from buyers to abide by labor codes has enabled factories to maintain satisfactory
In recent times, garment workers have protested against their low wages. The firsts protests
broke out in 2006, and since then, there have been periodic protests by the workers. This has
forced the government to increase minimum wages
The RMG sector is expected to grow despite the global financial crisis of 2009. As China is
finding it challenging to make textile and foot wear items at cheap price, due to rising labor
costs, many foreign investors, are coming to Bangladesh to take advantage of the low labor cost.
Even now for the readymade garments most of the manufacture need to bring all the accessories
from abroad, which is very costly. Now they are start using locally accessories minting the
required quality. Zippers, buttons, labels, hooks, hangers, elastic bands, thread, backboards,
butterfly pins, clips, collar stays, collarbones and cartons are the major garment accessories
produced in Bangladesh. Many small and medium accessory industries have grown here over the
years, particularly to meet high demand from low-end garment makers. The accessory market is
dominated by multinational companies operating in Bangladesh, because in majority cases,
garment buyers prefer accessories from them over the locally available items, Now it is time for
the Bangladeshi Merchandiser to introduce more local trims and trims manufacturer to buyer to
show their expertise. If the authority takes contemporary steps without any delay, they can
provide jobs opportunities for a large number of unemployed men and women in our country.
Knit Product made in Bangladesh, Factory Showroom
Garments Factory in Bangladesh Washroom for garment products
Automatic Printing Machine used Fake Leather Jacket Production in Bangladesh
BGMEA REGULATORY FRAME WORK
Cloth is one of the fundamental demand of human beings because , we know that the fundamental demands of human beings are food ,cloth, residence, education, and medical treatment. The people all over the world are increasing and demand of cloth of human beings are also increasing day after day .As a result various garments industries are built up all over the world .we know that huge labor needs for various industries. The owners of the garment industries find cheap labor all over the world. Since labor is very cheap in Bangladesh, a large number of garment industries are built up in Bangladesh day by day. The various factors of production are very essential for garment industries in Bangladesh. There is no so factors of production in Bangladesh. As a result the owner of the garment industries need to export and import with the rest of the world. As a result Bangladesh needs to control the work of the
garment industries. So BGMEA is established in Bangladesh in 1977.The full name of BGMEA is Bangladesh garment manufacturers and exporters association. BGMEA observes all the works of the garment industries in Bangladesh. The BGMEA currently has 5500 member factories of which 3600 are in operation according to the report of daily star in may 21, 2013.BGMEA provides licenses or permeation for production. Any garment industries can not produce and export any commodity rest of the world without the permeation of BGMEA.BGMEA fixes the salary and the age of the workers of the garments. There are two boards of BGMEA in Bangladesh. One is situated in Dhaka and other is in Chittagong. BGMEA has fixed the lowest salary of the garment workers is 4500 taka per month. But the workers struggle to increase the lowest salary into 5500.Now BGMEA negotiates with the owner of the garments and the workers to satisfy the demand of the workers.
Problems of the sector
Overall Problems of Bangladeshi Ready-Made Garments Industry
Bangladeshi garments industry has some severe problems. Those are bellow:
A problem of garment in Bangladesh is low wage of the workers. Garment industries do not provide perfect wages to workers. So that workers do not with much sincerity.
Electricity problem is another problem of garment industries of Bangladesh. It hampers production process. It also reduces production.
Increasing price of raw materials is another problem to garment industries of Bangladesh. Raw materials are imported by high tax. This is a vital problem to garment industries of Bangladesh.
Employees of garment industries are not well trained. There is no training system for garment workers in Bangladesh. It is a vital problem to garment industries of Bangladesh.
Bangladeshi garment owners do not have sufficient capital. So they cannot form large-scale business and do large-scale production.
Unstable political situation hampers production. Political groups are not aware about this. So in ‘ hartal ‘ Bangladeshi garments face a huge loss.
Most of the garments owners are not educated in business administration. Some of them even do not know about scientific method of keeping accounts. So it is also a major problem of garment industries of Bangladesh.
Bangladeshi garment owners do not have developed technology. So they cannot produce products so well.
All policies made by government are not favorable to garments. Some times its face problems. Promotion departments of garments are not active. So selling rate of products is low. In recent Rana Plaza at savar has been died more than 1127 workers, Five month ago Including Tarzin Fashion burnt 111 workers.
So in this above circumstances it can be easily said that garments of Bangladesh are facing so many problems. We should come forward all to overcome these problems. Our government should be more concerned about the solutions of these problems.
Suggestions for RMG
The Bangladesh government has established a national council to face the post MFA situation. BGMEA has placed their demands several times.
CPD, Oxfam, world Bank, IMF and other organizations have also given their opinions. Some have promised to give financial assistance to overcome the loss. The following initiative should be taken on emergency basis—
Proper foreign policies are necessary to exploit existing foreign markets adequately and to identify new potential markets and gain access to those markets. Simultaneously participation in specialized trade displays in various potential markets will help the exporters to promote their products.
- To be cost competitive and to produce quality items, modem technology and training at all levels of RMG are essential. At the same time to get maximum from the workers minimum wage, job security, better working environment, labor rights, participation of works in the management, development of skills and training are a must.
- Initiatives are urgent for improving infrastructure (ports, roads, electricity, telecommunication) and power facilities in term of both availability and price.
- To save lead-time BGMEA’S demand for a ‘Central Bonded Warehouse’ must be fulfilled immediately.
- Political good will is needed for batter environment
- Piukssor Wahiduddin Mahrnud, an eminent economist of the country and a former Advisor to the Caretaker Government of Bangladesh has suggested a simple but elegant solution to this problem:
We should completely separate the issues of export and backward linkage. one is how to make our garments export most competitive, facilitating access to materials worldwide at the most
competitive prices in whatever way or tinder whatever arrangement that we can. That’s the principle of making exports competitive in the international market.
The Ready-Made Garment Industry in Bangladesh:
The ready-made garment industry in Bangladesh generates a total of $19 billion in exports and
employs 3.6 million workers dispersed among 5,400 factories. Currently the sector accounts for
78 percent of exports and contributes 16 percent to the gross domestic product.
Expectations of rapid industrialization in future years invariably indicate further growth of the
garment sector. This is also because China, the largest exporter of manufactured garments in the
world, is losing its appeal in the apparel realm due to labor shortages and higher wages. A
McKinsey report suggests that 86 percent of the chief purchasing officers in their survey wanted
to move out of China, and Bangladesh is their next preferred destination. The country is expected
to gain much of China’s share in the cut-throat apparel terrain.
Cheap labor is abundant, some of them willing to work at a wage rate of $0.20 an hour. This is
less than a fifth of the labor costs in China. Capacity is another primary advantage. With a total
of 5,400 factories, Bangladesh is clearly ahead of other garment suppliers, for instance,
Indonesia has 2,450 factories, Vietnam 2,000 and Cambodia 260.
Another key prospect lies in the size of the global apparel business which is worth $1 trillion a
year. According to Bangladesh Knitwear Manufacturers and Exporters Association, the EU and
the US are the two largest importers of Bangladeshi garments and 86 percent of the total exports
are serving these two giants. But how big is our 86 percent in the sphere of total garment demand
in the EU and US? The number may seem meager, because Bangladesh caters to only 6 percent
of their total apparel demand, as opposed to China, which serves 30 percent.
The current average wage rate in the sector is one of the lowest in the world. Though minimum
wages were raised in November 2010, a study by the Fair Wear (a non-profit lobby group) found
that some workers were receiving less than the new minimum; nearly a quarter were reassigned
to lower pay grades. Recipients of the new minimum wage salaries were not necessarily better
off, since inflation soared as high as 12 percent the following year. Yearly ramp-up of wage rates
which help negate the effects of rising inflation are absent in the sector.
Low levels of work safety also pose a massive problem. Between 2000 and 2013, more than
1,500 lives perished in garment industrial disasters caused by fire, building collapses or
stampedes. Fire breakouts are the most common, with two out of three accidents recounting to
faulty fire extinguishers and electrical short circuits. Though industrial accidents are a recurring
phenomenon, the trend is not exclusive to Bangladesh.
The Ready-mate garments industry in Bangladesh : Challenges
Bangladesh having developed a strong position among European and US buyers many companies are already eager to evaluate the future potential. However, the lure of competitive prices, available capacities, and supplier capabilities offered is being cautiously weighed against a prevailing insecurity created by the challenges in Bangladesh’s ready-made garments (RMG) market.
The RMG industry accounts for 78 percent of exports, The sector exports 60 percent of its products to the European Union and 26 percent to USA. Showed that of chief purchasing officers in European and the USA.
While Bangladesh represents some very promising advantages in certain dimensions, a number of challenges could create hurdles for companies seeking to source there”
CPOs have 5 major issues on their minds when it comes to sourcing from Bangladesh.
Issue CPO’s perspectives
|Infrastructures||Unities, road network, and port facilities are seen as major limiting factors|
|Compliances||Salutation has improved over the last few year, however, significant continued efforts required|
|Supplier performance and world force||Labor costs expected to increase in addition, skill/ capability/ capacity gap needs to be closed|
|Raw materials||Dependency on imports are considered a major source of risk regarding lead times|
|Economy and political stability||Risk of political instability theaters a major source of risk regarding lead times|
At Present time Bangladesh have also many challenges in ready-mate garments industry in Bangladesh.
- Low wages
- Lack of safety in ready-mate garments industry in Bangladesh.
( 1,500 + people killed in RMG Industry related accidents between 2000 to 2013/ in every 3 RMG accidents are caused by fire)
- Unhealthy environment.
These above are most challenges in ready-mate garments industry in Bangladesh.