Importance of Garments Industries in Bangladesh

Importance of garments industries in Bangladesh

Readymade garments (RMG) exports to North American and European countries account for the majority of Bangladesh’s export earnings, accounting for 75% of total export earnings. Unsurprisingly, the economic crisis in those countries makes us worried.

Despite widespread anxiety among entrepreneurs, policymakers, and economists, the garment business has been mostly unscathed by the global crisis. The world’s attention is attracted to Bangladesh’s remarkable economic and social progress in recent decades as the country celebrates its 50th anniversary of independence.

Despite the losses caused by the COVID-19 outbreak, the South Asian country is on track to become a middle-income country in the future years. Bangladesh is now one of the world’s leading textile exporters, accounting for 84 percent of all exports.

This is owing to the garment industry’s enormous expansion and modernization over the previous decade, as well as progress made in improving the working conditions of the country’s four million garment workers.

History of garments in Bangladesh

The textile industry was founded in the 1960s of the nineteenth century. In 1965-66, the industry shipped shirts (Mercury shirts) made in Karachi to the European market for the first time. In 1977-78, there were nine exporting industries available. Riaz Garments, Jewel Garments, and Paris Garments were the three most important industries at the period. Riaz Garments was the most well-known and oldest of these at the time.

Riaz Garments, founded by Mohammad Reaz Uddin, began as a tailoring shop known as Riaz store. Later, in 1973, the name was changed to Riaz Garments from Riaz Store, and in 1978, the company began exporting products to other countries by selling 1 million shirts to a South Korean company called “Olanda.” “Desh Garments” is another RMG pioneer from Bangladesh. Desh Garments began collaborating with the South Korean manufacturer “Daiyuu” in 1979.

At the very same time, numerous garments were introduced, including Shamsur Rahman’s Stylecraft Limited, AM Subid Ali’s Aristocraft Limited, Engineer Mohammad Fazlul Azim’s Azim Group, and Major (Retd) Abdul Mannan’s Sunman Group.

Some more subtle and industrious entrepreneurs began their RMG businesses in the country by following in the footsteps of the RMG sector’s pioneers. From there, Bangladesh’s RMG sector grew day by day, so there was no need to look back. Despite the fact that this section had passed through several important stages along the way. In 1994, we learned about child labor, and in 1995, we effectively made our clothes business free of child slavery.

Present situation of garments sector in Bangladesh

A series of workplace catastrophes that claimed the lives of over 1,000 garment workers and made international headlines propelled the change of Bangladesh’s RMG sector over the last decade. The Tazreen factory fire in 2012 and the Rana Plaza factory collapse in 2013 exposed widespread flaws in working conditions, prompting some international buyers to discontinue buying from Bangladesh and the US to remove its favourable tariff deal.

With roughly 4,000 factories employing around four million workers, Bangladesh’s readymade garment (RMG) sector plays a critical role in the country’s economy, paying for more than 83 percent of total exports and providing approximately 16 percent of GDP.

For the establishment of our clothes sector, the quota system was a huge help. Using it was extremely beneficial to us. As a result, today’s clothing business is well-developed. However, as the quota system came to an end in 2004, many people were concerned about Bangladesh’s RMG sector. Though, according to the specialists, it cannot be affected in the future. We overcame the post-quota challenges and turned the tale into a success.

Thanks to initiatives taken in the aftermath of the disasters, such as the Accord on Fire and Building Safety in Bangladesh, the Alliance for Bangladesh Worker Safety, and the RMG Sustainability Council, Bangladesh’s RMG sector is now a leader in transparency regarding factory safety and value-chain responsibility. Hundreds of dangerous, low-wage factories were closed as a result of these actions, and remediation work in many more were ramped up.

These efforts helped Bangladesh regain its appeal in the global apparel-sourcing market, resulting in a decade of tremendous expansion. We predicted a growth rate of 7 to 9% ten years ago. RMG exports from Bangladesh have more than doubled, from $14.6 billion in 2011 to $33.1 billion in 2019, representing a 7 percent compound annual growth rate. 2 (It’s worth mentioning that this expansion was within the range we predicted in our 2011 study, which was produced in partnership with the German Chamber of Commerce and Industry in Bangladesh.) Bangladesh’s RMG industry grew its share of global garment exports from 4.7 to 6.7 percent over this time.

Contribution of RMG sector

The importance of the RMG sector in Bangladesh’s economy cannot be overstated. Since the last decade, the RMG industry has made a significant contribution to the national economy. The RMG industry accounts for roughly 76 percent of overall export revenues. According to statistics, Bangladesh’s RMG sector earned US$ 5,686.06 million in FY 2003-04, US$ 6,417.67.67 million in FY 2004-05, US$ 7900.80 million in FY 2005-06, US$ 9,211.23 million in FY 2006-07, US$ 10,699.80 million in FY 2007-08, US$ 12.35 billion in FY 2008-09, and finally US$ $24.49 billion in FY 2013-14.

Well here are some key factors which actually have an influence on the garments sectors are-

  1. a large labour force
  2. Human resources with a high level of expertise,
  3. Upgrades in technology,
  4. Support from the government for textiles and garments
  5. Zones designated for special economic purposes or for the processing of exports,
  6. Villages dedicated to textiles and clothes are being established.
  7. The motivation to use locally sourced materials,
  8. Import duties on inputs/machines have been reduced.
  9. Reduced income taxes,
  10. And there are international benefits such as GSP, GSP+, duty-free entry, and so on.

Using the aforementioned important criteria, one may easily dominate the global readymade garments business. However, there is one more important thing to consider. You  will gain priority in the world’s famous buyers’ notebook if you use those essential aspects in our readymade garments business.

These are the essential factors:

  • New Product Development Strategy,
  • Product Diversification Strategy, and
  • Market Diversification Strategy are all examples of cost-effective strategies.

Despite being the world’s second-largest supplier of garments, Bangladesh’s RMG sector confronts various hurdles. Bangladesh’s government has a vital role to play in maintaining workplace safety in all textile manufacturing companies. Foreign buyers would refuse to put orders in Bangladesh if individuals do not do so, which will be a severe blow for the country’s RMG sector. People want the government of Bangladesh, the BGMEA, and the BKMEA to be able to guarantee the RMG industry’s safety and maintain the country’s socio-economic growth momentum with the support of global brands and international development partners.