Shanto-Mariam University of Creative

Technology
Report Topic: History Of Apparel industry And RMG
In Bangladesh
Module Name: Swing Room Management-1
Module code: AMT-3109
Submitted To :
Name-Abdul Hai Submitted By :
Ass. Director & Lecturer Name : Md Faysal Ahammed
Department Of AMMT Id : 183051045
SMUCT Group : B

Batch : 34th
Semester : 7th

Date of Submission: 24-11-2020

Introduction
Introduction Shifting from an agro based economy to an
industrial economy is an essential part of the process of
economic development of a country. Bangladesh, one of the
representatives of LDCS that has recently graduated to a lower-
middle income country from a low-income country, has also
been following the same direction. Agriculture had been the
dominant sector of Bangladesh economy and also the main
source of income for the people of the country since her
independence in 1971. But Bangladesh cun now rightfully claim
that she has graduated from a predominantly agru based and
aid receiving nation to a trading nation [1.- The export-oriented
Readymade Garment (RMG) sector has made considerable
contribution to this transformation. Nowadays, RMG sector is
the largest exporting industry in Bangladesh that experienced
tremendous growth during the last 25 years. Within a short
span of time, it has attained a high profile in terms of foreign
exchange earnings, exports, industrialization, and contribation
to GDP. The industry also plays a key role in employment
generatioB, provision of incume to the poor, and in the socio-
economic development of the country. Acconding to
Bangladesh Knitwear Manufacturing and Exporting Association
(BKMEA), it provided 4.2 million direct jobs, 16 percent of GDP,
and more thun 8I percent of foreign exchange earnings in
FY2013-2014 [21.[31. Owing to the emergence of strong
hackward linkages within the country, the knitwear industry is
adding up to 75% value, which opens up enormous potential
for foreign and domestic investors to spend in the areas of
spinning. weaving, sewing, packaging, and accessories
manufacturing (4).

In the last five consecutive fiscal years, knitwear constituted

7.2% of the national GDP on average, demonstrating that RMG
continues to serve as a strategic and commercially important
sector to the country. articles both in online and printed,
websites of difteront bu ary sources of information. Different
research Bangladesh Bureau of Statistics (BBS) and Bangladesh
Economic Review (BER) are the majar sources of information
for this paper. The general objective of the study is to draw a
brief scenario of RMG industry in Bangladesh. The specific
objectives of this stady are a. to depiet the history and growth
picture of RMG sector in Bangladesh: b. to show the
contribution of RMG sector in the national economy of
Bangladesh; and 6. to explore the opportunities and challenges
of RMG sector of Bangladesh.
History of RMG and apparel industry in BANGLADESH
Like other 3rd world countries Bangladesh is a developing
country. Her economic development depends firstly on
agriculture and secondly on industry. Although Bangladesh is
not developed in industry, it has been enriched in Garment
industries in the recent past years. In the field of
Industrialization garment industry is a promising step. It has
given the opportunity of employment to millions of
unemployed, especially innumerable uneducated women of the
country. It is making significant contribution in the field of our
export income.

Historical background of the Garment Industry:

Once the cloth of Bangladesh achieved worldwide fame
specially muslim and jamdani cloth or our country was used as
the luxurious garments of the royal figures in Europe and other
countries. The British rulers in India didn’t develop our cloth
industries at all. Rather they destroyed them and imported
cloths from England. Garment Industry Large-scale production
of readymade garments (RMG) in organized factories is a
relatively new phenomenon in Bangladesh. Until early sixties,
individual tailors made garments as per specifications provided
by individual customers who supplied the fabrics. The domestic
market for readymade garment, excepting children wears and
men's knit underwear (genji) was virtually non-existe
Most importantly, the growth of RMG sector produced a group
of entrepreneurs who have created a strong private sector. Of
these entrepreneurs, a sizeable number is female. A woman
entrepreneur established one of the oldest export-oriented
garment factories, the Baishakhi Garment in 1977. Many
women hold top executive positions in RMG industry.The
hundred percent export-oriented RMG industry experienced
phenomenal growth during the last 15 or so years. In 1978,
there were only 9 export-oriented garment manufacturing
units, which generated export earnings of hardly one million
dollar. Some of these units were very small and produced
garments for both domestic and export markets. Four such
small and old units were Reaz Garments, Paris Garments, Jewel
Garments and Baishakhi Garments.
Reaz Garments, the pioneer, was established in 1960 as a small
tailoring outfit, named Reaz Store in DHAKA. It served only
domestic markets for about 15 years. In 1973 it changed its
name to M/s Reaz Garments Ltd. and expanded its operations
into export market by selling 10,000 pieces of men's shirts
worth French Franc 13 million to a Paris-based firm in 1978. It
was the first direct exporter of garments from Bangladesh.
Desh Garments Ltd, the first non-equity joint-venture in the
garment industry was established in 1979. Desh had technical
and marketing collaboration with Daewoo Corporation of South
Korea. It was also the first hundred percent export-oriented
company. It had about 120 operators including 3 women
trained in South Korea, and with these trained workers it
started its production in early 1980. Another South Korean
Firm, Youngones Corporation formed the first equity joint-
venture garment factory with a Bangladeshi firm, Trexim Ltd. in
1980. Bangladeshi partners contributed 51% of the equity of
the new firm, named Youngones Bangladesh. It exported its
first consignment of padded and non-padded jackets to Sweden
in December 1980.
Till the end of 1982, there were only 47 garment manufacturing
units. The breakthrough occurred in 1984-85, when the number
of garment factories increased to 587. The number of RMG
factories shot up to around 2,900 in 1999. Bangladesh is now
one of the 12 largest apparel exporters of the world, the sixth
largest supplier in the US market and the fifth largest supplier
of T-shirts in the EU market. The industry has grown during the
1990s roughly at the rate of 22%.
Number of workers and Factory in RMG sector.
The number of workers trend is upward trend, i.e., the number
of workers has increased at faster rates and reaches.
6,000 RMG factories
With a current 6,000 RMG factories employing about 3.6
million workers from a total workforce of 74 million,
Bangladesh is clearly ahead of Southeast Asian RMG suppliers
in terms of capacity offered (e.g., Indonesia has about 2,450
factories, Vietnam 2,000, and Cambodia 260 factories).

Present condition of RMG and apparel industry in Bangladesh

The ready-made garments (RMG) sector has a greater potential
sector than any other sector in terms of employment and
foreign exchange earnings to reduce poverty and make a
contribution to the national economy. Based on secondary
data, the study is intended to draw the scenario of RMG
industry in Bangladesh, especially the growth, contribution, and
challenges. It is the largest exporting industry in Bangladesh
that has experienced tremendous growth during the last 25
years. Among the people of Bangladesh, about 4 million
workers are directly employed in RMG sector. Therefore, the
contribution of RMG in total export is increasing day by day. At
present, 83.9% of national export in Bangladesh is contributed
by RMG export although it was 3.89% in 1983-1984. In fiscal
year (FY) 2017-2018, the percentage of ready-made garments
(RMG) contribution to gross domestic product (GDP) is 12.26%
but it was only 2.74% in FY 1990-1991. So, it indicates that RMG
sector is the main contributor of Bangladesh’s economy,
especially in the export of the country. This sector also faces a
lot of challenges, like unskilled workers, insufficient
infrastructure, raw materials, energy crisis, safety issue,
political crisis, and coverage of accord and alliance. To
overcome these challenges, we need to take different steps
from owners and major stakeholders.

Results and Discussion

Growth of Garments Industry in Bangladesh
The journey of the RMG industry was started in 1978 when
Reaz Garments exported its first consignment in USA and
earned 69,000 USD.
But the actual milestone was led by the Desh Garments Ltd.
established in 1979, the first 100 percent export oriented
company. But nowadays, ready-made garments industry
concaves up.
The growth of garments sectors are shown below:
Number of garment factories in Bangladesh. Figure 1
represents the number of garment factories in
Bangladesh from the fiscal year 1983-1984 to 2017-2018.The
number of factories was gradually increasing up
to fiscal year 2012-2013, decreased in fiscal year 2013-2014,
and thereafter increased up to 2017-2018.
Therefore, the growth factory showed a negative trend in year
2013-2014 due to utility crisis and strong
inspection from the regularity body to identify the risky
factories.

Challenges of RMG Sector in Bangladesh

Since 2005 the RMG of Bangladesh has become the top export
earner of Bangladesh and positioned itself in the frontline of
the world apparel market.
Some of the problems that threatened the remarkable success
of Bangladesh garment sector that are the financial crisis of
2008,Tazreen fire accident, Rana Plaza collapse, the
Trans-Pacific Partnership Agreement (TPP) and the withdrawal
of generalized system of preference (GSP) by America.
But every success comes along with the new challenges. Some
of challenges are shown as follows:
Unskilled workers.
Growth and development of an industry requires sufficient
skills and expertise.
However in spite of the growth of the industry, its development
is constrained by lack of skilled workforce.
Out of its current 4 million workers, 90 percent is women, most
of who are illiterate, unskilled and come from the rural part of
the country.
Insufficient infrastructure.
Transportation Infrastructure:
Infrastructure like transport and utilities is the single largest
issue hampering Bangladesh’s RMG industry.
The Chittagong port, which handles nearly 85 percent of the
country’s trade merchandise, suffers from labor problems, poor
management, and lack of equipment (World Bank, 1999).
The alternative mode of transportation such as Bangladesh
railways and Dhaka-Chittagong Airports provides very less
carrying and handling facilities.
Safety issue.
At the point of inception of the RMG industry, factory buildings
were in an unplanned manner that resulted into conversion of
common buildings for factory purpose.
As a consequence, several disastrous collapses took place such
Rana plaza and Tazrin incidents which took away thousands of
lives and injured another thousand. These have brought the
safety issue as a priority concern.
Contribution of RMG Sectors
The ready-made garments (RMG) industry contributes to the
Bangladesh economy in a distinctive manner.
The industry plays a significant role in terms of employment
and income generation of millions of people
especially the poor. Some contributions of ready-made
garment (RMG) sectors to the national economy of

Bangladesh are shown below:

RMG sectors contribution to export.
RMG sector’s contribution to country’s export has experienced.
Phenomenal growth over the years. It has evolved as the main
export earning sector of Bangladesh.
Table2shows the comparative statement between RMG export
and total export of Bangladesh and we can say that in 1983-
1984, the garments exports are only 31.57 million and the hare
of national export is only 3.89%.
The RMG export is increasing in a good way and it reached
30,614.76 and the share of national export is 83.49% as well as
the major part of employment in Bangladesh getting from RMG
sector. Table3 shows that the monthly export performance of
RMG of Bangladesh for 2016-2017 and 2017-2018 in million
USD. The RMG exports share in national export in fiscal year
2016-17 and 2017-18 are 81.23% and 83.49% i.e.
RMG export is the largest sector of national export in
Bangladesh.
Contribution of RMG industry to the GDP.
Garments industry is the largest exporting industry in
Bangladesh, which experienced phenomenal growth during last
two decades.
The sector has also played a significant role in the socio-
economic development of the country.To show the
contribution of RMG exports to
GDP, graphical representation and regression analysis are used
here.
Graphical representation.
In such a context, Figure3 shows the percentage of ready-made
garments (RMG) contribution to gross domestic product (GDP)
of Bangladesh. It shows that the percentage of ready-made
garments (RMG) contribution to theGDP is 2.74% in FY 1990-
191. The contribution of RMG sector to GDP almost is given up
growing pattern.
In FY 2017-2018, the percentage of ready-made garments
(RMG) contribution to GDP was 12.26%. Therefore, we can say
that the RMG sectors play an important role in our national
economy.
Conclusion and Recommendation
RMG sector has emerged as the single most important
contributor towards employment generation,income and
foreign earning, and growth of Bangladeshi economy.
However, different factors such as weak infrastructure, lack of
energy and supportive regime, inefficient management, and
lack of industrial integration have prevented the RMG sector to
realize its full potential.
It is expected that over the next 20 years,international trade
will become the lifeline of Bangladesh economy than today.
The share of exports, especially ready-made garments, in GDP
could be expected to increase many folds.
Therefore, trade policy reforms at the border and within the
border will have to be undertaken to utilize the potentials of
garments industry and to grow the economy out of poverty and
under-employment.
It is also time to change the conventional trade and trade
policies.
Special focus should be given on RMG sector in Bangladesh’s
five-year plans and other longer-term plans to ensure a
sustainable growth of the industry, which means incorporating
RMG issues into every stage of the development planning cycle.
Bangladesh economy may realize its development dream and
enhance the standard of living and approach towards a middle-
income economy.
RMG industry in Bangladesh has already proved itself to be a
resilient industry and can be a catalyst for further
industrialization of the country.
To face the upcoming challenges in RMG sector, some new
thinking and new directions in trade policy are as follows:
*To develop productivity and efficiency level, capacity building
training and re-training activity for
employers and workers in RMG sector should be undertaken.
* Multi-modal transport facilities, sound infrastructure facilities
including consistent supply of energy
through public-private initiatives is to be set up.
* Sound initiatives in research, training, and development to
innovate new product ideas and to increase the
workers efficiency are to taken especially by the BGMEA.
* The civil society and other socio-political stakeholders must
take able initiatives to ensure congenial
political environment to reduce corruption and maintain a
trade supportive environment.
*RMG owners must pay adequate attention to workers welfare,
safety, and health, and the buyers should
help to increase the supply chain’s efficiency through
investment in backward industry.

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TradeInformation
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