Bangladesh RMG Industry

1. BGEMA UNIVERSITY OF FASHION &
TECNOLOGY
DEPARTMENT OF AMT
Subject
Name ID Number
Sajib Banik 181-156-101
MD. Arafat Hossain 181-154-101
Shah jamal shakib 181-135-101
MD.Shahajalal Shibuj 181-163-101
MD.Shakil Ahammed 181-157-101
Submitted
By
(Group-9)
Students
Submitted
To
Tarikul Islam
Lecturer
Department of
AMT
BUFT

2.  What is RMG ?
It is expanded to Ready–Made Garments. The economy of Bangladesh is largely dependent on
agriculture. However the RMG sector has emerged as the biggest earner of foreign currency. The
RMG sector has experienced an exponential growth since the 1980s.
 History of Ready-made Garment (RMG) Sector in Bangladesh
Now a days textile sector of Bangladesh retains it's top position in global market. This can't
be gained overnights. Bangladesh can get it's present position by dint of merit and industry of
people of Bangladesh. The base of textile sector was first established in 60th decade of the
last century. "Mercury shirts" which is originated from Karachi started the RMG business
first. The industry exported shirts to the European market in 1965-66 first.
In 1977-78 only 9 exporting industries were available in this country which deal with 10
million used every year . there were 3 big industries available in that time. They were:
1. Riaz garments
2. Jewel garments
3. Paris garments.
Of them, Riaz garments was the most well known and oldest industry in that time. In Urdu
road of Dhaka it started it's business with some tailoring shop first. In that time it was known as
Riaz store. In 1973, it was named Riaz garments. In 1978, it started exporting products
abroad.it exported 1 million pieces of shirts to the Olanda, a South Korean company.
Another garments known as Desh Garments, also treated as the pathfinder of textile sector in
Bangladesh
In 1979 Desh Garments opened a joint venture project with south Korean company
"Daiyuu".
At present RMG sector of Bangladesh deals with 22 billion USD every year. 4 million people
directly depend on the ups and downs of the sector.the 81% of the total export earnings are come
from this textile sector.
The textile sector passes it's golden time now.with the help of the government and different
organizations we may hope for the betterment of this sector
Workers in RMG Industry

3. Role of RMG Sector in Bangladesh
Introduction:
Ready Made Garments (RMG) sector plays an important role in the total economy of Bangladesh.
Now-a-days RMG sector is a multi-billion-dollar earning business and export industry in
Bangladesh. Therefore, this sector is number one earner of foreign currency in Bangladesh. The
journey of RMG sector in Bangladesh has been started in 1980s since then; this sector did not
require for looking back. RMG sector improves our GDP, which makes us new rising countries on
the earth.
Role of RMG Sector in Bangladesh:
There are lots of role RMG sector in Bangladesh. The garments sector of Bangladesh most of
the worker is women. At least 80% women workers are working in this sector. Therefore, the
contributions of women workers are very important. Anyway, in brief the important roles are
Bangladesh is a fertile field for RMG sector. It has brought revolutionary to its economy
contributing about 81% to its total foreign income which was 3.89% in 1980-81. Therefore,
RMG sector in Bangladesh acts as the vertebral column of our economy
Solving Unemployment Problem:
Bangladesh is one of the most densely populated countries in the world. With the increase of
population employment opportunities is not creating accordingly. So a large number of its
population is to remain jobless. But the growth of RMG sector have created job opportunities
for more than 6 million people directly and about 30 million more indirectly.
Development of other Key Sectors of Economy:
The RMG sector stimulates the development other key sectors of economy and contributes to
launce of some business firms like Bank, Insurance, Transport, Logistic, Communication
process, buying house, liaison office, money laundering etc
International Relation:
RMG sector helps Bangladesh to make international relation among the other countries in the
world. Bangladesh exports garments to different nations of the world such as U.S.A, UK,
Germany, France and other E.U countries which make a better international relationship
among the nations

4. Ready-Made Garments Sector of Bangladesh:
Its Contribution and Challenges towards
Development
Abstract
The ready-made garments (RMG) sector of Bangladesh has got a greater facet than any
other sector in terms of growth and foreign exchange earnings. It makes a significant
contribution to the national economy by creating generous employment opportunities and
reducing poverty through socioeconomic development. Despite unquestionable success story,
this sector has got a number of formidable challenges for the future growth. The present
study has made a search on different dimensions of contribution and challenges of RMG
industry in Bangladesh. To accomplish the task, a descriptive research based on study of
available records is conducted. The study reveals that since its inception, especially during
the last three decades, the RMG industry contributed significantly through creation of
physical infrastructure which is demonstrated by 4222 RMG units along with the
development of human capital as around 4 million workforce are directly involved in this
industry. It has also contributed tremendously through empowering women as almost 90
percent of its labor force is female which ranked the highest in South-East Asia. In terms of
core economic consideration RMG holds almost 14.07 percent of the GDP of Bangladesh as
well as the 81 percent of the total export earnings. The study however, identifies some
challenges towards its future development including unskilled workers, improper
infrastructure, energy crisis, bank loan and high rate of interest, high tax rate, intricate
social compliance, political crisis, lack of market and product diversification, compliance
pressure of accord and alliance and lack of integration. Therefore, collaborative and
coordinated steps from both public and private sectors need to be initiated to overcome these
challenges.
Keywords: RMG sector, Contribution, Challenges and Development.
Introduction
Bangladesh is a fast growing economy powered by the readymade garments (RMG) industry
which has promoted the country in the world through the motto ‘Made in Bangladesh’. The
RMG industry has become one of the life lines of Bangladesh economy, sharing a major part
of the country’s export earnings. The industry started its journey in the late 70’s and since
then it continued to play a key role in the growth of the economy, and has emerged as the
largest export earning sector of the country. This industry has contributed in socioeconomic
prospects, creating a huge number employment opportunities mostly for the poor illiterate
female workforce of the country. Thus, the RMG sector has played a vital role in
empowering women by providing employment.

5. The RMG sector of Bangladesh as employing the rural poor illiterate female workers is
known for cheap labor and also producing low value garments. So producing high value
products remains a challenge for it. Besides, there is a high dependency on imported raw
materials especially in case of woven garments that cause high lead time in production.
Thus, this industry is established for low value apparels products at low price. There are very
less interest in developing technical skill, training and innovation, research and development
activities within the sector to develop it and transform to high pay- high value products. That
ultimately reduces the competitiveness this sector in the long run. In addition, there exists
monotony for repetitive work, low motivation in the workplace. Frequent political violence,
natural disaster or act of God often disrupts unrest and affect at the RMG sector. For example,
an export order of US$15,000 million could not meet on time due to the flood of 1998, and
more than 3 lakh workers were victims of the flood (Quddus & Rashid, 1999).
Besides, there has been several life causing accidents such as Rana Plaza and Tazrin events
that brought the workplace safety in the limelight as the most pressing challenge for the RMG
sector. Apart from the government initiatives, global brands and retailers have taken major
initiatives through creation of the Bangladesh Accord on Fire and Building Safety ‘Accord’
and the Alliance for Bangladesh Worker Safety ‘Alliance’.
Apart from the internal challenges, the RMG sector also suffers from the challenge of world
political and economic order. For example, recent devaluation of EURO against USD has
created a spot of bother for the RMG sector. It makes the Bangladesh RMG product expensive
in EU market which is the major export zone for Bangladesh. Political crisis such as terrorist
attack in USA in 2001 and followed by a depression in 2004 caused a decline in Bangladesh
export to USA by 13.04 percent (Abdin, 2008).
In spite of its contribution into the economy in terms of employment and income generation,
this sector is also facing some challenges from inside and outside. The present paper is an
attempt to analyze the contribution of RMG sector in economic development of the country,
and to uncover the challenges it is facing.
 Objective of the Study
The main objective of the study is to find out and discuss the contribution of RMG sector in
economic development of the country, and to uncover the challenges this sector is facing. The
specific objectives of this study are as follows:
To find out the economic contribution of RMG in Bangladesh
To uncover the challenges of RMG sector
To address the challenges and sought out the possible ways out.
Literature Review
Literature review exhibits the overall scenario of the RMG sector in Bangladesh and its
contribution to the Bangladesh economy. Robbani (2000) examined that the major portion of
foreign exchange earnings came from RMG sector, thus it created a giant position in the
economy. Rehman and Hundker (2001) stated that the RMG sector started its journey in late
1970s as a small non-traditional export, with a small worth of 69 thousand US$, and by
FY2002, exports have gone up to US$4.5 billion. In the following years, the sector develops
into an exclusive growth rate of 15 percent per annum.
Rock (2001) addressed that Bangladesh started exporting garments in 1976. The first joint
venture garment factory in Bangladesh was Desh Garment in association with Daewoo, a
South Korean company. Rahman (2002) described that the growth of RMG exports has
undoubtedly positive effects on macroeconomic balances.

6. Chowdhury et al. (2005) addressed the challenges of unskilled labor with low productivity
which results in increased per unit cost of production. Rahman and Anwar (2007) highlighted
weak and inadequate infrastructures, e.g., poor energy supply, poor port facilities are the
common challenges facing by the RMG sector in Bangladesh.
Berik and Rodgers (2008) addressed that Bangladesh RMG owners are very reluctant to invest
in training and development facilities, although it revealed that training costs are directly offset
by the productivity increase. Rahman et al. (2008) addressed the RMG workers’ productivity
and stated that the proportion of skilled workers is high in large factories (46-53 percent) than
small and medium factories. The proportion of unskilled workers is high in small and medium
enterprises (18-26 percent) than that of large enterprises (16-18 percent).
Clark & Kanter (2011) found that the efficiency level judged by the productivity of Bangladesh
RMG workers is not up to date or accordance to international level and it is just one-fourth of
that of Chinese workers owing to workers’ low literacy.
Berg et al., (2011) stated five major challenges for Bangladesh RMG sector such as weak
infrastructures, compliance issues, low supplier and labor efficiency, insufficient backward
linkage and political & economic volatility. Chowdhury et al. (2014) pointed major challenges
as utility crisis such as oil and gas shortage, too much dependency on imported raw material,
suppliers’ inefficiency and low labor productivity, high interest rate and insufficient bank
finance and political unrest within the country.
Hasan (2013) addressed that the single most challenge of Bangladesh RMG sector as the open
competition emerged from the withdrawal of quota system under MFA agreement and the
sustainability of the RMG sector under global market competition.
Klaus Schwab (2014) addressed that the infrastructure facilities such as road network, sea and
land port facilities, and utility such as electricity and gas supply are the top most challenges for
Bangladesh RMG Sector. Construction of new and up-gradation of existing Road-Rail-Port
facilities are now become major requirements for RMG growth and sustainability.
Narrow and busy highways such as Dhaka- Chittagong will take almost take 20 hours of
transport time, lack of alternative transportation mode e.g., rail also offers very limited
capacity. Unavailability of deep sea harbor and inefficient management of Chittagong port and
limited crane capacity and employee strike have increased the lead time by almost 10 days.
Islam et al. (2014) identified a number of problems such as conflict between owners and
workers, labor unrest, shortage of gas and electricity, poor infrastructure, poor port facility, lead
time complexities, conspiracy of home and abroad, advancing competitors in the quota free
international market.
From the above literature it is clear that different researchers have examined the RMG sector in
different viewpoints. The present study will be general in nature that it will analyze and
consider both contribution and challenges of RMG sector in Bangladesh economy.
Methodology
The present study is descriptive one and based on mainly secondary information. The data was
collected from various journals, research articles, thesis papers, newspapers, online news and
survey reports, BGMEA annual reports, and files. However, primary data was also collected
through in-depth discussion among number of RMG entrepreneurs and BGMEA officials. A
descriptive technique was adopted to analyze and represent collected data and information in
tabular form.

7. Result and Discussion
Growth of Factories in RMG Industry
The journey of the RMG industry was started in 1978 when Reaz Garments exported its first
consignment in USA and earned 69 thousand USD. But the actual milestone was led by the
Desh Garments Ltd established in 1979, the first 100 percent export oriented company. It was
set-up in joint venture with Daewoo of South Korea and became the single largest and most
modern garment manufacturing unit in the sub-continent (Yunus and Yamagata, 2012). In 1980
Youngone-Bangladesh (49 percent), and Treximb Ltd (51 percent) were established as equity
joint-venture garment firm. Since then there has been tremendous growth in the number of
factories in consistent with the amount of export. Thus, the number of factories in RMG industry
has gone manifold increase over the last 3 decades. Data in Table 1 captures these facts.
Growth of Factories in RMG Sector
Year Number of Factories
1983-84 134
1989-90 759
1995-96 2353
2001-02 3618
2007-08 4743
2012-13 55876
2013-14 4222
In year 1983-84 there were only 134 RMG units and by 2012-2013 the number increased to
5876 (BGMEA, 2015a). This growth is strongly facilitated by the Multi Fiber Agreement
(MFA) under the Uruguay round of GATT in 1994, proactive entrepreneurial approach and
supportive policies of Government of Bangladesh (Hasan, 2013). However, the growth of
factory has shown a negative trend in year 2013-14 due to the utility crisis and strong
inspection from the regulatory body to identify the risky factories.
Number of Workers in RMG Sector
Emergence of RMG sector is seen as one of the best thing happened in Bangladesh economy
as it created generous employment opportunity for labor force especially for the women. It
provided a room for women participation and their empowerment. More than 4 million
workers are directly employed in RMG sector. Data in table 2, highlights workers trends in
RMG sector.
Source: BGMEA, 2015a Table no:1.

8. Number of Workers in RMG Sector
Year Workers (in millions)
1983-84 0.04
1989-90 0.34
1995-96 1.29
2001-02 1.80
2007-08 2.80
2012-13 4.00
2013-14 4.00
Source: BGMEA, 2015a. Table no:2
The numbers of workers have increased at faster rates and reached to 4 million in
2012-2013 fiscal years. During the following year however, the employment level
remained stagnant. Out of these total labor force almost 90 percent are women. In
fact, a large supply of cheap female labor remained the key success factor in the
initial stages of this the country’s flagship export-oriented industry (Bhattacharya &
Rahman, 1999).
Table 3: Female Employment in South Asian Garment Industry
Country No of Workers % of Female
Bangladesh 4 Million 90
Sri Lanka 31200 81
India 5.3 Million 38
Nepal 52000 18
Pakistan 912000 15
Currently the RMG industry employs about 4 million workers, of whom 90 percent
are women. The data in Table 3 clearly shows that the women participation in RMG
industry in Bangladesh is the highest among all South Asian countries. All other
countries are lagging far behind Bangladesh, except Sri Lanka which is little closer
to Bangladesh and amounts to 81 percent women participation.
RMG Sector’s 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. Over the
last two decades the RMG industry has emerged as the thrust sector and ensured the fuel
of growth and development of the economy. While export earnings from the apparel
industry were barely $ 1 million in 1978, it became $31.57 million in 1983-84, $10.7
billion in 2007-08, and $24.49 billion in 2013-14 fiscal years holding the 81.13 percent
of country’s of total export earnings. Table 4 captures these facts.

9. RMG and Its Contribution in Total Export
Year RMG export
(in million
us$)
Total export
(in million
us$)
Contribution
in
total export
(%)
1983-84 31.57 811.00 3.89
1989-90 624.16 1929.70 32.45
1995-96 2547.13 3882.42 65.61
2001-02 4583.75 5986.09 76.57
2007-08 10699.80 14110.80 75.83
2012-13 21515.75 27027.36 79.61
2013-14 24491.88 30186.60 81.13
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. This results in a lower
productivity score 77 percent, compared to competitors e.g., India 92 percent, Vietnam
90
percent and Pakistan 88 percent (Islam, 2015).
Most of the factories do not have in-house training facilities, and those have, the
existing training facilities are poor in quality due to lack of professional qualified
trainers,
weak training program (irregular courses and covered only workers), lack of training
aids, no
systematic training needs assessment or evaluation program, no follow up and feedback
intervention, no corollary relation between training and benefits in terms of cash or kind,
etc.
 Challenges of RMG Sector
Unskilled workers
Table no:3

10. Why and how should you invest in Bangladesh RMG industry?
Introduction:
Bangladesh is the 2nd largest Ready Made Garments (RMG) exporter in the world after
China. About 81% of its export earnings are coming from RMG. Textile and Apparel
sector’s contribution to Bangladesh GDP is around 20%. About 20 million people are
directly associated with the industry. It is clear that main driving force of country’s economy
is this industry. Now Bangladesh is dreaming to have middle income country status by 2021,
RMG will certainly play a crucial role in materializing the dream.
Why business in RMG?
1. Quick return
As per the information from factory owners, RMG is the only sector in Bangladesh where
one can get back his investment by 3 to 5 years. The ratio of the return against investment is
very high compared to other business or industry. RMG is a people oriented
industry. Currently it has
Figure 1: Abundant and skilled workforce remain as core competence of Bangladesh for textile and apparel business.
4 million of employees (Source; BGMEA). So, it can generate a lot of employment
opportunity for both skilled and unskilled people. Government is also encouraging to the
entrepreneur by providing incentive on export earnings (4% for traditional market and 7%
for nontraditional or emerging market) and low taxing policy on the income. Also the social
recognition and honor is the main achievement of an RMG entrepreneur. Employment of
huge number of people is a great motivation for the industry owners

11. 2. Huge market opportunities:
Recent export data shows that there is huge chance to grow more RMG business in
Bangladesh. Bangladesh has 6.4% of market share where our main competitor china has
36.4% share. RMG export is increasing every year and our market share rose 5.1%, 5.9% &
6.4% through last 3 consecutive years (Source; BGMEA). Our main competitor China, the
largest garments exporter of the world, is now losing its garment export for high production
cost and short of skilled manpower. Its market share decreased to 36.4% (2016) from 39.3%
(2015). There is huge gap in export value between China ($161 Billion) and Bangladesh
($28.67 Billion). It’s a great opportunity for Bangladesh to grab more market shares.
The global apparels market is predicted to be $650 billion by 2020. Where current market is
$444 (2016) billion (source: The Financial Express). Continual RMG export growth of
Bangladesh is predicting massive opportunities to be a global leader in the export of
garments.
The rate of export percentage is increasing each year to the emerging markets like Australia,
Korea, Japan and Russia etc. It was 14.79 (2014), 15.29 (2015) & 15.30 (2016) percentage
of total export value. It is encouraging RMG exporters to expand their business in the new
markets. Government also announced special incentives for nontraditional markets.
3. Abundant & skilled workforce:
The main strength for this business is available workforce. Labor cost is lowest in
Bangladesh among the other competitors. Minimum wages in Bangladesh is $ 68 where
China is $ 155, Cambodia $ 140, India $ 137, Vietnam $ 107 (Source: University of
Delaware, USA)
Figure 2: Minimum wage advantage for Bangladesh
are generating skilled manpower in every year for this sectorSkilled
and relevant educated manpower is also increasing in this
industry. There is around 37 public & private university and colleges
which are producing textile graduates. There are 6 government textile
institutes (under Bangladesh Technical education board) for creating
diploma engineers for this industry. There are also good numbers of
private institutes and polytechnics

12. 4. Strong backward & forward linkage:
Favorable government policy and bank facilities for raw material purchase are advantages for this
business. There is so many backward linkage supporting industries established in the country.
Now a day’s maximum raw materials are available in local market. Around 1430 textile mills are
in operation. Capacity of yarn production is 2100 million kg per year. Capacity of fabrics
production is 2800 million meters. 85% of knitted fabrics demand met by locally. (Source:
Readymade Garment & Textile Industry in Bangladesh- World Textile Conference II, Mumbai
September, 2016). Over last few years Bangladesh’s strength in producing cotton based yarn and
fabric has increase significantly. Good numbers of plants are in the process now. Chinese and
other countries are looking forward in Bangladesh to invest in fiber, fabric and other allied
industries in Bangladesh.
5. Geographic & demographic advantage:
Geographically Bangladesh is located in an ideal place which is an additional advantage for
international business. Our country has very convenient access to international seaports, air
routes and others. It has 3 sea ports (Chittagong, Mongla and Payra), 3 international airports
(Dhaka, Chittagong and Sylhet) and 22 land ports.
Every year about 2 lacs youth are entering in job market in Bangladesh. 70% of Bangladesh
population is under 40 years of age which gives huge work force availability. Most of these
youth is educated.
6. Duty advantages in export destinations:
As a Least Developed Country (LDC) Bangladesh is enjoying duty free market access or
reduced tariff rate facilities for RMG export to many developed and developing countries in the
world. Tax free facility in importing country is a great advantage for RMG exporters.
Bangladesh is getting GSP (Generalized System of Preference) facilities in 38 countries
including EU (28 Countries) and some other (10 countries) selected countries. EU countries are
importing 90% of garments from Bangladesh. Buyers are planning to increase more sourcing of
their target goods from Bangladesh.
7. Recognized hotspot for souring:
Bangladesh’s growth potential has been recognized by many reputed analysts across the globe.
Goldman Sachs includes Bangladesh in the “Next 11” emerging countries to watch for along
with the BRIC countries (Brazil, Russia, India, and China) and JP Morgan lists Bangladesh
among its “Frontier Five” emerging economies worth investing in (Source: The Daily Star).
Many research and survey showed that Bangladesh will be the next hot spot for sourcing. As per
McKinsey & Company’s research; Bangladesh will be top sourcing country over next 5 years.

13. Figure 2: What’s next in apparel sourcing?
8. One of the safest RMG industries in the world:
Tajreen and Rana Plaza incident was a wake-up call for the entrepreneurs and all
stakeholders. Though it was caused thousands of death but it made the owners, workers
and all other parties involved with this business aware and now safety is being
considered as integral part of the factories. Now Bangladesh factory is world standard in
social compliance and workers safety.. This awareness made our garment industry
stronger and work friendly. Bangladesh has seen number of initiatives around Tajreen
and Rana Plaza incidents i.e. Accord & Alliance altogether Bangladesh could use the
learning positively.

14. Things to be considered while investing in RMG
1. Only efficient companies will survive:
Bangladesh RMG industry is an established sector. It may seem that doing this business is
very easy. But reality is different. People those who know the industry well and can manage
the business efficiently they only should invest in the sector, opined Engr. Saiful Islam Khan,
Managing Director, Essential clothing Ltd. Mr. Khan being a successful young entrepreneur in
Bangladesh RMG motivates others to come in this business. But he also warns that only the
efficient businesses will survive. He added that management efficiency is the key for success.
If the management is efficient many barriers will be easy to overcome
2. Financial Management is the key:
Mr. Khan particularly emphasized on the importance of managing finances efficiently. He
brought the example of Sri Lanka where most the chiefs of the RMG factories are from
financial background. He told that as in RMG business the working capital has highest
possible impact, managing short term to medium term finances is very critical for the
companies. He added that companies usually failed for financial failures not much for
technical failures.
3. Investments should add capacity for new product ranges:
RMG business will sustain more 15-20 years in Bangladesh- as per the opinion of Saiful
Islam. Moreover we can invest more in this sector to establish for producing high value
products- he told. However he added that there is not enough facility to handle small quantity
of fancy order i.e. minimum capacity of dye house, all over print factory, sewing unit etc. As
per his opinion, new investments should open up market for new product and order ranges.
4. Invest in design and development:
Mr. Khan also emphasized on the importance of design and product development by the
garment manufacturers. Till now we are producing clothing as per buyer’s provided design.
There is huge opportunity for Bangladesh to develop business in design selling to buyer. Some
local giant group of companies already has established own design studio and buyers also like
their design and buying a lot, he added

15. 5. Value addition:
There is a good chance for Bangladesh to earn more foreign currency from producing the
high value items. Currently we are producing mostly low value items, for example T-shirts,
polo Shirts, basic pants, shorts etc. Still there is shortage of professional ladies under
garments, suits, sports garments and work wear factory. This type of item’s value is high and
competition is low.
 How to Do?
RMG entrepreneur should pay their main attention on Sales Strategy, Procurement Policy,
Quality & Productivity, FICO and Cash Flow management. Besides these, Customer
Relationship, Training & Grooming and Analyze Investment opportunities also important to
accelerate business in order to achieved organizational goals and objectives. Bargaining and
negotiation is prerequisite for price setting. Buyers are placing order with competitive price.
Entrepreneur needs to hire people with good negotiation and bargaining skills.
1. Planning:
The first and most important job is to make the business plan and selecting short & long term
goal. After that selecting appropriate product line is second job of a RMG entrepreneur. After
that working out on project cost and selecting means of financing is the way of starting
operation for the venture.
2. Human resources and business process:
Companies must have planning for recruitment and mapping out policy to convert work force
into assets. You need to do scheduling the milestone of project design to trial production. See
through and evaluating the learning curve.
3. Finance:
Finances can arrange by personal investment or intercompany investment. Local commercial
banks also provide project loan to establish industry in apparel sector. Foreign currency loan
also can be availed by the entrepreneurs. Loan from strategic partner customers also can be a
mode of finance
 Challenges to be faced:
Bangladesh garment industry has been facing multidimensional problems since its
establishment. These are uninterrupted power and gas supply, poor infrastructure, less
capacity of sea and airport, political and labor unrest. Price hike for utility services which is
have direct impact to the garment industry as well as backward linkage industry

16. Valuable working hour is losing in the road due to traffic. Half an hour journey needs 3 to
4 hours to reach the destinations. It is also taking one day or more time to reach goods in
Chittagong port from Dhaka where it is supposed to need 7-8 hours. Government should
remove all the infrastructural obstacles in the transportation facilities and focus on
separate route for the export and import activities. These are may be high way, metro line,
more cargo ship etc.
Chittagong port also cannot provide efficient service for shipment. It is hampering mainly
in case of raw materials import. Shipment lead time from China is 12-14 days but it is
taking additional 10-15 days for clearing the goods. The same scenario is also seen in
Airport. By 2-3 days goods are arriving in airport but it needs need more 8-10 days for
releasing. It is badly affecting shipment lead time
Conclusion:
RMG industry occupies a unique position in the Bangladesh economy. To remain
successful, government needs to take more strategic policy for investment in the RMG
sector to maintain competitiveness in the global RMG market. Despite of all the
challenges that exist in the RMG sector of Bangladesh, still there are unlimited prospects
and can look forward to advancing its share of the global RMG market.

17. An overview of Bangladesh RMG 2016
In the year 2016 Bangladesh textile & clothing industry has faced many challenges,
including worker unrest, gas crisis etc. and of course positives were many as it could
continue to contribute to the country economy and global trade very significant. The
purpose of the report is to give a brief view to the readers about 2016’s overall
scenario of Bangladesh RMG industry.
Contribution to the GDP:
According to the IMF, Bangladesh’s economy is the second fastest growing major
economy of 2016 (Dec), with 7.11 percent Gross Domestic Product (GDP) growth
rate where the growth rate was 6.12 percent in 2015. Contribution of industry to the
GDP was 28.1%, where RMG sector donate the biggest part. Since 2004, Bangladesh
averaged a GDP growth of 6.5%, which has been importantly driven by its exports of
readymade garments.
FDI trends:
According to classical and neo-classical economic theory, economic growth depends
on the supply of capital as well as the supply of labor and technology. Developing
countries like Bangladesh face capital shortages that put a limit on investment and
therefore growth, which can be balanced with an inflow of funds from foreign private
or public sector (Hussain & Haque, 2016). Foreign Direct Investment (FDI) is very
important for economic growth as well as textile industries enhancement.
Bangladesh’s textile and clothing sector secured a growth in achieving Foreign
Direct Investment (FDI) in the FY 2015-2016. According to the Bangladesh Bank
statistics, in this sector FDI successfully stood up at $396 million which is 11 percent
higher than previous fiscal year when it was $351.62 million.
In South Asia, Bangladesh got good growth of all countries except India, where
inflows to Pakistan and Sri Lanka turned down to $ 865 million and $ 681 million
respectively, a World Bank report said. However FDI inflows are not yet of that level
where it could be said that it has been one of the most preferred industries by the
global investors.

18. Capital machinery import:
The country’s overall imports grew by 14.75 percent in the first four months of the current
FY 2016-17, where 83 percent increase in import of capital machinery is significant. It could
be said that the growth in import is mainly due to higher import of capital machinery and
industrial raw materials, according to Bangladesh Bank. Garment factories, which are
obligated to become compliant, are importing most of the capital machinery, in recent times
for complying with the requirements of Accord and Alliance. More than 4,000 woven and
knitwear garment factories are under pressure from their Western buyers to improve their
workplace safety to global standards by June 2018. For this reason, capital machinery
particularly in the safety equipment import is increasing year by year.
Worker unrest:
In 2016, the textile industry has observed some incidents where the workers have come
down in the street and making insurgence on their demand and tried to destruct public
properties. Operations of 55 factories were stopped for few days. More than 1,000 workers
have been accused of instigation, trespassing, vandalism and theft in seven cases started over
the unrest so far. As a result, companies lost working-hours and production targets. It also
hampered export earnings and the image of the country to the international markets. Some of
the leaders of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA)
attributed the decline in apparel exports to the latest labor unrest. Export earnings of woven
garment declined by 9.36 per cent in July-December period of 2016.
Compliance:
Accord and Alliance started inspection to the garment factories after Rana Plaza and Tazreen
fashion fire incidents. Accord and Alliance inspection found less than 2% factory risky to
safety, while the global safety risk rate is about 4%, according to BGMEA President
Siddiqur. International buyers are very particular about compliance with codes of conduct
before placing any import order. In 2016, RMG factories achieved a great success on it and
the sector is going ahead in being more environments friendly. Moreover, the top three
performing environment-friendly LEED certified garment and textile factories in the world
are located in Bangladesh. BGMEA president recently said, “Environment-friendly factories
have been established in the country, meeting the best compliance standards of the world.
Now 150 factories are being prepared as green factories. That will increase confidence of
buyers in our clothing industries. It will expand business as well.”

19. Table 1: value of total apparel export- calendar year
basis. (Source- BGMEA)
Year USD (million) YonY Growth (%)
2007 9350.33 4.67
2008 11878.92 27.04
2009 11890.49 0.10
2010 14854.6 24.93
2011 19214.47 29.35
2012 19788.14 2.99
2013 23500.98 18.76
2014 24583.96 4.61
2015 26602.7 8.21
2016 28668.29 7.76
Export scenario:
Bangladesh garment industry has generated $28.67bn exports in the calendar year 2016 which is
7.76% higher than the previous calendar year. The export in the last fiscal year 2015-16 was
$28.09bn with a 10.21% growth from the previous fiscal year, according to Export Promotion
Bureau data. Of the total figure of 2016 export, the knitwear constituted $13.74bn and woven
products $14.93bn.
Table 1 shows that Bangladesh RMG have been securing a consistent growth through the decade.
From 2007 to 2016 average yearly growth was 12.84% which shows strong potential of the
sector. The data also shows that growth has been slowed down through last five years which was
8.47 percent average. And this was even greatly contributed by the spectacular growth of the year
2013. As Bangladesh RMG is moving towards achieving a target of reaching USD 50 billion by
2021 the country requires more growth than it has been getting for last three years in particular.
2017 is to be a very crucial year in that path. If the country can secure a growth around of 15% in
this year, it may proceed well achieving the goal.

20. In conclusion, RMG sector is growing though there is a little bit slow
down in last three years but it could be enhanced to take some steps by
government and others stake holders. If the country could help bringing
more investments to the sector and a strong positive reformation
continues the sector would reach its expected growth. More investment
behind the human capital of the sector would be key for coming days.
To secure more value addition companies must invest behind human
resource. If not full RMG sector a portion of must be transformed into
world class best performing ones. Product and process diversity is the
key along with productivity and performance improvement. At the same
time, building proper infra-structure throughout the country and special
look should be given to the livelihoods of the workers and staffs in and
around RMG factories.