SHANTO-MARIAM UNIVERSITY OF

CREATIVE TECHNOLOGY

Department: Business Administration

Program: Bachelor Of Business Administration.
Course: Bangladesh Study & Culture.

Presentation Topic

RMG sector in bangladesh

Team Member Name

1. Tanvir Ahmed (1023)

2. Jannatul Ferdous Kotha (1013)
3. Shihab Shekhor Rohan ( 1012)
4. Eddie Fraser (1011)
 What is ready-made garment industry?

Ready-made garments are mass-produced finished textile products of

the clothing industry. They are made from many different fabrics and
yarns. Their characteristics depend on the fibers used in their
manufacture. Ready-made garments are divided into the following
types:

● Outer clothing: workwear and uniform, leisure wear,

sportswear (e.g. suits, pants, dresses, ladies‘ suits, blouses,
blazers, jackets, cardigans, pullovers, coats, sports jackets, skirts,
shirts (short- or long-sleeved), ties, jeans, shorts, T-shirts, polo
shirts, sports shirts, tracksuits, bathing shorts, bathing suits,
bikinis etc.)

● Underclothing (underwear): jersey goods, lingerie (e.g.

underpants, undershirts, briefs, socks, stockings, pantyhose
etc.)

Most jersey underwear consists of knitwear made from cotton or

synthetic filament warp-knit goods (Dederon, nylon). Knitwear is
divided into fully fashioned and cut goods:

● Fully fashioned jersey goods are produced in finished form and

size with securely finished edges; they are a high-quality
product, as the loops cannot run at the edges.

● Cut jersey goods are cut from tubular knit piece goods and sewn
together; they are a lower value product, as the loops can run at
the edges and the fit of the garment is not as good as in the
case of fully fashioned jersey goods as the knitted fabric may
twist out of shape.
 Bangladesh RMG Industry

Renowned for its strong manufacturing capabilities and thriving

ecosystem, the Bangladesh RMG industry has gone from strength to
strength and has become a global hub for apparel sourcing.

At present, the industry consists of over four thousand factories. RMG

exports from Bangladesh includes a wide variety of knitwear & woven
garments products such as shirts, trousers, T Shirt, denim, jackets,
sweaters, etc.

Growing at an annual rate of 7%, RMG exports from Bangladesh more

than doubled between 2011 and 2019. As of December 2020, total
exports around stood at USD 27.4 billion, capturing a market share of
6.30% out of the global apparel export market of $435 billion. While
the industry suffered a temporary setback due to covid19, demand
has started to recover and normalize again.

Today, Bangladesh leads the world in green garment manufacturing

with 150 LEED (Leadership in Environmental and Energy in Design)
certified factories in the country and another 500 waiting to obtain
the LEED certification from United States Green Building Council
(USGBC).

Currently, nine of the top 10 green garment factories and 40 of the

top 100 are located in Bangladesh.

Bangladesh’s RMG sector has now transformed into a highly

transparent and compliant industry regarding factory safety and
value-chain responsibility after initiatives such as the Accord on Fire
and Building Safety in Bangladesh, the Alliance for Bangladesh
Worker Safety, and the RMG Sustainability Council were successfully
undertaken.
 Advantages of Bangladesh

Established Ecosystem

Around 1,430 textile mills are present in Bangladesh which includes

796 woven fabric manufacturers with a capacity to produce 3,850
million meters of fabric per annum. In addition, Bangladesh has 240
dying, printing and finishing mills, which manufacturers 3,170 million
meters of fabric per annum.

Favorable trade benefits

Bangladesh enjoys duty free access in 52 countries which includes the

EU, Australia, New Zealand, Norway, Switzerland, Japan, Iceland,
South Korea, Canada, Chile, India (46 RMG products), Turkey, China.
Bangladesh is also a member of regional blocs SAPTA, SAFTA, APTA,
BIMSTEC.

Eco friendly factories

At present, six out of the top 10 eco-friendly platinum LEED

(Leadership in Energy and Environmental Design) certified factories
worldwide are located in Bangladesh. In addition to having the
highest number of LEED-certified factories, Bangladesh is also home
to the highest-rated LEED Platinum denim factory, knitting factory,
washing plant, and textile mill in the world.

Qualified workforce

Abundance of young and qualified labor force With over 110 million
of the population aged below 40 and 75 million of the

population aged below 24, Bangladesh has an abundance labor

force.
Availability of customized educational programs for textile industry At
present, there are 37 public and private universities and colleges
along with 6 government textile institutes producing textile graduates
and diploma engineers every year for the industry, in addition to
several polytechnic institutes and private institutes in the country.

Getaway to South, Southeast Asia and East Asia

Market Access to growing consumer markets: Bangladesh is located

between South and Southeast Asia making it an entryway to both
these markets of over 3 billion people. Neighbors India and China are
within easy distance of Bangladesh.

Well-connected to major ports in Asia Well connected to land and sea

ports in several states in India and located within easy distance from
ports in China.

Several government Infrastructure projects underway to improve land

and port connectivity: Several projects are underway to improve the
existing land and sea routes such as the Dhaka-Chattagram route,
development of Payra and Matarbari deep-sea ports.

Safe & compliant factories

All factories maintain international safety and compliance, and

assessed in accordance with BSCI, WRAP, SMETA, ICS, Higg index,
GTW, RTM, Join Life, ZDHC, Blue Sign, ISO, OCS, GOTS, Oekotex.

Established & trusted sourcing destination

More than 100 international clothing brands have been directly

sourcing from Bangladesh over the years with exports reaching to
more than 150 countries around the world.
 Challenges of Ready-Made Garments Sector in
Bangladesh

The ready-made garments (RMG) sector has a greater potential than

any other sector in terms of employment and foreign exchange
earnings to reduce poverty and make a contribution to the national
economy.

Along with its potentiality the sector is also experiencing new

challenges which can be the future determinants of its sustainability.
The present study has made on descriptive research, is conducted to
identify different dimension of challenges in readymade garment
industry in Bangladesh and a feasible solution to cope up the
challenges.

To accomplish result research technique has relied based on

information from secondary sources. From the inception of RMG in
1978 Bangladesh has seen a tremendous growth of the number of
factories in consistent with the amount of export.

In year 1983-84 there were only 134 RMG units where only 40000
workers were working in this sector but in 2013-2014 the number of
RMG units increases around 6000 with the employment of around
4.2 million workers among them almost 80% are female.

This sector also faces a lot of challenges like unskilled workers,

improper infrastructure, electricity crisis, gas shortage, insufficient
bank loan associated with high rate of interest, high tax rate, intricate
social compliance, political crisis, market and product diversification,
lack of new investment, poor backward and forward linkage etc.
 In order to overcome these challenges, we need to take number
collaborative and coordinated steps to be taken from both owners
and major stakeholders to reach the ultimate goal of achieving the
top position in the world apparel market.

Five steps to put the RMG sector back on track

Introduction

Historically, the textile industry had always been the backbone of

economic growth among most emerging and developed economies.
Textiles have traditionally been a key driver of technological changes
since the inception of the industrial revolution.

As a matter of fact, it was the British textile industry that drove the
industrial revolution in Britain. Subsequently, we witnessed how the
successful development of this sector, enabled nations such as the
USA, China, South Korea and even India to gradually build their global
economic prominence.

Recent figures show the export of ready-made garments (RMG) from

Bangladesh during the first four months of the current fiscal year
(FY2019-20) fell by 6.67 percent to USD 10.5 billion. Knitwear exports
for the four months fell 5.73 percent to USD 5.5 billion, while woven
garments exports fell 7.67 percent to USD 5 billion.These figures offer
cause for concern and should encourage all of us involved in this most
vital of industries to pause for reflection.

The most important markets for RMG exports from Bangladesh are
the US and the EU. Neither of those markets are, at the present time,
in recession. Therefore, we cannot blame wider economic forces for
the decline in exports from Bangladesh.

Instead, we must look inwards, as difficult as that might be.

Unlike some, however, I do not think it is all doom and gloom right
now for Bangladesh's RMG industry.

However, I do think the industry is at a crossroads and has reached a

stage of its development where fresh thinking and ideas are required
if export growth is to get back on track. Blindly following the same
road that we have been going down in the past will not, in my
opinion, deliver the growth we all know our industry is capable of.

Here I offer five ways in which Bangladesh's RMG sector can get back
on track in the medium to long term.

Step 1: Diversify

We continue, as an industry, to be heavily reliant on the export of

cheap, basic commodity garments for the mass market retail sector.
Such commodities represent more than half of all total exports,
around 54 percent according to the most recent world trade figures.

Meanwhile, RMG exports represent about 84 percent of Bangladesh's

total exports. With more than half of that 84 percent being cheap,
commodity garments, this leaves Bangladesh hugely exposed in this
area. What if the market for such products shrinks? Where will that
leave our national economy?

We need to diversify from commodity products, firstly, because a

shift to more high added value products will boost margins for
exporters but secondly, because an over-dependence on one product
category exposes Bangladesh's economy to far too much risk.

Step 2: Work smarter

Are all our RMG factories working to their maximum efficiency? There
is plenty of evidence to suggest that this is not the case and that
productivity rates continue to languish at relatively low levels
compared to one of our biggest competitors, China.

There are a whole host of statistics in this area but most observers on
this issue claim that productivity in Bangladesh stands at around
40-50 percent, significantly below China.

This means garments being made in Bangladesh are, in many cases,

taking twice as many labour hours as they take to make in China.

With labour representing such a large proportion of overall

overheads in Bangladesh, low labour productivity rates mean that
extra time—and wages—are being spent by RMG factories on per
unit of production.

Increase productivity, and we can increase overall profits and exports

revenues.

Step 3: Improve energy efficiency

There is so much "low hanging fruit" to be had for RMG factories in

Bangladesh when it comes to the issue of energy efficiency. Whether
it be through the use of inverters, thermal oil heaters, biogas plants,
sky lights, boiler economisers, the use of solar—and a whole lot
more—energy saving opportunities represent a huge opening.

Already, the industry has been proactive in embracing energy saving

initiatives but there is always more that can be done. This includes
the industry as a whole—led by the BGMEA—addressing strategic
issues such as affordable rates of interest and broader regulatory
reform required to scale up energy saving methods.

Suppliers need to understand that our industry is only heading in one

direction on this issue, with many apparel retailers looking to enrol
suppliers into energy projects to help them meet their own climate
goals.

Step 4: Change the brand—go circular

Bangladesh is known for its discounted garment products. This has

been a successful backbone of our economy for many years but there
are signs that this model is running out of steam. As indicated earlier,
it is time to diversify.

So why can we not become known for something else? Why can't we
take the lead in the circular economy?

There are very few areas of huge untapped potential in the global
apparel industry at the present time. However, the circular economy
is certainly one of them.

There is a huge amount of technological developments in

textile-textile recycling at the current time. Yet no textile producing
country has seriously taken the bull by the horns on this issue—till
now.

The opportunity is there for Bangladesh to do that: to become a

testing bed for garment recycling at scale. If Bangladesh and the
various players in its garments industry could collaborate on this
issue, the country as a whole could gain major First Mover Advantage
in this market of unlimited potential. But we must move quickly and
decisively.

Step 5: Let's all be world class

There's a phrase we sometimes hear in business: you're only as good

as your worst employee. One bad employee can easily tarnish the
reputation of a whole business. In a similar way, one bad business can
easily tarnish the reputation of a whole industry.

In the Bangladesh RMG sector, where the global spotlight always

shines so bright, it only needs a report of products being sourced
from one factory which is found to be unsafe, or reports of one
factory mistreating its workers, and the whole industry is damaged.

We have a great many world class RMG factories in Bangladesh, but

the achievements of the majority risk being overshadowed by the
blemishes of a few, unless standards and levels of compliance are
raised across the board.

In short, it's time for us all to be world class.

History of textile production in Bangladesh

Under Mughal rule, Bengal Subah was a midpoint of the worldwide

muslin and silk trades during the 16th to 18th centuries. During the
Mughal era, the most important center of cotton production was
Bengal, particularly around its capital city of Dhaka, leading to muslin
being called "daka" in distant markets such as Central Asia.

Bengal also exported cotton and silk textiles to markets such as

Europe, Indonesia and Japan.[14] Bengal produced more than 50% of
textiles and around 80% of silks imported by the Dutch from Asia, for
example.

Bengal was conquered by the British East India Company after the
Battle of Plassey in 1757 and the Bengal Presidency was founded in
1765.

British colonization forced open the Bengali market to British goods,

while at the same time Britain implemented protectionist policies
such as bans and high tariffs that restricted imports of Bengali cotton
cloth to Britain. Britain imported raw cotton from Bengal, without
taxes or tariffs, for British factories, which used it to manufacture
textiles, many of which were exported back to Bengal. British
economic policies led to deindustrialization in Bengal.

Post-1971

From 1947 to 1971 the textile industry, like most industries in East
Pakistan, were largely owned by West Pakistanis. During that period,
in the 1960s, local Bengali entrepreneurs had set up their own large
textile and jute factories.
Following its separation from West Pakistan, the newly formed
Bangladesh lost access to both capital and technical expertise.

Until the liberation of Bangladesh in 1971, the textile sector was

primarily part of the process of import substitution industrialization
(ISI) to replace imports.

After the liberation, Bangladesh adopted export-oriented

industrialization (EOI) by focusing on the textile and clothing industry,
particularly the readymade garment (RMG) sector. Immediately after
the founding of Bangladesh (1971),tea and jute were the most
export-oriented sectors.

But with the constant threat of flooding, declining jute fiber prices
and a significant decrease in world demand, the contribution of the
jute sector to the country's economy deteriorated.

In 1972 the newly formed government of Sheikh Mujibur Rahman

who was also the head of the Awami League, enacted the Bangladesh
Industrial Enterprises (Nationalization) Order, taking over privately
owned textile factories and creating a state-owned enterprise (SOE)
called Bangladesh Textile Mills Corporation (BTMC).

President Rahman promoted democracy and a socialist form of

capitalism. The BTMC never managed to match the pre-1971 output
and in every year after the 1975–1976 fiscal year, lost money. Until
the early 1980s the state owned almost all spinning mills in
Bangladesh and 85 percent the textile industry's assets (not including
small businesses). Under the 1982 New Industrial Policy (NPI) a large
number of these assets including jute mills and textile mills were
privatized and returned to their original owners.

In the devastating famine in 1974, one million people died, mainly of

starvation caused in part by the flooding of the Brahmaputra river in
1974, and a steep rise in the price of rice.
Partly in response to the economic and political repercussions of the
famine, the Bangladeshi government shifted public policy away from
its concentration on a socialist economy, and began to denationalize,
disinvest and reduce the role of the public sector in the textile
industry while encouraging private sector participation.

The 1974 New Investment Policy restored the rights to both private
and foreign investors. Bangladesh's development model switched
from a state-sponsored capitalist mode of industrial development
with mainly state-owned enterprises (SOE) to private sector-led
industrial growth.

Post-liberation war, Bangladesh continued to focus on the agricultural

sector to feed its rural and poor masses. Even in 1978, there were
only nine "export-oriented" garment manufacturing units.

That same year the first direct export of garments, 10,000 shirts to a
Parisian firm, was shipped from a Bangladeshi firm. The Bangladeshi
government began to realize potential for the industry to flourish and
offered development stimulus such as "duty-free import machinery
and raw materials, bonded warehouse facilities and cash incentives.