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Saturday, 28 November 2020

Textile industry in Bangladesh

 




 


The ready-made garment industry of Bangladesh started its journey in the sixties. However, in the late seventies, the industry began to develop as an export-oriented sector. At present it is the largest export oriented industry in Bangladesh.


The garment industry is better known as Readymade Garments. The phenomenon of large-scale commercial production of garments in well-organized factories is relatively new in Bangladesh. Until the early sixties, local tailors made garments according to the designs provided by the buyers and directed by them. It goes without saying that there was no internal market for the ready-made garment industry until the sixties, except for children's clothes and men's wearables. Since the last half of the seventies, the garment industry in Bangladesh has been developing as an export oriented sector. The domestic market for the ready-made garment industry is also expanding rapidly and the income of all those involved in this sector is increasing and the lifestyle is changing. The sector is rapidly becoming important in terms of employment and contributes significantly to foreign exchange earnings and GDP.


By 1980, raw jute and jute products accounted for 50% of total exports and topped the export earnings. In the last half of the eighties, the garment industry surpassed the income of jute and jute products and came to the forefront in terms of export income. In 1999, more than 1.4 million people were directly employed in the industry, of which about 80 percent were women. Along with the expansion of the ready-made garment industry, the industry of textiles, yarns, accessories, packaging materials, etc. also began to expand. In addition, demand for transportation, banking, shipping and insurance services continues to grow. All of this creates additional employment. Such new indirect employment is mainly created by the readymade garment industry which benefits a total of 200,000 workers.


GarmentsIndustry.jpg The first consignment of garments (oven shirts only) made from Bangladesh was exported in 1986. Only then did the interest of foreign buyers increase and the industry grew rapidly. In 1981-82, the contribution of this sector to the total export income was only 1.1%. In March 2010, the garment industry contributed 6% of the total export earnings. Over time, ready-made garments became more elaborate and divided into oven and knitting subdivisions. Owen and knitting contributed 52.06% and 8.56% to garment exports in 2002, respectively. Subsequently the knitwear subdivision grew faster than the oven subdivision. In the fiscal year 2008-09, the net sub-sector surpassed the oven sub-sector and contributed 41.38% (6429 million) to the total exports, as against 37.02% (5917). 51 million). In the 2008-09 financial year, net and oven together reached  12.5 billion, including the value of imported raw materials, and created employment for 2.2 million women workers.


The expansion of the readymade garment industry has brought about significant changes in the society of Bangladesh. Indirectly, about two and a half lakh people are employed in these services. In addition to making a significant contribution to the national economy, the ready-made garment industry has made a significant difference in the lives of 2.5 million women workers and they are contributing to the economy. The economic empowerment of working women has been able to change their position in the family, and the social status of these women workers has also increased due to their financial empowerment. The benefits of employment have changed the traditional patriarchal authority of fathers, brothers and husbands. Most working women can now decide on their own choices when it comes to marriage and childbearing. They are also able to take part in family decision making. The number of child marriages in the society has decreased, At the same time, the birth rate has decreased. Working girls are taking care of their younger siblings and sending them to school. As a result, the literacy rate is increasing in the country. Importantly, the expansion of the ready-made garment industry is creating new entrepreneurs who have built a strong private sector in manufacturing. A significant number of these entrepreneurs are women. One of the oldest export oriented garment factories in Bangladesh, 'Baishakhi' was established in 1986 by a woman. At present, many women hold senior executive positions in garment factories. The expansion of the readymade garment industry is creating new entrepreneurs who have built a strong private sector in manufacturing. A significant number of these entrepreneurs are women. One of the oldest export oriented garment factories in Bangladesh, 'Baishakhi' was established in 1986 by a woman. At present, many women hold senior executive positions in garment factories. The expansion of the readymade garment industry is creating new entrepreneurs who have built a strong private sector in manufacturing. A significant number of these entrepreneurs are women. One of the oldest export oriented garment factories in Bangladesh, 'Baishakhi' was established in 1986 by a woman. At present, many women hold senior executive positions in garment factories.


This industry is basically sub-contract based. In other words, the Bangladeshi entrepreneur performs the sub-contract or part of the original contract of the foreign buyer. It is developed in accordance with the orders of foreign buyers in C-M (Cut and Made). The buyers had to supply all the clothes and accessories as per the demand or they had to import the clothes for the garment making of the Bangladeshi subcontractors from the specified source. After receiving the textiles and related materials, the sub-contractors used to cut and sew the fabrics according to the designs given by the foreign buyers and wrap them for export. Foreign buyers choose Bangladesh because the cost of making clothes here is the lowest.


In the beginning this 100% export oriented industry was completely dependent on imported raw materials. The situation was very fragile because of this dependence. But over time, Bangladeshi owners have gained experience and the situation has improved. Local entrepreneurs developed the post-connection industry and started producing quality exportable yarns and cloths by increasing skills locally. Moreover, the garment industry has gained the ability to transform into exportable products by cutting and sewing cloth after dyeing and processing. This activity has expanded in the last 15 years. Due to the rapid development of the post-connection industry, the industry is no longer dependent on raw material imports. As of April 2010, imports depended on 50% of oven clothing and only 10% of knitwear.


At present many large multi-tiered full fledged garment factories have sprung up in Bangladesh. All these factories do other work including spinning, weaving, dyeing, processing and calendering. Moreover, all these exportable fabrics are also sold in local factories. In these factories, foreign buyers are cut according to the design, wrapped and sent to the designated buyer. With the development of the post-connection industry, Bangladesh's position in the competitive market has become more integrated than before.


The ready-made garment industry has grown remarkably in the last 25 years. In 1978, Bangladesh earned an estimated 1 million by exporting products produced in only nine export-oriented garment factories. Many factories were small in size and the products produced here were exported as well as sold in the local market. The four small old factories are Riaz Garments, Paris Garments, Jewel Garments and Baisakhi Garments. Riaz Garments was the guide, Which started operating in 1960 as a small tailor's factory called Riaz Store in Dhaka. It has been supplying cloth to the local market for about 15 years. In 1983, the factory was renamed as Messrs. Riaz Garments Limited. It later expanded its operations to a Paris-based firm in 1986 to export 10,000 boys' shirts worth 13 million francs. Riaz Garments was the first to export garments directly from Bangladesh. In 1989, Desh Garments Limited established the first non-equity firm in a joint venture. Desh Garments and Daewoo Corporation of South Korea established a relationship of technical and marketing cooperation. At first the workers were trained to make them suitable for working on machines. Later the inspectors were given training. Following this, 120 directors (machines) including 3 women have been trained in South Korea Yes, and these trainees started production in 1970. It was the first hundred percent export oriented company. In 1980, another Korean corporation called Yangon set up its first garment factory in a joint venture with another company called Bangladeshi Trexim Limited. Bangladeshi partners own 51% of the equity in the new company Yangon's Bangladesh. It first exported padded and non-padded jackets from Bangladesh to Sweden in December 1970. In both cases there is a complete digestive tract. The first exported padded and non-padded jackets from Bangladesh to Sweden in December 1970. In both cases there is a complete digestive tract. The first exported padded and non-padded jackets from Bangladesh to Sweden in December 1970. In both cases there is a complete digestive tract.


Bangladesh is known as a growing attractive business hub for foreign buyers due to its low production costs. In order to take advantage of the low cost, they increase the loan assistance provided in some cases under special management. Again in many cases local banks provide equity capital. In spite of all this, new factories are a big problem for working capital. This time back-to-back LC (Letter of Credit) has been a boon for the garment industry, contributing to the new approach to transactions. Has created opportunities for import.


The success of the industry was evident in the number of factories increased from 48 in 1982 to 58 in 1985, and to 2,900 in 1999. In this continuity, the production and export capacity increased in parallel and in 2009 the number of factories reached 3 thousand. Bangladesh has already become the twelfth largest garment exporter in the world. Among them, Bangladesh ranks sixth in the US market and fifth in the European Union market for T-shirt exports. In the 1990s, the industry expanded at an annual rate of about 22 percent.


In 1973-74, the revenue from garment exports was only 0.9 billion, which was 3.69 percent of the total export earnings of Bangladesh. In 1998-99, the revenue from readymade garments exports was  5.51 billion, which is 75.6 per cent of the total export earnings. However, net foreign exchange earnings were only 30% of the reason, as imports of raw materials and accessories for the readymade garment industry accounted for about 70% of the earned foreign exchange.


However, due to the recent global financial crisis, Bangladesh's garment exports to the US and EU markets have been hampered. Consumer spending in these two markets has declined, resulting in a decline in demand for Bangladesh's export products. After the rise in exports in 2008, the growth in 2009 has been negative. However, due to the foresight of Bangladeshi businessmen, it has recovered from the recession in early 2010 and stepped towards growth. This shows that Bangladesh's ready-made garment industry has been able to overcome the negative effects of the financial crisis.


By 1975, Bangladesh emerged as a strong garment supplier and a strong competitor to traditional suppliers in the United States, Canada and European markets. In 1987, Bangladesh became a growing quota obligation for the USA and Canada. The garment industry in several countries fell into disrepair in the 1980s. Production costs have risen sharply in Sri Lanka and several other countries in South Asia due to internal problems. Buyers continue to look for alternative sources and Bangladesh appears to be an ideal alternative due to cheap labor and large export quotas. The European Union continues to grant Bangladesh quota-free status and GSP facilities. Moreover, USA and Canada maintain quite large quotas for Bangladesh. Taking advantage of these opportunities, Bangladesh exports garments to the USA, Confirms markets in Canada and the European Union. Internal factors play an effective role in the growth of the readymade garment industry and the availability of trained cheap labor brings comparative advantage to Bangladesh. Government policies contribute to the rapid prosperity of the industry. The government provides various incentives including import of duty free garments, benefits of using duty-free warehouses, special discounts on interest rates, cash incentives for exports, facilities in the export processing area. The government also took some formal steps in the field of import and export. Export processing provides a variety of incentives, including facilities in the area. The government also took some formal steps in the field of import and export. Export processing provides a variety of incentives, including facilities in the area. The government also took some formal steps in the field of import and export. Export processing provides a variety of incentives, including facilities in the area. The government also took some formal steps in the field of import and export. Export processing provides a variety of incentives, including facilities in the area. The government also took some formal steps in the field of import and export.


Both the internal and external elements have contributed to the wonderful growth of the ready-made garment industry. One of the external factors was the quota system under the GATT approved Multi Fiber Arrangement (MFA). Under this quota system, garments made through international outsourcing reorganization were transferred from high-producing countries to low-producing countries. The implementation of MFA brings a lot of blessings for Bangladesh. As a low-income country, Bangladesh is considered a priority country by the United States and the European Union. Bangladesh has the opportunity to export a significant 'quota' of garments to the US market. In addition to the European Union's quota-free market, Bangladesh was given GSP opportunities. In order to survive in the competition in the global market, the large supplier of garment manufacturers adopts the strategy of quota facility and factory restoration in the country of cheap labor. They identify Bangladesh as a country of potential. That is why garment factories were formed in Bangladesh.


Apart from this, some other factors have contributed to the development of the readymade garment industry in Bangladesh. In some countries, such as Sri Lanka and Southeast Asia, wages are rising rapidly. Buyers are likely to call everyone who looks appropriate, if there are only a few. Bangladesh is considered as an ideal place for a peaceful working environment, cheap labor and large scale quota facilities. The EU continues to offer quota-free benefits and GSP status. In addition, the United States and Canada allocate significant amounts of quotas. These facilities ensure the market for Bangladeshi products in the United States, Canada and the EU.


The comparative advantage is that the internal factor that contributes to the development of readymade garments or RMG. And this advantage is due to cheap labor and adequate supply of trained workers. The internal policies of the government have also contributed to the development of this industry. Back-to-back LCs (Letters of Credit) are among the facilities of the government. Commodity warehousing facility (subject to collection of duty) Loan at reduced interest rate, cash export facility, creation of export processing area etc. The government has also taken a number of practical steps to accelerate import-export policies.


There are still several weaknesses in the readymade garment industry. Bangladesh lags behind the competing countries in labor productivity. On the one hand, the skills of Bangladeshi workers are less than in Hong Kong, South Korea and other countries, on the other hand, the machines used in most factories are not modern. This means that the cost of making clothes is not as high as it seems in reality. Another weak point of this industry is excessive import dependence for raw materials and underdeveloped infrastructure. Inadequate power supply and underdeveloped communication systems also hinder the development of this industry. Frequent congestion due to inadequate facilities and mismanagement at the port also leads to unnecessary delays in shipments and increases costs.


The implementation of the MFA has had a negative impact on many garment exporting countries. All these affected countries have put pressure on the IMF to eliminate the export opportunities by merging textiles and garments in GATT. As a result, the MFA has been revoked since 2004 after a round of negotiations in Uruguay. Bangladesh's position in the world market has changed since the rise of the MFA. Now all countries, including those under the border, are enjoying quota-free status.


Bangladesh now has to compete with many powerful countries. Bangladesh has already taken several steps to address this challenge. These include product and market diversification, elimination of infrastructural difficulties, increased product delivery capacity, adoption of cost reduction strategies, and increased value addition through post-connection expansion.


The back-to-back industries for the ready-made garment industry include textile weaving, sewing yarn cutting, dyeing, imprinting and finishing. These composites can be done together in a composite or separately, in separate units. At present Bangladeshi garment exporters import garments at international prices using back to back certificates. In this process, importers i.e. Bangladeshi garment exporters pay high interest and other charges, commissions and fees to intermediaries. Establishing a composite factory for textile weaving, spinning and processing will reduce the time lag between accepting orders and supplying ready-made garments accordingly, increase value addition and employment, and needless to say, Production costs will also be saved. In the Fifth Five Year Plan (1996-2002), the Government of Bangladesh set a target of achieving self-sufficiency in the production of sewing yarn through the expansion of spinning. Although the productivity of the spinning sector has increased significantly, it is still insufficient compared to the demand. There are now 1,126 weaving and spinning mills in Bangladesh, including 142 ring spinning mills and 15 open-end spinning mills. These are mainly produced for the domestic market. Modern factories provide only 25% of the total textiles produced, while the rest of the domestically produced textiles are supplied by specialized units, electric looms and handlooms. Domestic production can meet less than 7% of the total demand of the oven sector for the export-oriented readymade garment industry, and can meet about 40% of the demand for knitwear. The rest of the domestically produced textiles are supplied by specialized units, electric looms and manual looms. Domestic production can meet less than 6 percent of the total demand of the oven sector for the export-oriented readymade garment industry, and about 40 per cent of the net textile demand. The rest of the domestically produced textiles are supplied by specialized units, electric looms and manual looms. Domestic production can meet less than 7% of the total demand of the oven sector for the export-oriented readymade garment industry, and can meet the demand of net textile by about 40%.


Bangladesh exports a limited number of garments. Factories in Bangladesh mainly produce shirts, jackets and pajamas and about 60% of the total ready-made garments are shirts, which are exported at low prices. Bangladesh is a major exporter of cotton shirts for older men and children in the US market. Bangladesh competes with India, Sri Lanka, Mexico and other Central American countries in selling low priced products in this market. In 1996, Bangladesh used to sell shirts at 72.84 per dozen. This price was the second lowest. The Dominican Republic sold similar shirts at a minimum price of ৭ 54.69 per dozen. Indian, Mexican and Sri Lankan shirts were priced at  61.04, 8.26 and  74.6 per dozen, respectively. The shirts in Hong Kong and Malaysia, on the other hand, were priced at  107.34 per dozen and 134. 06 dollars. Bangladeshi exporters mostly produced garments prescribed by quota. However, there were several exceptions. Several South Korean companies used to export padded jackets and trousers from Dhaka and Chittagong export processing areas at high prices. Many companies now export some non-quota items. The amount of these items is very low. Recently, exports of knitwear and sweaters have been growing faster than knitwear. This means that Bangladesh is diversifying its garment production. There were several exceptions. Several South Korean companies used to export padded jackets and trousers from Dhaka and Chittagong export processing areas at high prices. Many companies now export some non-quota items. The amount of these items is very low. Recently, exports of knitwear and sweaters have been growing faster than knitwear. This means that Bangladesh is diversifying its garment production. There were several exceptions. Several South Korean companies used to export padded jackets and trousers from Dhaka and Chittagong export processing areas at high prices. Many companies now export some non-quota items. The amount of these items is very low. Recently, exports of knitwear and sweaters have been growing faster than knitwear. This means that Bangladesh is diversifying its garment production.


Although Bangladesh exports readymade garments to about 30 countries, its export market is mainly the United States and the United States, the largest importer in the European Union, accounted for 43.24% of the total garment exports from Bangladesh in 1998-99. In the same year, Bangladesh was the sixth largest supplier to the US apparel market. However, if the markets of all the countries of Europe are considered as an integrated single market, then the United States will become the second largest market. In 1998-99, Bangladesh exported 52.36% of readymade garments to the European garment market. The European Union is the most important destination for knitwear exports from Bangladesh. Germany alone is the largest European importer of knitwear and textile garments in Bangladesh. 15.7% of Bangladesh's exported textile garments and 14% of knitwear. 7% goes to Germany and the next two buyers are the United Kingdom and France respectively. The European Union, as a bloc, continues to import large quantities of clothing from Bangladesh. During 1995-2000, the growth rate of Bangladesh's readymade garment exports to the European Union was 164%. The main reason for this unprecedented growth rate is the almost duty-free and quota-free access to the European market mainly due to the GSP facility. Other export markets are quite small. However, the markets of Japan and ASEAN countries have considerable potential. Although Bangladesh imported about 90% of machineries from Japan in the garment industry, it was not able to export large quantities of garments to the Japanese garment market. Similarly, Bangladesh has not been able to enter the ASEAN market. Although Bangladesh imports sufficient quantities of cloth and yarn from the Indian market, Bangladesh's exports to this country's market are also limited. The main reasons for this are tariffs and non-tariff barriers and restrictions. Bangladesh has recently started exporting readymade garments to India, South Korea and a few other new markets. As a member of SAARC, Bangladesh has undertaken a detailed program to export garments to India and other SAARC member countries.


Despite being a large exporter of readymade garments, Bangladesh faces many difficulties. Although Bangladesh exports garments to about 30 countries, exports are mainly concentrated in the US and EU markets, which is a major weakness of the industry. This means that more than 90% of the total exports are sold in the US and EU markets. Of this, 40% is exported to the United States and 50% to the EU. In these two markets, Bangladesh has to compete with China, India, Sri Lanka, Pakistan, Thailand, Vietnam, Cambodia, Turkey, Mexico, Eastern European countries, Latin America and Africa. Mexico, several Latin American countries, and Bangladesh did not get the opportunity to export duty free to the US market in Africa and Eastern European countries. Due to this inequality, Bangladesh is facing fierce competition. Due to this inequality, the price difference is against Bangladesh and we have to go through tough competition. If for some reason a market goes out of hand, then the ready-made garment industry could face a major threat.


To meet this competitive challenge, Bangladeshi entrepreneurs have taken initiatives to diversify their products and markets. Several exporters have received orders to export some new high value products. Many have opened their own buying houses in the United States and Europe. They are no longer dependent on foreign buyers. Some are exporting their own brand products. It has already started exporting products to India, Russia, Thailand, Japan, China and other countries, albeit on a small scale, as a step towards market diversification. The Bangladesh Garment Manufacturing and Exporting Association (BGMEA) and the Bangladesh Knitwear Manufacturing and Exporting Association (BKMEA), two of the leading trade bodies in Bangladesh, assist the government in formulating relevant policies and play an important role in product and market diversification. All factory owners are members of this organization.


The ready-made garment industry has already reached maturity. The industry has taken steps to stop child labor, pay minimum wages, and improve the work environment in accordance with the advice of buyers, out of respect for international law. Trade unions, including CBA, are active in several factories.


Bangladesh has responded positively to the international demand for boycott of child labor in the garment industry. On July 4, 1994, BGMEA, ILO, UNICEF and the US Embassy in Dhaka jointly signed a memorandum of understanding and Bangladesh pledged to ban child labor from November 1997. It is implemented successfully. With financial support, children can attend school until the age of 15. BGMEA and some NGOs are jointly running some schools for working children. The demands of the factory owners are to abide by the law, introduce minimum wage, work environment, Implementing the demands of garment industry workers in the field of eco-labeling etc. and allowing workers to form trade unions and / or participate in trade unions. There are many active trade unions in the garment industry, including the CBA. There are no trade unions in the factories located in the export processing areas. However, the workers working in the factories here enjoy higher wages and better facilities. BGMEA can help the industry to comply with international standards, especially in factories by ensuring that non-hazardous dyes, including aju dyes, are not used. Bangladesh has acknowledged that the country's economic security depends on the future of the garment industry. So in order to address the new challenges of the MFA-North world market, detailed programs have to be taken in this regard. The economic security of the country depends on the future of the readymade garment industry. So in order to address the new challenges of the MFA-North world market, detailed programs have to be taken in this regard. The economic security of the country depends on the future of the readymade garment industry. So in order to address the new challenges of the MFA-North world market, detailed programs have to be taken in this regard. Especially in the factory by making sure not to work with dyes that are harmful to health. Bangladesh has acknowledged that the country's economic security depends on the future of the garment industry. So in order to address the new challenges of the MFA-North world market, detailed programs have to be taken in this regard. Especially in the factory by making sure not to work with dyes that are harmful to health. Bangladesh has acknowledged that the country's economic security depends on the future of the garment industry. So in order to address the new challenges in the MFA-North world market, detailed programs have to be taken in this regard.


Today, the ready-made garment industry is a success story, founded on the initiative of 100% individuals and managed by the business entrepreneurs of the country. The ready-made garment industry has now reached such a level of importance that the economic security of the country is largely dependent on this industry today. 


History 

The ready-made garment industry developed in the western countries in the 1950s. In 1974 , an agreement called Multi Fiber Agreement (MFA) was signed to regulate the export of RMG products from developing countries to developed countries . The agreement stipulates that exports from developing countries to developed countries will increase at a rate of 6% per annum. In the early eighties, Bangladesh started receiving foreign aid in the RMG sector. During this time some Bangladeshis received free training from a Korean company. At the end of the training, these workers return to the country and start working in other factories or on their own initiative. In the early 1980s, Bangladeshi garments began to be regularly exported to Europe and America. Retired government official Nurul Quader Khan and Desh Garments ' initiative was innovative in this regard .


Bangladesh's garment sector role in the economy of 

The readymade garment industry has been playing an important role in the economy of Bangladesh since the late 1980s. The role of the readymade garment sector in creating employment and earning foreign exchange has increased every year.


The role of foreign investment 

When an export processing zone was set up in Chittagong in the late 1970s, foreign investment in Bangladesh's ready-made garment industry began.


The number of factories 

By 2018, the number of export-oriented garment industries in Bangladesh is about 4,000. Just as hundreds of new factories are set up every year, hundreds of factories close down because they cannot compete.


Global position 

Bangladesh mainly exports low cost garments so that the rate of local value addition is very low. Until the end of the twentieth century, Bangladeshi garments were mainly exported to North America and Europe. Since the beginning of the twentieth century, especially in 2005 when the quota system was lifted, Bangladeshi entrepreneurs have been trying to export readymade garments to other countries of the world and success has been coming.


Until 2005, due to the quota system, Bangladesh has enjoyed special benefits in the field of garment exports. Under the 'Rules of Origin' as a list developed country, Bangladeshi readymade garments have gained access to duty free or reduced tariffs in European Union countries, Japan, Australia, Canada etc.


Compliance issues 

Bangladesh's garment industry is facing problems as various developed countries have created non-tariff trade barriers by imposing compliance conditions.


Workers 

The strategy of the garment industry in Bangladesh is to supply high quality garments to the world market at low prices. This is possible because cheap labor is available. About 60 percent of the garment industry in Bangladesh is made up of women.


BGMEA and BKMEA 

BGMEA is the leading organization of garment industry owners in Bangladesh. BKMEA is a different organization for knitwear.





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