Introduction:
Bangladesh,
the southern Asian country has a population of approximately 164
million people. The economy of Bangladesh is significantly dependent on
agriculture. But its a great news for the country that,
readymade garments
(RMG) sector of Bangladesh has raised as the biggest earner of foreign
currency. This sector creates about 4.2 million employment opportunities
and contributes significantly to the GDP. Readymade garments (RMG) of
Bangladesh is powered by young, urbanizing, workers, where most of them
are women.
History of RMG Sector in Bangladesh:
The
foundation of textile sector was first established in the 60th decade
of 19th century. For the first time, the industry exported shirts
(Mercury shirt) to the European market in 1965-66, which was produced
from Karachi. In the latter, 9 exporting industries were available in
1977-78. The three largest industries in that time were Riaz Garments,
Jewel Garments and Paris Garments. Among those, Riaz Garments was the
most famous and oldest industry in that time.
In
the earlier stage, Riaz Garments of Mohammad Reaz Uddin started its
business with some tailoring shop in the name of Riaz store. In the
later, the name turned into Riaz Garments from Riaz store in 1973 and
from 1978 the company started exporting products in the abroad by
exporting 1 million pieces of shirts in the South Korean Company named
“Olanda”. “Desh Garments” is another pioneer of Bangladesh RMG sector.
In 1979, Desh Garments started a joint project with South Korean company
“Daiyuu”.
At the same time, several
garments were introduced such as-Stylecraft limited by Shamsur Rahman,
Aristocraft Limitd by AM Subid Ali, Azim Group by Engineer Mohammad
Fazlul Azim and Sunman Group by Major (Retd) Abdul Mannan.
By
following the beginners of RMG sector, some others discreet and
hard-working entrepreneurs started their RMG business in the country.
From there, RMG sector of Bangladesh was developing day by day and not
needed to look back. Though this sector had passed various critical
stages through the path. In that time, we learned about child labour
1994 and in 1995 we made our garments industry free from child labour
very successfully.
Present Situation of RMG Sector in Bangladesh:
Quota
system was a great blessing for establishing our garments industry. We
were strongly benefited by using that. As a result we can see a matured
garments industry today. But while quota system was approaching to an
end in 2004, there’s so many got upset about the
RMG sector of Bangladesh.
Though in the latter it can’t be affected here as the experts were
seemed. We conquered the post quota challenges and made that a
successful story.
In RMG sector of
Bangladesh, there are more than 5000 garment factories (private
statistics) at the current time, employing more than 12 lack labours,
where 85% of the labour force is women. But, according to BGMEA the
number of garment factories in Bangladesh around 4000. Now, RMG industry
is the countries largest export earner with the value of over $24.49bn
of exports in the last financial year. Its a great news for us that,
Bangladesh is clearly ahead from other South Asian suppliers in terms of
capacity of the ready made garments industry.
Though,
there are various types of garments are manufactured in Bangladesh, but
all the ready made garments are classified into two broad categories,
where one is woven products and another one is knitted products. Woven
products includes Shirts, Pants and Trousers. On the other hand, knitted
product includes T-Shirts, Polo Shirts, Undergarments, Socks, Stockings
and Sweaters. Woven garments still dominates the export earnings of the
country.From BGMEA website its seen that, Day by day knitted items
production is increasing in considerable rate and now about 40% export
earnings has achieved from knitted products.
Contribution of RMG Sector to the National Economy:
The
role RMG sector in Bangladesh economy is remarkable. It’s seen that,
from the last decade, RMG sector contributes to the national economy in
considerable rate. About 76% of total export earnings come from RMG
sector. From a statistics it’s known that, in FY 2003-04 RMG sector of
Bangladesh earned US$ 5,686.06 million, in FY 2004-05 the value was US$
6,417.67.67 million, in FY 2005-06 the value was US$ 7900.80 million, in
FY 2006-07 the value was US$ 9,211.23 million, in FY 2007-08 the value
was US$ 10,699.80 million, in FY 2008-09 the value was US$ 12.35 billion
and finally in FY 2013-14 the value stands at $24.49billion.
Opportunity of RMG Sector in Bangladesh:
RMG
sector of Bangladesh has some key factors which inspired for steady
growth of this sector. Though its a matter of great surprising for so
many that how RMG sector of Bangladesh continues to show its robust
performance in the world.
The mian key fcactors which has great influence on RMG sector of Bangladesh are in the following:
- Vast labor force,
- Skilled human resources,
- Technological upgrades,
- Government supports for textile and clothing,
- Special economic/export processing zones,
- Creation of textile and clothing villages,
- Incentive for use of local inputs,
- Duty reduction for the import of inputs/machines,
- Income tax reduction,
- And international supports like GSP, GSP+, duty free access etc.
By
using the above key points we can easily take place the world”s
readymade garments market very strongly. But there”s some another key
factors. If we apply those key factors in our readymade garments sector,
then we will achieve the first priority to the worlds famous buyers
note book.
Those key factors are-
- Cost Effective Strategy,
- New Product Development strategy,
- Product Diversification Strategy and
- Market Diversification Strategy.
All the above points are discussed in the below:
Cost Effective Strategy:
Cost Effective Strategy includes the following two key points:
- Cost Reduction Strategy and
- Labour Productivity Improvement.
Those key points are discussed in the below:
1. Cost Reduction Strategy:
Cost reduction strategy should begin with assigning the highest
priority for establishing backward linkages. The establishment of
backward linkages will reduce our dependence on foreign sources which
will reduce the total and average production cost of garments. This
Strategy will make our products more competitive in the world’s ready
made garments market.
2. Labour Productivity Improvement:
Bangladeshi workers are not efficient as of Hong Kong, South Korea and
Sri Lankan workers. Wages are low in Bangladesh, but it does not
necessarily mean that relatively low wages workers automatically lead to
higher productivity. So, to keep place in the worlds largest
competitive market, labor productivity must be improved.
New Product Development strategy:
Its
a matter of great sorrow for us that, we are regularly produced the
same products. Our product categories are very less in quantities. Our
product items that are exported into foreign market are Shirts-60%,
Jackets-11%, Knit items-10%, Trousers-7% and Others-11.50%. To survive
in the worlds most competitive RMG market, we have to develop new
product items with a lot of variations.
Product Diversification Strategy:
Product
Diversification Strategy is an important factor to keep place in the
worlds ready made garments market. Different types of products should be
produced by applying fashion. Thailand, China, India, Pakistan, Hong
Kong, Singapore, Malaysia, Indonesia and others are the main competitors
of Bangladesh. They are already ahead of Bangladesh in product
diversification strategy areas.
Market Diversification Strategy:
Bangladesh
has exported their products in the worlds limited market. Mostly are in
USA, Canada and Europe. About 46% of its total garment exports goes to
USA, 14% to the Canada and rest of those into the European market. The
competitors of Bangladesh are regularly expands their markets and keep
changing their products by using fashion.
The following key factors must be undertaken during market diversification strategy:
- Market research on product design
- Market research on product development,
- Market promotion through trade fairs, exhibition, etc.
- Human resources development by providing training.
Challenges for RMG Sector of Bangladesh:
Though
RMG sector of Bangladesh has achieved the second spot for the highest
number of garments exporter, but it has a lot of problems. The major
problems faced by RMG sector currently is the lack of safety in working
place and working conditions for the millions of garments workers. It’s
become a great challenge for the upcoming financial year of Bangladesh.
Another important one is political stability.
Two major incidents in RMG sector of Bangladesh are the Tazreen fire and the
Rana Plaza collapse,
which have brought the issue of workplace safety to the fore and led
all stakeholders to act accordingly. But it’s good news for RMG sector
that, following the unfortunate incidents, various platforms such as the
Bangladesh Accord on Fire and Building Safety, the Alliance for
Bangladesh Worker Safety and National Plan of Action have been formed to
improve building and fire safety of Bangladesh’s garment industry. Also
BGMEA and BKMEA are working together here to solve such kinds of
problems. They have also taken necessary actions and invested huge
amount of money.
It’s a huge
responsibility for the government of Bangladesh to ensure working place
safety in all the garments manufacturing factories. If we can’t do it,
foreign buyers will refuse to place order here, which will be a massive
blow for RMG sector of Bangladesh. We hope, the government of
Bangladesh, BGMEA and BKMEA, with the support of global brands and
international development partners, will be able to ensure the safety of
the RMG industry and maintain the momentum of socio-economic
development in the country.
Political
stability creates a negative impact on RMG sector of Bangladesh. If it
continues, it will be a massive blow to destroy our most valuable
sector. So, political leaders should come out immediately to solve such
kinds of problems.
Hoping for RMG Sector of Bangladesh:
According
to the McKinsey survey, it’s seen that 86 percent of the chief
purchasing officers in leading apparel companies in Europe and the
United States planned to decrease levels of sourcing in China over the
next five years because of declining profit margins and capacity
constraints.
Also they said in that
survey, “Western buyers are evaluating a considerable number of sourcing
options in the Far East and Southeast Asia, many chief purchasing
officers said in the survey that they view Bangladesh as the next hot
spot”. Many chief purchasing officers mentioned Bangladesh as the hot
spot in the readymade garments market.
McKinsey
survey also reported that, with about $15 billion in exports in 2010,
ready-made garments are the country’s most important industrial sector;
which represents 13% and more than 75% of GDP and total exports,
respectively. McKinsey forecasts, export-value growth of 7 to 9%
annually within the next ten years, so the market will double by 2015
and nearly triple by 2020.
Conclusion:
It’s
a prime duty for us to provide a perfect working place for the
readymade garments sector of Bangladesh which has given our economy a
strong footing, created jobs for millions of people, especially for
women, lifted them from the abyss of chronic poverty and given them a
magnificent life. Now what we have needed to do is dealing with all the
challenges facing our readymade garments industry, paving the way for
its further development.
