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Internship Report On:

Problems and Prospect of Readymade Garments Industries In


Bangladesh---A study on KDS Garments.
(This Internship Report Is Submitted For the Partial Fulfillment of the Degree of
Master of Business of Administration with a Major in Finance)

Submitted To:
The Supervisor
Steve D Oscar Rozario
Lecturer
Faculty Of Business Studies
Premier University
Chittagong. Bangladesh.
Submitted By:
Name:

ID No:

Batch: 29th

Major: Finance

Program: RMBA (2 Years)

Submission Date: 16-10-2016

PREMIER UNIVERSITY CHITTAGONG

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Letter of Submission
Date: 16-10-2016

To

The Supervisor

Steve D Oscar Rozario

Faculty Of Business Studies

Premier University

Chittagong. Bangladesh.

Subject: Submission of internship report on “Problems and Prospect of Readymade


Garments Industries In Bangladesh

Dear Sir

It is my great pleasure to submit the Internship report on ““Problems and Prospect of Readymade
Garments Industries In Bangladesh. This report has been prepared to fulfill the requirement of the
internship program in Prime Bank Limited.

It has been an interesting and very enlightening experience for me to work in KDS Garments Limited. I
have tried my level best to reflect my three months long work experience in this report and also tried to
make this report a successful one.

Therefore, I would like to express my heartiest gratitude to you for your full hearted inspiration,
instructions and valuable advices. Thank you for accepting the report. I am very glad to submit the report
to you.

Name:

ID No:

Batch: 29th

Major: Finance

Program: RMBA (2 Years)

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Acknowledgement

First and foremost, I would like to pay my gratitude to the almighty God for giving me the ability to work
hard. I wish to extend my sincere gratitude to giving me opportunity to take up this study and her
invaluable comments and suggestions and supervision through the course of my study.

I also want to express my strong gratitude to my internship supervisor, Steve Oscar D Rozario, Lecture,
Faculty of Business Studies Premier University, Chittagong, for his supervision during the preparation of
the internship report. I am grateful to him for his suggestions and all instance observations to prepare the
term paper.

I think my survey Analysis will provide me lots of practical knowledge regarding the garments Industry
in Bangladesh.

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Chapter 1
Introduction

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1.1 Introduction of the Report
The largest industrial sector of Bangladesh is garments Industry. The history of garments industry
in Bangladesh is not an older one rather it had been renowned all over the world from the period
Mughal emporium. For last 25 years Bangladeshi Garments Industry is the largest sector with 5
billion foreign currencies by exporting garments products. It makes the employment about 3
million workers and 90% of them are women, which in fact helps in a large section to employment
of women (Bangladesh Centre for Worker Solidarity,2011 ) RMG sector is helping to generate
revenue of 6 billion dollar yearly for this developing country. This is the single major sector of
Bangladesh which is helping continuously to more development of our country. This sector is
already treated with care by the government, but by recent issues it is shown that this sector is not
going appropriately. There is even better chance to develop the sector as well as our country, but
due to some unavoidable reasons, the sector is now endangered by various causes. Whatever, it’s
never so late to start again. So if appropriate intensive care for the sector can be taken exactly from
right now, this is a single sector can change the base of our country.

The development of Garments Industry is considered as the priority area in the development policy
in many countries, especially in Bangladesh. The young entrepreneurs are engaged in varied form
of small and medium scale garments industry which comprises of products like shorts, trousers,
shirts, sweaters, blouses, skirts, tea-shirts, jackets, sports attire and many more casual and fashion
items with the changing times. This study is conducted to analyze the prospects, problems and
solution of problems of Readymade Garments Industry in Bangladesh. The findings of this paper
show that Bangladesh has a great opportunity to earn a great foreign currency through developing
readymade garments industry. The study also suggests some measure for the removal of ongoing
crisis of garment sectors.

1.2 Objective of the Report


The objective of the study is to analyses problems and prospects of RMG sector at Bangladesh.
The broad objectives of the study are as follows

(i) To focus over garments industries’ prospect.


(ii) To find out the competitiveness of RMG sector.
(iii) To analysis the existing problems.
(iv) To define possible solutions of above problems.
(v) To brief the present situations with valid data.

(vi) To identify the future of the readymade garments sector in Bangladesh.

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(vii) To identify the impediments faced by the readymade garments sector and develop some
overcome strategies.

1.3 Methodology of the Report

The Study Area


The study mainly focuses on the different aspects of RMG sector like problems, prospects,
competitiveness and possible solution for the industries to make it strong and stable.

Data Sources

The study is descriptive in nature. It comprises of secondary data and information. In order to
achieve the objectives of the study, data have been collected from secondary sources. Secondary
data have been collected through surfing the internet, visiting BGMEA office, and studying
journals and books published by other authors who are related to my research. Newspaper also
helps a lot for collecting current situation of this industry.

1.4 Limitations of the Report


I try my best to settle and pass up the Report before the due date and hoping it
was satisfied. The study considers following limitations:

1. Lack of in-depth knowledge and analytical ability for writing such report.

2. Another limitation of this study is ACI information for obvious reason, which could
be very much useful.

1. In case of the secondary data collection, there were very few secondary
information was available. There were few supporting books, report,
journals etc.
2. Lack of experience to analyze data.
3. Gathering information about the banking performance was very difficult. That is why I
have to follow more on secondary data like annual report, web sites and some of ACI
documents.

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Chapter: 2
Theoretical Aspects

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2.1 History of Garments Industry
In the field of industrialization, the role of textile industry is found very prominent in both
developed and developing countries. Economic history of Britain reveals that in the 18 thcentury the
cotton mills of Lancashire ushered the first industrial revolution in the world. Moreover, during the
last 200 years or more, many countries of the world have used textileand clothing industry as an
engine for growth and a basis for economic development (Ahmed 1991). Bangladesh has a long
and illustrious history of producing world-class fabrics. During the Mughal period (in the 17th and
18th century) Moslin at Dhaka was a legend in the world fabric market. It was adored by members
of royal palaces of many countries of Asia and Europe. The unique craftsmanship of the artisans,
the cheap labor and locally developed technology were the basis of textile industry of Bengal to
flourish for several centuries prior to the British colonial rule. Andre Gunder Frank in this
connection comments, “Bengal once provided the life blood of mercantile and industrial capitalist
development in the metropolis”. Unfortunately the industry did not survive. The East India
Company suppressed the export of textile from Bengal, often with draconian means, at the behest
of British manufacturers of cloth who were unwilling to compete with the cheaper and better cloth
of Bengal (Rashid, 1990). History is the evident of inhuman torture upon craftsmen of Moslin by
the British colonist. The British colonist even cut the fingers of craftsmen of Moslin and thus
bunged the glory of fine textile of Bengal. On the other hand, to ensure the supply of raw materials
of textile mills of Britain, they imposed compulsory indigo cultivation upon the farmers of Bengal.
The ‘Nil Bidroho’ (Revolution against compulsory cultivation of indigo) in early 1860s by the
agrarian class of Bengal was one of the major shakes against British Imperialism in India. In 1947,
at the end of British rule in India, this part of the sub-continent (present Bangladesh) was part of
Pakistan. Despite a number of dissimilarities (having only similarity in religion) two parts of
Pakistan (West Pakistan- the main land and East Pakistan-present Bangladesh) started journey as
an independent country enduring practically and theoretically wide gap. Though Bangladesh was a
fertile land for jute and other raw materials, industrialization did not flourish here mainly because
of economic exploitation and discriminatory policies of government of Pakistan (centered in West
Pakistan). On the contrary, based on the raw materials of Bangladesh industrialization took place
in West Pakistan. The following table shows the difference of West and East Pakistan in terms of
number of textile mills between 1947 and 1971.

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For last 25 years Bangladeshi Garments Industry is the largest sector with 5 billion foreign
currencies by exporting garments products. It makes the employment about 3 million workers and
90% of them are women, which in fact helps in a large section to employment of women. RMG
sector is helping to generate revenue of 6 billion dollar yearly for this developing country.

This is the single major sector of Bangladesh which is helping continuously to more development
of our country. As far it becomes the very important sector at RMG industries, many already work
over with this sector and doing so many researches about the problems we are facing at RMG
sector, they worked about the prospects and focus over the competitiveness of our RMG sector.
Such works which are related with the topic are as follows.

Haider (2001) has conducted a research on “RMG Competitiveness of Bangladesh”. The purpose
of this research was to define the sectors for competitiveness of RMG sector at Bangladesh. He
found that the competitiveness of the Bangladesh Readymade Garments Industry is well enough
than other countries except China only. This paper was published at Asia Pacific Trade and
Investment review about the Competitiveness of the Bangladesh Ready-Made Garments Industry
in Major International Markets.

Khondoker Abdul Mottaleb has conducted a research on, “An Inquiry into the Rapid Growth of the
Garment Industry in Bangladesh” and it was found at GRIPS Policy Research Center Discussion
paper 11-10. The purpose of this research was to find out the growth of garments industry. He
found from the study that RMG sector growth at Bangladesh is still running on at a rapid speed.

Muhammad Aminul Islam Khan has conducted a research over Labor unrest in the RMG sector of
Bangladesh: A Public-Private Cooperation Perspective. The purpose of this research was to find
out the reasons of labor unrest at RMG sector. He found from the research that the owners of
garments industries are not so cordial about the labors wages and other benefits due to high supply
of labor at very cheap cost. And he also doubted that foreign conspiracy may be involved with the
unrest and striking issues of labor.

Abdur Rezzauque and Abu Eusuf have conducted a research over “Trade, Development and
Poverty Linkage: A case study of RMG Industry in Bangladesh for Unnayan Shamannay”. The
purpose of this study was to find out the linkage among trade, and the development had taken
place for the trade and the removal of poverty through these trade and development. They found a
positive relationship among trade, development and removal of poverty from the study.

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Chapter: 3
Practical Aspects

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3.1 A Brief History of KDS Group

This group is a well-known one in Bangladesh with major business in export of garments to all
parts of the world. It is true of success for the Group established in 1983, with long-term vision,
dedication and determination the Group has established itself successfully within a very short
period of time and its present yearly turnover is about 2200 Core Taka. It employs more than
13,000 people in its various establishments. KDS implies Khalil, Dilruba and Salim.

The iron and steel sector are vital in the economic and industrial development of any country. With
a view of these requirements, KY has introduced themselves in the steel sector in Bangladesh. K
and Y imply Khalil and Yasin. The KDS group came in the industrial sector of Bangladesh to
establish their philosophy. They believe that their name is their mission; their slogan for the future,
a vivid realization, a goal and a commitment, to people, to country, this is the promise.

Galvanized plain sheets and corrugated iron sheets (GP/CI) are value added steel products, which
are sturdy, lightweight, bright and corrosion resistant. KY produces this product from their own
raw materials that is CR coil under their own factories and doing this purpose KY imports the HR
coil mainly from Japan, Korea and India etc. KY also sells this CR coil inside the country which
companies produce CI sheets. But in this report I want to give emphasis on CI sheets, which is a
corrugated iron sheet and it has a major application in domestic and industrial roofing and
negligible uses in rolling shutters. There are several kinds of CI sheet companies in Bangladesh
and KY steel mills ltd. is one of them. It's completely an individual private Ltd. Company.

Al Hajj Khalilur Rahman as the chairman & managing director of KDS group are always very
pleased to employee who brings the organization to a strong position. He has tested all roads and
stayed ahead of the competition time and time again. This has been possible by continuous capital
investments in the various sectors where the organization is involved. This not only proves how
determined and focused the group in achieving the goals for the future but also depicts how it
intends to play an important role in the socio-economic development of Bangladesh. Getting to be
the one of the largest & most diversified business group in Bangladesh was a long & hard road to
tread. KDS is still continuing on the journey of growth, diversity & achievement. The growth has
been one of the most significant in each area of operation. This was made possible by the strong
drive of the management & continuous dedicated hard work of the rest of its team. KDS
employees are more than 13,000 people in all its operation.

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3.2. Success of KDS Group

The potential of the readymade Garments manufacturing industry was first brought to light in the
late 70s. The country being in its primary stage, having independence for only a few years was in a
rather vulnerable situation as far as international trade was concerned.

Thus, it was mainly with the perseverance of the few entrepreneurs, who visualized the future of
Garments industry; the path of the industry was laid in Bangladesh. One of those visionaries was
Mr. Khalilur Rahman the founder of the KDS Group.

Recognizing that the basics that the industry required was available in Bangladesh, Mr. Rahman
set up one of the first garment manufacturing units in Bangladesh, KDS garments industry Ltd. on
sep. 11, 1983. 300 men and women on one single floor worked eagerly to build a future together.

Since then, KDS never stopped growing. Numerous struggles and hurdles had to be toppled before
the company started to take shape to its present size and structure.

KDS set up its first accessories plant in a location just 5 minutes away from the mother plant.
Following that a series of accessories manufacturing units were set up in the same location to
support the mother industry, and soon it formed an independent operational division, the KDS
accessories division. Apart from the accessories, KDS establish its own washing, Quilting and E
embroidery plants to meet its growing needs of the international market. Export of readymade
garments is mainly to the USA. But KDS identified different markets around the world.

The KDS Textiles Mills was its latest ambition related to the mother industry, which is gradually
turning into a reality as it is now due to go into production early 1999. In 1985 KDS explored a
completely different field. The steel industry, KIY Steel Mills Ltd was an established producing
Galvanized CI sheet mainly consumed locally. With the immediate results of KIY, the Plant Was
Expanded To doubles Its Original Size By 1995. With a steady growth, KDS has also made major
investments in several Financial Institutions (Garments) as well as insurance companies and even
in stocks and securities in the country and has acquired Directorship in each.

It remains to be the pride of KDS that it grew to be one of the largest groups of industries in the
country within only a decade. Today, after 25 years of KDS, the group has a total turnover of over
US $ 480 million. The entire Group has now around 13000 people in its different division.

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This sincere effort has been duly recognized and KDS thus been the proud recipient of many
International awards and the National Export trophy each year since 1985.KDS, always looking
forward to changes as opportunities.

The group has got four major divisions with a number of group companies within each division as
mentioned below. Besides, company has got liaison offices in abroad also.

Garments Accessories Information Steel Division

Division Division Technology

Division

 KDS Garments  KDS Poly  KDS  KIY Steel Industries Ltd.


Industries Ltd. Industries Ltd. Information  KY Steel Mills Ltd.
 Five Star  KDS Plastic Technologies  KY CR Coil Industries Ltd.
Corporation Industries Ltd. Ltd.
 Shaindir Garments  KDS Printing
 HN Garments Ltd. Industries Ltd.
 Moon Apparels  KDS Packaging
 KHS Enterprise Industries Ltd.
 KS Apparels  KDS Label
 KDS Quilting Printing
 Star Apparels Industries Ltd.
 Modern Apparels,  KDS Cotton Poly
 KDS Washing Plant Thread Industries
Ltd.
 KDS Textiles Mills
Ltd.  KDS Offset
Printing
 KDS Embroidery
Industries Ltd.
Plant
 KDS Screen
 KDS Knitting &
Printing
Dying Ind. Ltd.
Industries Ltd.
 KDS Screen Printing
Ind. Ltd.

The Garment and Accessories divisions have integrated vertically all the activities starting from
textile fabrication to printing of labels and the group is totally independent in manufacturing and
exporting garments to abroad. Venture in steel business is relatively new for this group but it has
already become a player to recon with. In 2001 the Steel division has completed a massive green
field project for Cold Roll Steel Production with installed capacity of 1,50,000 Metric Ton of CR
Sheet using German technology, which is the first of such kind in Asia.

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Chapter 4
Findings and Analysis

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4.1 Findings and Analysis

Prospect of Garments Sector in Bangladesh


Apart some problems, the prospect of garments industry at Bangladesh are very promising. In the
1980s, there were only 50 factories employing only a few thousand people. Currently, there are
4490 manufacturing units. The RMG sector contributes around 76 percent to the total export
earnings. In 2007 it earned $9.35 billion. This sector also contributes around 13 percent to the
GDP, which was only around 3 percent in 1991. Of the estimated 4.2 million people employed in
this sector, about 50 percent of them are women from rural areas. In 2000, the industry consisting
of some 3000 factories employed directly more than 1.5 million workers of whom almost 80%
were female. USA is the largest importer of Bangladeshi RMG products, followed
by Germany, UK, France and other E.U countries. (BGMEA,2009-2010)

Exports and even manufacture of readymade garments have suffered due to the rail-road-port
blockade that marked last two months of agitation, upsetting commitments made to foreign buyers,
who have begun to look elsewhere. Among them is Van Heusen, a major brand that has shifted 30
percent of its requirements elsewhere, according to Bangladesh Garment Manufacturers and
Exporters Association (BGMEA) chief S.M. Fazlul Hoque. “The declining trend of RMG
(readymade garments) exports as observed during the October-December quarter this fiscal would
be felt further in the next January-March quarter,” he told The Daily Star published at 22 nd
December.

The decline in the growth rate already surfaced in the export figures of October as the woven
export growth came down to 22.70 percent from 31 percent in September. The exporters said they
had experienced a very low placement of orders since the last quarter. The chief of the apex trade
body of the sector said: “A worse situation has prompted me to ask the government and financial
institutions for providing soft term loans to the RMG exporters just to continue the workers’ salary
and thus help survive the industry.”

He alleged an international conspiracy to shift the export orders from Bangladesh to somewhere
else on the pretext of political uncertainty in the country.” It will be difficult to retain the position

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as a RMG exporting country unless normalcy is back in the political arena,” Annisul Huq, a former
BGMEA chief, said.
Sources in the apparel sector said India earned $12 billion from apparel exports, while Pakistan
earned $3 billion, Sri Lanka $4 billion, Cambodia $2.2 billion, Vietnam $5 billion and Nepal
nearly $1 billion last year.

According to industry insiders, although Bangladesh is well ahead of many south Asian RMG
exporting countries like Sri Lanka, Pakistan, Indonesia, Vietnam and Nepal, a sharp rise is
anticipated in exports from those countries and it is imminent that they emerge as strong
competitors. The exporters claimed that the country could achieve a tremendous growth in
garments export if the political situation and seaport remain normal.
“We are hopeful that export earnings may reach $15 billion within the next five years, if the
election takes place peacefully and the country survives any major political uncertainty,” Hoque
said. He said: “If the situation does not improve, we will simply lose the game.”

Despite many difficulties faced by the RMG industry over the past years, it continued to show its
robust performance and competitive strength. The resilience and bold trend in this MFA phase-out
period partly reflects the imposition of ‘safeguard quotas’ by US and similar restrictions by EU
administration on China up to 2008, which has been the largest supplier of textiles and apparel to
USA. Other factors like price competitiveness, enhanced GSP facility, market and product
diversification, cheap labor, increased backward integration, high level of investment, and
government support are among the key factors that helped the country to continue the momentum
in export earnings in the apparel sector. Some of these elements are reviewed below.

Market Diversification
Bangladeshi RMG products are mainly destined to the US and EU. Back in 1996-97, Bangladesh
was the 7th and 5th largest apparel exporter to the USA and European Union respectively. The
industry was successful in exploring the opportunities in markets away from EU and US. In FY07,
a successful turnaround was observed in exports to third countries, which having a negative growth
in FY06 rose three-fold in FY07, which helped to record 23.1 percent overall export growth in the
RMG sector (Financial Year Record 2006-2007, BGMEA). It is anticipated that the trend of market
diversification will continue and this will help to maintain the growth momentum of export
earnings. At the same time a recent WTO review points out that Bangladesh has not been able to

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exploit fully the duty free access to EU that it enjoys. While this is pointed out to be due to
stringent rules of origin (ROO) criteria, the relative stagnation in exports to EU requires further
analysis.

Product Diversification
The growth pattern of RMG exports can be categorized into two distinct phases. During the initial
phase it was the woven category, which contributed the most. Second phase is the emergence of
knitwear products that powered the recent double digit (year-on-year) growth starting in FY04. In
the globalized economy and ever-changing fashion world, product diversification is the key to
continuous business success. Starting with a few items, the entrepreneurs of the RMG sector have
also been able to diversify the product base ranging from ordinary shirts, T-shirts, trousers, shorts,
pajamas, ladies and children’s wear to sophisticated high value items like quality suits, branded
jeans, jackets, sweaters, embroidered wear etc. It is clear that value addition accrues mostly in the
designer items, and the sooner local entrepreneurs can catch on to this trend the brighter be the
RMG future.

Backward Integration
RMG industry in Bangladesh has already proved itself to be a resilient industry and can be a
catalyst for further industrialization in the country. However, this vital industry still depends
heavily on imported fabrics. After the liberalization of the quota regime some of the major textile
suppliers Thailand, India, China, Hong Kong, Indonesia and Taiwan increased their own RMG
exports.

If Bangladesh wants to enjoy increased market access created by the global open market economy
it has no alternative but to produce textile items competitively at home through the establishment
of backward linkage with the RMG industry. To some extent the industry has foreseen the need
and has embarked on its own capacity building.

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Flow of Investment
It is predictable that domestic entrepreneurs alone may not be able to develop the textile industry
by establishing modern mills with adequate capacity to meet the growing RMG demand. It is
important to have significant flow of investment both in terms of finance and technology. The
investment outlook in this sector is encouraging, although the uncertainties before the MFA phase-
out period caused a sluggish investment scenario. In part the momentum in the post-MFA phase-
out period is indicative of the efforts underway towards capacity building through backward
integration. This is evident in the pace of lending to the RMG sector and in the rising import share
of RMG related machinery. However further progress would be necessary to improve and sustain
competitiveness on a global scale.

Competitive Advantage in Garments Sector of Bangladesh


The United States was the main export destination for Bangladeshi RMG products in the early
1990s followed by the European Union, but the European Union has surpassed the United States
over time. These two destinations generate more than 90 per cent of the total RMG export earnings
of Bangladesh (BGMEA and the Export Promotion Bureau websites; and Quddus and Rashid,
2000). The shares of other importers, such as Australia, Canada, China, Japan and the Russian
Federation as well as countries in the Middle East, in the total RMG export earnings of Bangladesh
are minimal. This section of the paper focuses on surface-level competitive performance of the
Bangladesh RMG industry in the United States and the European Union markets only. In addition,
the performance of China and India along with Bangladesh as RMG suppliers to international
markets is also considered for comparative analysis.

Export Competitiveness in the United States Market


Bangladesh has experienced some product diversification in its export of garments to the United
States market in recent years compared with the early 1990s. However, the country’s performance
in upgrading its products is not significant with regard to the United States market (Haider, 2006).
The country experienced a sharp increase in the export of garment products to the United States
market in the 1990s, but faced declines in export earnings from that country in 2002 and 2003,
followed by slow increases since 2004. The exports of India also increased rapidly in the 1990s,

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although that country experienced comparatively slow progress in the last few years. However, the
RMG exports of China to the United States have increased at a startling rate over the years. For
example, the textile and garment export earnings of China, India and Bangladesh from the United
States were $3.6 billion, $0.8 billion and $0.4 billion respectively in 1990, and increased to $22.4
billion, $4.6 billion and $2.5 billion respectively in 2005. (Haider, 2006) Such rapid expansion in
the exports of China represents a major challenge to other exporters. Bangladesh exported a total
of 99 types of products in the textile and garment category to the United States in 2005, but most
of the category’s contribution was minimal. For India and China, the number of textile and
garment product categories exported in the same year to the United States was 161 and 167
respectively.

Export Competitiveness in the European Union Market


Bangladesh has experienced both quantitative and qualitative changes in exporting garment
products to the European Union market during the period 1996-2005. The textile and garment
export earnings of Bangladesh from the European Union increased from 1.2 billion euro’s in 1996
to 3.7 billion euros in 2005. For India and China, the corresponding earnings increased from 3
billion and 5.3 billion euros in 1996 to 5.3 billion and 21.1 billion euro’s in 2005 respectively.
Garment products generate the major share of Bangladesh’s export earnings from the European
Union. However, both textile and garment products in China and India contribute to the export
earnings from the European Union. For example, garment products on average generated more
than a 95 per cent share of the total textile and garment exports to the European Union from
Bangladesh during the period 1996-2005. The corresponding shares for India and China stand at
below 75 per cent and 80-90 per cent respectively. The top five product groups contributed 76 per
cent of the total garment export earnings of Bangladesh from the European Union in 1996, and that
share increased to 82 per cent in 2005. The corresponding changes for India and China were from
shares of 62 per cent and 34 per cent in 1996 to 54 per cent and 45 per cent in 2005 respectively.
This trend demonstrates that product diversification in Bangladesh is lower than that of India and
China in exporting garments products to the European Union market. Knit garments from
Bangladesh have gained remarkable access to the European Union market during the period 1996-
2005. Duty- and quota-free access of garment products manufactured under “two-stage local
transformation” (yarn turns into fabrics, and fabrics to garment) have accelerated the exports of
knit garment products from Bangladesh to the European Union. As the knit textile subsector is
relatively less capital intensive and requires relatively simple technologies, it managed to undergo
rapid expansion, benefiting from the European Union Generalized System of Preferences. The

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woven part of the category has failed to utilize that facility owing to a lack of sufficient backward
linkages. In contrast to the European Union, both knit and non-knit products have entered the
United States market simultaneously, as no special tariff or tax reduction incentive was available
there for the import of garment products from Bangladesh. The product-mix of garment products
exported from Bangladesh to the European

Union has changed significantly during the period 1996-2005. The share of shirts in total garment
exports from Bangladesh to the European Union has decreased, whereas the shares for overcoats,
jackets, sweaters, suits and some other garment products have increased in recent years. These
changes demonstrate that Bangladesh is achieving some level of product diversification in
exporting garment products to the European Union. In addition, a gender analysis indicates that
Bangladesh has achieved some upgrading of its products recently in terms of exporting garment
products to the European Union. Garments for females are treated as upgraded products compared
with garments for males, since they add more value on average. The earnings of Bangladesh from
the export of garments for females to the European Union had increased during the period 1996-
2005 (Haider, 2006).

Price Competitiveness
China and some other competitors of Bangladesh have implemented sharp price-cutting policies in
exporting garment products over the last few years, but Bangladesh has failed to respond
effectively to such policies. China was able to drop the export price of 29 garment categories10 by
46 per cent11 on average in the United States within a year, from $6.23 per sq. meter in December
2001 to $3.37 per sq. meter in December 2002. However, all other suppliers were able to drop the
price by only 2 per cent, from $3.50 per sq. meter to $3.41 per sq. meter during the same period.
By the end of 2002, China had underpriced all other exporters to the United States in 22 out of 29
garment categories and it had underpriced others in 26 out of 29 categories by March 2003
(American Textile Manufacturers Institute, 2003). Moreover, China rapidly managed to be price
competitive in the European Union and other major international markets. For example, the
average unit export price of garment products integrated in the third stage of the Multifibre
Arrangement phase-out decreased from 11,600 Euros per ton in 2001 to 9,500 euro’s per ton in
2002 for Bangladesh in the European Union, whereas the corresponding decrease for China in that
market was from 13,500 euros to 8,800 euros per ton (European Commission, 2003). Bangladesh

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needs to respond to such price-cutting policies of its rivals in order to remain competitive in the
quota-free global market.

Lead Time
Lead time refers to the time required for supplying the ordered garment products after the export
order has been received. In the 1980s, the usual lead time in the garment industry was 120-150
days for the main garment supplier countries of the world; it has been reduced to 30-40 days in the
current decade. However, in this regard the Bangladesh RMG industry has improved little; for
example, the average lead time is 90-120 days for woven garment firms and 60-80 days for knit
garment firms. In China, the average lead time is 40-60 days and 50-60 days for woven and knit
products respectively; in India, it is 50-70 days and 60-70 days for the same products respectively.
Shortening the lead time is the most urgent priority task for Bangladesh. The best way is to
develop domestic backward linkages with the aim of reducing “production and distribution” time.
Such a strategy would contribute to enhancing the deep-level performance of the industry and
would have a positive impact on surface-level performance. An alternative solution would be to
establish a central or common bonded warehouse in the private sector for storing raw materials
usable in the export-oriented garment industry, with special incentives such as duty-free import.
While such a solution is the fastest way to improve surface-level competitiveness by reducing lead
time, it carries the risk of delaying deep-level competitive performance-enhancing initiatives and
the long-term development of the industry.

Competitiveness of the Bangladesh Readymade Garment Industry


While the export-quota system cushioned the Bangladesh RMG industry enabling it to remain
competitive as a prominent garment supplier in international markets until 2004, the phase-out of
this system has posed a big challenge for the industry. The industry needs to find proper strategies
to remain competitive in international markets. Linkage expansion, meeting compliance standards,
product/market diversification and upgrades, and reduction of “production and distribution” time
are some important strategies for the industry to improve deep-level competitiveness.

Linkage Expansion

The consumption-production gap of yarn decreased over time, although actual consumption
increased every year. The fabric-manufacturing capacity of the country also increased over time.
Such a trend indicates that the linkage expansion process of the Bangladesh RMG industry has

21
already started, while the pace of expansion varies from stage to stage. Still, many garment
manufacturers in Bangladesh are interested in using imported raw materials instead of using local
raw materials owing to price differences. The price of RMG inputs supplied by local sources is
relatively high. According to The New Nation, Bangladeshi businessmen bought yarn at the
equivalent of $2.80 per kg on the local market, whereas Indian businessmen bought the same
quality yarn at $2.10 per kg in June 2004. Bangladesh is just a price taker in sourcing RMG inputs
from external sources, whereas competitor countries such as India and China have a certain level
of influence on RMG input pricing, as they themselves are prominent textile suppliers in the world
market. Hence, strengthening the linkage expansion is very important for Bangladesh. Such an
expansion will contribute to higher value addition in the local economy and facilitate the easy
availability of raw materials. However, radical or overnight expansion of backward linkage
industries is not possible, because it requires huge investments, modern machinery, a skilled
workforce and experienced management. Therefore, the most important step that needs to be taken
at this moment is to accelerate the existing pace of expansion

Compliance Issues

In addition to speedy supply, the social dimensions of the RMG industry are getting more attention
from consumers, social workers, welfare organizations and brand name international buyers.
Currently, many international buyers demand compliance with their “code of conduct” before
placing any garment import order. Although Bangladesh was able to solve the problem of child
labor very successfully in the mid-1990s, the country’s performance in improving the factory
working environment is not yet satisfactory. Informal recruitment, low literacy levels, wage
discrimination, irregular payment and short contracts of service are very common practices in the
RMG factories in Bangladesh. It is true that the country still enjoys some comparative advantage
in manufacturing garment products based on low labor costs. The average garment manufacturing
labor cost of Bangladesh was $0.16 per hour in 1993, while the corresponding figures for India and
China were $0.27 and $0.25 respectively in the same year (Delahanty, 1999). The corresponding
data for 2002 were $0.39, $0.38 and $0.68 for Bangladesh, India and China respectively (Jassin-
O’Rourke Group, 2002).
However, such advantages cannot be sustained forever nor can they be expected from a
humanitarian perspective. Labor organizations, social welfare organizations and humanitarian
organizations are raising their voices against such low wages, which are considered labor

22
exploitation. Rented factory premises, narrow staircases, low roofs, closed environments, absence
of lunch rooms, unavailability of clean drinking water and no separate toilets or common rooms
for female workers are other concerns in the garment factories of Bangladesh (Paul-Majumder,
2001). Bangladesh RMG firms need to deal with these issues in order to remain competitive in the
global market.

Product and Market Composition

The product and market composition of garments from Bangladesh requires special attention to
ensure the long-term sustainability of the Bangladesh RMG industry as a prominent supplier in the
global market. The export-quota system diverted the attention of some international garment
suppliers from quantitative expansion to qualitative improvement of exportable garment products.
China and other competitor countries took that opportunity, but Bangladesh failed to do likewise.
The country stands far behind in the race to upgrade products compared with its rivals. Bangladesh
is still focused on manufacturing lower-end products, although recently the country has emerged
slowly from being a lower-end producer towards becoming a middle/high-end producer, from
being a simple male-wear producer to become a producer of fashionable female wear.
Strengthening the process of upgrading products is very important for the Bangladesh RMG
industry if it is to enhance its competitiveness. As with China and other prominent garment
suppliers, Bangladesh needs to address both the qualitative and quantitative expansion of its RMG
industry simultaneously in order to sustain the business in the long run. The country needs to be
capable of adjusting its manufacturing capacity to frequent changes in customer demand. In
addition to upgrading products, the country should try to achieve product and market
diversification in order to diversify risks, gain access to new markets/buyers and increase export
volume.

“Production and Distribution” Time

A shorter “production and distribution” time improves deep-level competitiveness.


Scenario 1 indicates the current situation of Bangladesh. In this stage, the country has to depend
mostly on foreign sources for inputs such as textiles. For this very reason, both the lead time and
total “production and distribution” time are longer in this case.

23
Scenario 2 considers the establishment of common bonded warehouses in Bangladesh, which will
play a significant role in reducing lead time. Such lead-time-cutting initiatives will improve
surface-level competitiveness, but total “production and distribution” time will not be shortened;
rather it may deteriorate further owing to the additional time required for storing inputs in local
warehouses. Therefore, common bonded warehouses will not create any positive impact on deep-
level competitive performance.
Scenario 3 is the primary stage of establishing a domestic textile industry, which will reduce both
the lead time and total “production and distribution” time compared with the present situation
(scenario 1). As a result, both surface and deep-level competitiveness will be improved. However,
the lead time will remain longer at this stage than that of scenario 2. The textile firms will produce
textiles only after getting an order from garment firms at this stage. Scenario 4 is the intermediate
stage of domestic textile industry development. Local textile firms will be able to bear the risk of
producing and storing some basic textile items to supply the garment firms just after getting the
demand order. Such capability will reduce the lead time and offset the necessity of common
bonded warehouses. Total “production and distribution” time is longer here as it contains the time
required for both the production and storing of textiles. Even after that, it will not be worse than
the present situation. Rather, such improvements will increase the local contribution more
advanced scenarios resulting from the further development of the domestic textile, garment and
infrastructure sectors will contribute to further improvement of both deep and surface-level
competitiveness of the Bangladesh RMG industry.

Indirect Influences of Competitiveness


The Government of Bangladesh does not play any direct role in the garment business. However,
the Government helps the industry indirectly by providing some basic policy support such as back-
to-back letters of credit, the duty drawback scheme, bonded warehouse facility and cash
incentives.17 Some other notable initiatives taken by the Government are the adoption of
conducive investment and industrial policies, encouragement of foreign direct investment,
establishment of export processing zones and organizing trade fairs inside and outside the country.
Encouraging export-led industrialization is the main objective behind such government initiatives.
The Government provides the advantage of duty-free raw material imports usable in the
manufacturing of export products to encourage and accelerate such industrialization. However,
proper monitoring and careful implementation of this duty-free raw material import strategy is
important to protect the illegal infiltration of imported materials into the domestic market.

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4.2 Problems of Garments Sector in Bangladesh
Over last three decades, the RMG industry has expanded dramatically. The history of RMG sector
of Bangladesh is fairly a recent one. Nonetheless it is a rich and varied story. Traditionally the jute
industry was the dominant sector. But after 1980’s, the RMG industry has emerged as an important
player in the economy of the country and has gradually replaced the Jute industry.

Bangladesh is not yet developed country but it has been enriched in garments industries through
past years. Garments industry is a promising step in the field of industrialization. The sector is now
dominating at export earnings, secondary impact and employment generated. Millions of
unemployed labor force has been employed through this sector. Especially, innumerable
uneducated women of this country have come under income segment which makes a great
contribution in the field of our export income.

Recent days, Bangladesh is exporting 35 types of garments products to about 31 countries around
the world. This sector is a 100% export-oriented country. (Labor and Management in
Development Journal, 2012)

For last 25 years the garments industry of Bangladesh has been the key export division and known
as a renowned source of foreign income. National labor laws do not apply in the EPZs, leaving
BEPZA in full control over work conditions, wages and benefits. Garment factories in Bangladesh
provide employment to 40% of industrial workers. But without the proper laws the worker are
demanding their various wants and as a result the conflict arises within the industry.
(http://nazifahmed.wordpress.com)

Raw Materials
Bangladesh has to import the necessary raw materials for garments like cotton, thread, color etc.
It’s well known that dependence on raw materials from import is a reason for hampering the
development of the industry. Beside this, if foreign suppliers are supplying low quality results in
low quality products.

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Unskilled workers
Most of the women are illiterate who are being employed at garments. So they are unskilled and
often the reason for lower in quality of the products, creating problems while implementing any
new concept from root level and others problems also.

Improper Working Environment


Most of the workers in our country are poor and living under poverty line. The owners are taking
this as an advantage and forced them to work in unsafe and unhealthy work place overcrowded
with workers beyond capacity with improper ventilation. The garments factories are not building
up with proper facilities. Garments workers sweat their brows from morning to evening to earn
foreign currencies for our countries. But the working environment is very poor and unhealthy. It’s
really hampered the production quality and often the impression if any buyers are coming to visit
the factories. Also the problems must focus are improper ventilation, stuffy situation, filthy rooms.
These are the characteristics of the majority of our factories. It is happening as because the owners’
first priority is the profit and it’s becoming so high that sometimes they are not even caring about
their lives. Rana Plaza and Tazreen Garments is the most recent example of their greed.

Lack of Managerial Knowledge


There are some other problems which are associated with this sector. Those are- lack of marketing
tactics, absence of middle management, a small number of manufacturing methods, lack of
training organizations for industrial workers, supervisors and managers, autocratic approach of
nearly all the investors, few process units for textiles and garments, sluggish backward or forward
blending procedure, incompetent ports, entry/exit complicated and loading/unloading takes much
time, time-consuming custom clearance etc.

Gendered Division of Labor


Tasks are allocated largely on the basis of gender. This determines many of the working conditions
of women workers. In sewing section all are women on the other hands, cutting, ironing and
finishing sectors are men. Varieties of women working place is low. Women work mainly as

26
helpers, machinists and less frequently, as line supervisors and quality controllers. There are no
female cutting masters. Men dominate the administrative and management level jobs. Women are
discriminated against in terms of access to higher-paid white collar and management positions.

Wages
For various categories of workers Bangladesh Government sets minimum wages. According of
Minimum Wage Ordinance 1994, apprentices’ helpers are to receive Tk500 and Tk930 per month
respectively. Those who work under garments industry less than three months are known as
apprentices. After 3 months they are appointed as helper. But the female helpers are discriminated
while set the wages. The wages is fixed far below level than minimum wage set by the
government. A survey conducted in 2008 showed that 73% of female helpers, as opposed to 15%
of their male counterparts, did not receive even the minimum wage.

Unit Labor Cost


In south Asia, Bangladesh has the cheapest labor cost. It costs only 11 cents to produce a shirt in
Bangladesh, whereas it costs 79 cents in Sri Lanka and 26 cents in India. So the comparative
advantage of Bangladesh is cheapest labor costs actually. (Competitiveness of the Bangladesh
Ready-made Garment Industry in Major International Markets by Mohammed Ziaul Haider,)

Working Hours
Through the wages are low, but working hours are very long. The RMG section claims to operate
one eight-hour shift six days a week. But it often seems that those workers are working more than
16 hours each day and have no break or off day in a week.

Poor accommodation facilities


Most of the garments workers are coming from poor family and remote areas, so they need to rent
a place near factory, stay together 4-5 persons in a room which is not so healthy for living
condition. For four to five workers there is one common latrine and a kitchen for which they have
to pay from Tk. 2000 to Tk. 2500. (A survey done at 2012 under the topic, Livings of RMG
labors).

27
They share this amount among themselves to minimize the accommodation expense. After
working almost in a horrible condition for such a long time, it’s really tough to believe how tough
the way they are living is. The owners of these factories must not treat the workers as animals.
The owners of these factories who drive the most luxurious car and live in most luxurious house do
ever think that these are the workers who have made their living so juicy. Now the question is, they
never thought for a long run like Toyota has done for their employees.

Safety Problems
The factory management often keeps the doors locked because of safety reason and security. But
the tragedy is this locked gate becomes the reason of tragedy like Tazreen garments. Ensuring
safety for the workers is essential for all organizations. Some important causes of accidents are
given below which indicates the safety problems are as follows:

Routes are blocked by storage materials

● Machine layout is often staggered

● Lack of signage for escape route

● No provision for emergency lighting

● Doors, opening along escape routes, are not fire resistant

● Doors are not self-closing and often do not open along the direction of escape

● Adequate doors as well as adequate staircases are not provided to aid quick exit

● Fire exit or emergency staircase lacks proper maintenance

● Lack of proper exit route to reach the place of safety

● Parked vehicles, goods and rubbish on the outside of the building obstruct exits to the open air

● Fire in a Bangladesh factory is likely to spread quickly because the principle of


compartmentalization is practiced.

Political Crisis
Political Crisis is another large issue on the way to development for RMG sector. Due to political
instability and too much strike and other purposes, aggregate economy goes down, hampers the

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shipment process, miss-management the time of delivery, in situational cases international buyers
often take back their orders to other countries. In some cases interested Foreign Direct Investment
get out of the country. Not only for RMG but due to any sector of businesses political stable is too
much essential.

Price Competitiveness
China and some other competitors of Bangladesh have implemented sharp price cutting policies in
exporting garment products. China was able to reduce the price nearly 3 dollars in a systematic
manner, whether Bangladesh is only reducing the price through depriving the labors.

Lead time
Lead time refers to the time required for supplying the ordered garment products after the export
order has been received. In the 1980s, the usual lead time in the garment industry was 120-150
days for the main garment supplier countries of the world; it has been reduced to 30-40 days in the
current decade. However, in this regard the Bangladesh RMG industry has improved little; for
example, the average lead time is 90-120 days for woven garment firms and 60-80 days for knit
garment firms. In China, the average lead time is 40-60 days and 50-60 days for woven and knit
products respectively; in India, it is 50-70 days and 60-70 days for the same products respectively.
Bangladesh should improve its average lead time to compete in the international market. (An
empirical study of lead time between China and Bangladesh. Joynul Abedin 2006.)

Labor Unrest
Surpassing all these, labor unrest has become a chronic disease in this sector. At present, labor
unrest has been labeled as a conflict of interest between the owners and workers. Generally labor
unrest emerges when workers come to the street demanding some facilities (financial or other)
which the owners are not ready to provide. Sometimes some rumors spread unrest among the
labors. Conspiracy of home and abroad is also responsible. Sometimes it is found that workers of a
factory attack intentionally another factory to damage the factory or hampers its growth as there is
competition among the factories. Some NGOs financed by foreign donors are blamed to instigate
the garment labors regarding their rights and privileges. The actual causes of labor unrest must be

29
addressed and proper action must be taken to solve this problem. Government, owners and workers
have to work hand to hand to come out the situation.

Unfavorable Tax for New Investment in RMG Export Sector


International experiences show that facilities like a tax holiday could promote national and foreign
investment. For the sake of a healthy economic development of the country, it is expected that with
proper taxation policies in place investment in the export-oriented RMG sector in the country can
be canalized.

Unequal Opportunity for RMG Export Oriented Industry


The government's policy to attract foreign investment in Bangladesh is quite impressive. This
policy, however, show some inequalities. Under the bonded warehouse system every export
oriented garment factory is an EPZ, but factories in the EPZ enjoy more benefits than those outside
the EPZ. Even in Japan, all export oriented factories enjoy such benefits. If these inequalities were
eliminated and export oriented garment units outside the EPZ were provided with similar benefits
to those industries in the EPZ, it would certainly support to increase export and earn more foreign
currency for the country.

Congestion in Road and Railway Communication and Traffic Jam


A good transport system is a prerequisite for economic development. A lack of it creates road
congestion, as a result it may take a longer time to get imported raw materials from the port and
transport the finished product to the port from the factory. It also causes additional transport costs.
A congestion-free road and rail communication, especially between Dhaka and Chittagong, linking
the garment industry is vital for further development of the export-oriented RMG sector.

Incompetent, Slow and Corrupt Custom Services


AS the export has increased in a rapid manner to abroad countries customs office become too
much busy for handling these. But unfortunately the customs officer are not so well trained, beside
this the system is incompetent slow and sometimes corrupted. Besides this loosing important pares
causes loss of international buyers.

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Trade Union Situation at RMG
The “Directorate of Labor” has refused over 450 valid applications for trade union registration
during last three years to keep free the industry from unionism. DoL said, “The garment owners
subsequently sacked over 250 worker leaders from their factories who submit those applications to
DoL”.

The DoL has only 149 registered TU for garments sectors despite the workers' desire and lawful
premises to form TU at 5000 plus factories across the country. Of the 149 TUs, 125 are in Dhaka
zone and remaining 24 are in Chittagong division.

Most of the registered trade unions in the garments sector got registration before nineties and a few
10 to 12 numbers of registration got in the last two years by getting labour court verdict after DoL
refusal.

"The DoL are not giving us new registration on the ground of many unmet conditions that are
difficult to meet and are not legally required. We from our federation have applied applications for
about 15 new TUs during last two and half years but all of these applications have been rejected.
The process had remained suspended during two years of army backed caretaker government,"
Nazma Akther, President of Sammilito Garments Sramik Federation (SGSF) and a member of the
second minimum wage board told The FE.

Babul Akther, General Secretary, Bangladesh Garments and Industrial Workers Association
( BGIWA) said that over 250 workers who had submitted applications to get their trade union
registered with the DoL have lost their job during last two and half years.

Ashik Hossain, Shumi Akther President and General Secretary along with their 10 co workers lost
their job from Pastel Apparel one day before Eid-Ul-Azha last year, Babul Akther said adding that
his organization has filed a case with the labor court in protest against the sacking.

Shahidul Islam of Bangladesh Nationalist Garments Sramik Dal alleged that Elie Fashion sacked
Alamin and Jostsna Akther and threatened them of severe consequences if they talked to the media
on their sacking.

It seems that, the owners or RMG sector are so powerful and they do anything to prevent from
starting any sort of trade union and they are not really interested. Some incidents will make it clear.
The killing of Aminul a trade union leader recently revealed the fact that trade union leaders are
facing repression. But this is nothing new in the readymade garments sector as the police itself

31
filed around 85 cases against workers and trade union leaders during last three years for their
alleged involvement in destructive activities and vandalism.

Police also arrested about 35 trade union leaders due to same reason from different places.

But the crucial role in ending the strikes was played by the trade unions, which struck a deal with
the government and employers. The minimum wage was to be lifted to about $US43 a month, still
well below the poverty line and just over half of what had been demanded originally.

The workers would not dare to launch any fresh agitation against the wholesale degradation of
their grades at many of the compliant factories.

Now the exact point is, Trade Union can ensure the right and responsibility of industries to the
labors. The point behind losing GSP is one of this. But the situation right now is upholding the
cause of giving licenses of trade union. It will ensure the existing problems obviously between the
labors and owners. There is a certain gap between owners and labors. It can be reduced by
allowing trade union within the industries and will open the way to discussion. And any problem
can be solved through discussion. We must look with care to solve this issue.

Other Problems of the RMG Sector in Bangladesh


Today our RMG sector is going through a crucial period; it has many long term problems as well
as it is facing some short term and new arrival problems also. If we try to make a list of these
problems it can be as follows:

 The entrepreneurs are discouraged to invest to very high debt – equity ratio.
 The long-term interest rates on loan for new industries in Bangladesh are very high
(Bangladesh 9-12%, Pakistan 5%, India 6%) compared to competing countries.
 Present worker unrest is making the sector limbs at the same time our glorious image is
downward in the international market. Which caused some buyers is really worried to
place new order.
 Exploiting mentality of some garment owners is also a major problem to have a
sustainable RMG industry & continuing of its current growth.
 Political instability is another major problem for this sector. Day long strike or so call
uncompromised strike may be cause of undue shipment of product. It hampers the
transportation of product from factory to sea port.

32
 Long bureaucratic jam is another major problem for every industry in Bangladesh. As a
result we are losing FDI in our country which may help to establish backward linkage of
RMG industry in Bangladesh.
 Leakage from Bonded warehouses and smuggled fabrics deter the growth and
development of RMG.
 Due to provision of subsidy and other incentive at different stages of production process
by the competing countries, their products are more competitive than ours in the
international market.
 Dearth of trained manpower of international standard.
 Scarcity of use of modern technology is resulting a long period of shipment as a result our
products are uncompetitive in international market even though the labor costs are low.
 Due to operation of obsolete production techniques and acute shortage of technically
sound manpower, weaving and weaving-dyeing-finishing subsector could not make
significant headway.
 Production capacity of some factory is extremely low due to use of obsolete technology.
This was compounded by poor quality of manufacture.
 Unfavorable Service Charges for Air Cargo
 Inadequate Service Support
 Frequent Interruption in Energy Supply
 Port Congestion and Crisis
 Inadequate Exchange of Views between BGMEA and the Board of Directors of the
Nationalized Commercial Banks
 Inadequate Cash Support and Export Performance Benefit

The Ready-Made Garments (RMG) industry occupies a unique position in the Bangladesh
economy. It is the largest exporting industry in Bangladesh, which experienced phenomenal
growth during the last 25 years.

Given the remarkable entrepreneurial initiatives and the dedication of its workforce, Bangladesh
can look forward to advancing its share of the global RMG market.

Our garments industries can improve their position in world map by reducing the overall problems.
Such as management labor conflict, proper management policy, efficiency of the manager,
maintainable time schedule for the product, proper strategic plan etc. Government also have some
responsibilities to improve the situation by providing proper policy to protect the garments
industries, solve the license problems, quickly loading facilities in the port, providing proper

33
environment for the work, keep the industry free from all kind of political problem and the
biasness. Credit must be provided when the industry fall in need.

To be an upper position holder in the world Garments Sector there is no way except follow the
above recommendations. We hope by maintaining proper management and policy strategies our
country will take the apex position in future.

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Chapter: 5
Recommandations and Conclusions

5.1 Recommendation:

35
4. Government also have some responsibility to improve the situation by
providing-proper policy to protect the garments industries, solve the license problem,
quickly loading facility in the port, providing proper environment for the work, keep the
industry free from all kind of political problem and the biasness. Credit must be provided
when the industry fall in need.

5. Solar Energy can be a great source for solving power crisis in Bangladesh.
Bangladesh is situated between 20.30 and 26.38 degrees north latitude and 88.04 and 92.44
degrees east which is an ideal location for solar energy utilization.

6. The government should focus on production and procurement of high


quality raw materials within the country. For this endeavor Government should use Public
Private Partnership. This will in turn gives the nation an ample opportunity to add a
significant amount with the national income.

7. Bangladesh labor productivity is known to be lower when it compared with


of Sri Lanka, South Korea and Hong Kong. Bangladesh must look for ways to improve the
productivity of its labor force if it wants to compete regionally if not globally. Because of
cheap labor if our country makes the labor productivity in the apex position, then we think
the future of this sector is highly optimistic. BKMEA has already introduced educational
program on fashion designing. The various private university and training institution has
already introduced various program regarding this issue.

8. The existence of sound infrastructural facilities is a prerequisite for


economic development. The policymakers should not only focus on creating the law but
also focus on implementation of the law. The govt. should focus on separate route for the
export and import activities. It may be high way, metro line, more cargo ship etc. The
development of infrastructure will avoid the problem of safety, unskilled worker, lead time,
transportation problem and so on.

6. The main causes of labor unrest include lack of minimum facility and safety

36
at work, sub-standard living conditions, deferred payment of wages and benefits,
international conspiracy and coercive role of the law enforcing agency, too much
dependency on buyers, pressures from the workers and local terrorists, use of workers by
others and rumors, un-fulfillment of education demands of their children, distorted minded
workers, political instability of the country, too much workload, lack of promotion
opportunity, insufficient wages to survive etc. If the policy makers of Bangladesh consider
these causes and make policies to overcome the problems the labor unrest in garment
sector may be minimized.

7. The main two political parties should not take any harmful and
destructive steps
which will causes a great lose to the general interest of people such as strike. They

should take action beyond the Business sector.

Government body must ensure that the garments sector fully comply with
8. the factory

act 1965 in order to construct a garments factory. The workers right and privileges must
also be ensured. The working environment should be favorable to work. The following
steps should be taken to improve the environment.

●Building should be constructed with fire resisting materials


●Adequate exits and proper escape routes should be designed
●Protection against fire and smoke should be ensured
●Electrical wiring must be properly designed, installed and maintained
●Escape routes should be lighted at all times, kept clear, be indicated by signs
●Regular fire drills should be held
●Doors should be protected and should open along the direction of escape
●Doors should not open on the steps and sufficient space should be provided.
●Smoke/Fire alarm systems must be installed
●Adequate number of extinguishers should be provided
●Prior relationship with local Fire service.

5.2 Conclusion

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The Ready-Made Garments (RMG) industry occupies a unique position in the Bangladesh
economy. It is the largest exporting industry in Bangladesh, which experienced phenomenal
growth during the last 25 years. By taking advantage of Multi Fiber Agreement (MFA) of GATT,
the industry plays a key role in employment generation and in the provision of income to the poor.
To remain successful, Bangladesh needs to remove all the structural obstacles in the transportation
facilities, telecommunication network, and power supply, management of seaport, utility services
and in the law and order situation. The government and the RMG sector would have to jointly
work together to maintain competitiveness in the global RMG market. Given the remarkable
entrepreneurial initiatives and the dedication of its workforce, Bangladesh can look forward to
advancing its share of the global RMG market.

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5.3 References

1. Sultana S. and et al 2011, “Likely Impacts of Quota Policy on RMG Export from Bangladesh:
Prediction and the Reality.”

2. Azim, M. Tahlil, and Nasir Uddin, 2003, “Challenges for Garments Sector in Bangladesh After
2004: Avenues for Survival and Growth” Bangladesh Institute of International and Strategic
Studies Journal, Vol. 24, No. 1, Page 49-82.

3. Bhattacharya, D, M. Rahman and A. Raihan, 2002, “Contribution of the RMG Sector to the
Bangladesh Economy”, CPD Occasional Paper Series, Paper 50.

4. Islam, Sadequl, 2001, The Textile and Clothing Industry of Bangladesh in a Changing World
Economy, CPD and The University Press Ltd.

5. Jahan, Sarwat, 2005, “The End of Multi-Fiber Arrangement: Challenges and Opportunities for
Bangladesh”, WBI Policy Note.

6. Bhattacharya, D., & M. Rahman. (1999). Female Employment Under Export-Propelled


Industrialization: Siddiqi, H. G. A. (2004). The Readymade Garment Industry of Bangladesh. The
University Press Limited, Dhaka.

7. Zafour, Abu. (2009). Problems and Prospects of Garments Industries in Bangladesh.


[Online] Available: BGMEA database. [Online] Available

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