Introduction: A late entrant to apparel trade world with a modest beginning in 80s as a non-traditional sector, Ready-made Garments (RMG) industry of Bangladesh has carved out a niche for itself. This is the only sector that has achieved phenomenal growth almost unaided by anybody. Now considered as one of the major thrust-sectors, RMG industry accounts for over 78.86% of total export earnings, employing, 1.8 million people.
Present state of RMG sector: The RMG sector accounts for around two-third of the country's total foreign exchange earnings through merchandise sales abroad. In 2012-2013 (July-March) fiscal year, total export earnings from garment industries was US $ 24.32 billion which 1s 19.01% of Bangladesh's
GDP. BGMEA members export all kinds of knit and sweater items for men, women, ladies, boys, girls and infants. Bangladeshi manufacturers export apparels to various countries of the world. But the major destinations of the country's RMG products are USA, Canada, Germany, France, Italy, UK, Spain,
Belgium, Sweden, Holland, Denmark, Greece, Portugal, Austria etc. Thus, export to USA and EU countries constitute around 93 percent of total RMG export.
Contribution of RMG to national economy A. Entrepreneurship development: Garments industry in Bangladesh emerged as a profitable, quick yielding investment sector and opened up a wide scope for entrepreneurship development in the garments sector as well as in linkage industries and support services. So, garments industry 1n Bangladesh had developed an educated, young hardworking entrepreneurial class which was absent in the country.
B. Generation of employment: Ready-made Garments (RMG) industries have generated direct employment opportunities for 1.8 million workers of which 90% are female workers. Besides, more than 0.8 million workers are engaged in accessory industries related to the garment industries. On the other hand, around 10 million people are indirectly dependent on the RMG industries.
C. Foreign exchange earnings: The garments sector of the Bangladesh economy emerged as a hundred percent export oriented industry and ever since the beginning in 1978/79; the country earned foreign exchange from garments export at a very fast growing rate. In 2011-2012 (July-March) fiscal year, total export earnings from garments industries was US $ 14104.85 million which is 78.86 percent of total export earnings.
D. Linkage effects: The development of the garments export trade in Bangladesh has brought in tremendous expansion in the linkage industry.
1. Backward linkage : With the fast expansion of garments factories in numbers and the rapid growth of export of their products, the backward linkage industries started to gradually come up. These industries started with the development of factories producing woven fabrics (textiles) and the accessories for garment products.
2. Forward linkage : The development of garments industry and the requirements associated with its growth and expansion have contribute to forward linkage industries. For example, a good number of buyers/buying houses have opened offices at Dhaka and Chittagong and hired accommodation/services of local staff. According to an estimate, the sector generates US $ 25 million as earnings for the real estate sector as office and factory rent. It has also led to a manifold (RRT) increase of shipping business;, trucking and transportation services, extension of container services in Chittagong and in Dhaka, expansion in the cargo handing and storage facilities in sea and airport. According to BGMEA,
the RMG sector pays USS 62.33 million to the shipping business and US $ 26.17 million to the domestic transportation sector.
E. Government earnings: The garments sector provides the government with a great amount in various forms. It generates revenue earnings in the form of postage, license and renewal fees to the tune of US$ 6.17 million. Besides, the RMG sector contributes US$ I million to the Export Promotion Bureau. It contributes US $ 2.33 million as direct tax to the national exchanger. It pays an amount of US$ 3.67 million as Gas and WASA bills.
Present state of RMG sector: The RMG sector accounts for around two-third of the country's total foreign exchange earnings through merchandise sales abroad. In 2012-2013 (July-March) fiscal year, total export earnings from garment industries was US $ 24.32 billion which 1s 19.01% of Bangladesh's
GDP. BGMEA members export all kinds of knit and sweater items for men, women, ladies, boys, girls and infants. Bangladeshi manufacturers export apparels to various countries of the world. But the major destinations of the country's RMG products are USA, Canada, Germany, France, Italy, UK, Spain,
Belgium, Sweden, Holland, Denmark, Greece, Portugal, Austria etc. Thus, export to USA and EU countries constitute around 93 percent of total RMG export.
Contribution of RMG to national economy A. Entrepreneurship development: Garments industry in Bangladesh emerged as a profitable, quick yielding investment sector and opened up a wide scope for entrepreneurship development in the garments sector as well as in linkage industries and support services. So, garments industry 1n Bangladesh had developed an educated, young hardworking entrepreneurial class which was absent in the country.
B. Generation of employment: Ready-made Garments (RMG) industries have generated direct employment opportunities for 1.8 million workers of which 90% are female workers. Besides, more than 0.8 million workers are engaged in accessory industries related to the garment industries. On the other hand, around 10 million people are indirectly dependent on the RMG industries.
C. Foreign exchange earnings: The garments sector of the Bangladesh economy emerged as a hundred percent export oriented industry and ever since the beginning in 1978/79; the country earned foreign exchange from garments export at a very fast growing rate. In 2011-2012 (July-March) fiscal year, total export earnings from garments industries was US $ 14104.85 million which is 78.86 percent of total export earnings.
D. Linkage effects: The development of the garments export trade in Bangladesh has brought in tremendous expansion in the linkage industry.
1. Backward linkage : With the fast expansion of garments factories in numbers and the rapid growth of export of their products, the backward linkage industries started to gradually come up. These industries started with the development of factories producing woven fabrics (textiles) and the accessories for garment products.
2. Forward linkage : The development of garments industry and the requirements associated with its growth and expansion have contribute to forward linkage industries. For example, a good number of buyers/buying houses have opened offices at Dhaka and Chittagong and hired accommodation/services of local staff. According to an estimate, the sector generates US $ 25 million as earnings for the real estate sector as office and factory rent. It has also led to a manifold (RRT) increase of shipping business;, trucking and transportation services, extension of container services in Chittagong and in Dhaka, expansion in the cargo handing and storage facilities in sea and airport. According to BGMEA,
the RMG sector pays USS 62.33 million to the shipping business and US $ 26.17 million to the domestic transportation sector.
E. Government earnings: The garments sector provides the government with a great amount in various forms. It generates revenue earnings in the form of postage, license and renewal fees to the tune of US$ 6.17 million. Besides, the RMG sector contributes US$ I million to the Export Promotion Bureau. It contributes US $ 2.33 million as direct tax to the national exchanger. It pays an amount of US$ 3.67 million as Gas and WASA bills.
Problems of Garment industries: Garments industry of Bangladesh suffers from a number of drawbacks ( 41). Among them, some notable Constraints and weaknesses are as under:
1.Insufficient backward linkage industries: One of the major problems faced by the apparel exporting firms in Bangladesh is their great dependence on imports of fabrics and accessories from abroad. According to some estimates, the domestic woven fabrics meet only 10 to 15 percent of the demand for fabrics of the country's garments industry units. However, situation with knitwear fabrics production in the country is relatively better 70 to 75 percent of knitwear is now domestically produced.
2. Back of product diversification: There is a back of product diversification within the RMG sector and there is no incremental shift to higher value added fashionable product categories. It is true for both woven and knit.
3. Failure to maintain standard of production: The quality of our garments products is not so good. Even, our garments exporters sometimes cheat the buyers and consequently the foreigners are losing their trust on Bangladeshi garment products.
4. Low labor productivity: The productivity of our unskilled labors working in the garments sectors is very low. They are not properly trained and even not properly paid. So, despite their hard work, they can not produce more.
5. Internal political instability: Internal political instability is a great barrier to our garments industries. Because, political unrests disrupt the very process of production as well as the freight of goods and services. Specially due to frequent hartals, exporters can not carry goods to the port and thus they make delay in delivery of goods to foreign buyers. It sometimes results into cancellation of order
6. Lack of modern technology: Our garments sector lacks modern technology. It is mainly dependent on manual labor. It also lacks skilled and technologically trained labor force.
7. Lack of competitive capacity : Our garment sector is not established on a strong basis It is being reared and compensated in many ways by the government. Which is most important is that our garments sector flourished only because of the opportunities for quota free access in the international market. So, our garments industries are facing a great challenge after lifting the quota system in 2005.
Suggested measures: For acquiring the competitive capacity in a free quota market and to accelerate the growth of our garments sector, the following measures should be considered:
i. Domestic textile industry is to be given extra protection and the government can at least minimize the disparity in the effective protection rates received by textile products for sale in the domestic and export market.
ii. Textile weaving, spinning and dying/finishing capacities equipped with modern machinery and methods are to be tagged with the demand for the export garments industry.
iii. It is not desirable that the Bangladeshi business community remains fragmented and operate as if in different worlds with different interest an needs. Therefore, acrimony and accusations must be replaced with co-ordination and recognition that each has fate of the other in its hand.
iv. The backward linkage can be improved only if domestic manufacturers can supply the garments industry units on a competitive credit basis.
Conclusion: After all, the country has the opportunity to build up increased capabilities to adjust to the changing industry conditions through market and product diversification as well as to develop the local base through growth of the backward linkage industries. So, the need for the hour is to take initiative in this direction by our government as well first as our business community thereafter.
July 23, 2021
Tags :
Case Study
Subscribe by Email
Follow Updates Articles from This Blog via Email
2 Comments
Right
Reply DeleteReally?
Reply Delete