The Bangladesh Garment Industry: Challenges with the 21st century Introduction

Readymade Dress (RMG) Market occupies a dominant location in the export-manufacturing sector of Bangladesh. The advent of the RMG sector happened through the early 80s in Bangladesh. Since then, as a result of supportive plans of the Authorities of Bangladesh (GoB), this kind of industry features experienced a substantial growth. 23 years ago, the export-oriented RMG sector overtook the traditionally dominating jute sector in terms of low export accruals. And since after that this sector has continuing to combine it predominant position in the export container of Bangladesh. According to data of 2003-2004 economic year, the export earnings of the RMG sector was 5686. 09 million ALL OF US dollars, which usually constituted seventy four. 79 percent of total export profits. The market, which began with only some factory products during 1980s, now offers 4094 stock units utilizing around 1 ) 5 mil workers.

Composition of Production

The clothes products of Bangladesh include both knit and woven wear. Discuss of knitwear in the total production of garment in Bangladesh is usually steadily increasing over time. At present, knit use accounts for regarding 33 percent of the total production. With the woven dons, high-value goods are t shirts, jackets, coats, blouses, sportswear and many more casual and style apparels. The latest data demonstrates that production of such high value items either lowered over the years or increased for a very nominal rate in comparison to other fundamental low value-added items such as trousers or shorts. As a result, product diversification in the Bangladesh garment industry has been alternatively slow and products are mostly low value-added or low-fashion items. Of all of the produced things in 2001-2, around 40 per cent were exported to USA markets and 53 per cent were exported towards the EU market segments, with Australia being the greatest imported or Bangladeshi clothes. However , info of 2003-4 shows that export products to EUROPEAN UNION has increased to 65 percent, while export products to UNITED STATES have decreased to 28 per cent. This drop can be related to the abolition of Multi-Fibre Agreement, which will be discussed even more in detail afterwards in the paper.

Expansion and Difficulties of the RMG sector

A pair of the main reasons behind the growth with this industry could be attributed to (a) comparative advantage of cheap labor and (b) tax-free access of Bangladeshi garments for the American and European marketplaces. However , presently, the RMG sector in Bangladesh is usually facing a debacle due to various national and international reasons. Among them, the phasing away of Multi-Fibre Agreement (MFA), which made certain tax-free entry of Bangladeshi apparels to the US markets, is one of the main ones. Likewise, due to substantial inflation and cost of living elevating in Bangladesh, the workers happen to be demanding larger salaries, which in turn are damaging the comparative good thing about cheap labor of Bangladesh over different countries.

The scenario of foreign trade has changed to a large extent after the phasing out of MFA. Beneath the trade agreement, Bangladesh received a tax free quota center, which developed an guaranteed market for Bangladeshi garments in the world marketplace. But following the phasing out of your MFA, Bangladesh has been tossed into the available market high is an acute competition among the transferring countries for global market share. However , in addition, it opened up industry opportunities leading to export expansion. The realization of the increases from the increasing market opportunities depends on the features of countries to successfully treat the requirements arising from serious competition among the exporting countries. Thus Bangladesh, whose comparison advantage is its cheap labor, needs to turn this kind of comparative benefits into competitive advantage to compete with various other countries.

Recommendations to increase competition of the Industry

Increasing the productivity with the labor remains to be at the core of accelerating competitiveness, which depends on standard of technological...


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