First Year Report: Analysis of the RMG Sector in Bangladesh

This report provides a comprehensive overview of the Readymade Garments (RMG) sector in Bangladesh. It begins with a historical perspective, tracing the industry's evolution from the 1960s to its current status as a multi-billion dollar export industry. The report details data collection methods, discusses the reasons behind Bangladesh's RMG success, and lists major garment companies. It examines the raw materials used, highlights the crucial role of RMG in Bangladesh's export earnings, and identifies major buyers. The report further analyzes the contribution of the RMG sector to the national economy, offering insights into its GDP impact and employment generation. It also explores the future prospects of the industry, considering potential growth and challenges. The report concludes by addressing the problems faced by workers, including working conditions, and proposes solutions to overcome these challenges, such as addressing raw material dependency, improving working environments, and advocating for fair labor practices. References are included for further reading.

Independent University of Bangladesh
Assignment on “RMG Sector of Bangladesh”
Submitted To:
Sabrina Alam
Lecturer
Department of Computer
Science and Engineering
Submitted By:
Am Ratul Ahmed Prokash
ID: 2222650
Year: First year first
semester

Table of Contents
Abstract:...........................................................................................................................................1
Introduction:....................................................................................................................................1
History of RMG Sector in Bangladesh:...........................................................................................1
Sources of Data collection:..............................................................................................................2
Why RMG in Bangladesh?..............................................................................................................2
List of the Garments Company........................................................................................................3
RAW MATERIALS........................................................................................................................3
The Important Role of Ready Made Garments to Bangladesh’s Export Earnings:.........................3
Major buyers of Bangladesh RMG product.....................................................................................4
Contribution of RMG Sector to the National Economy..................................................................5
Hopeful for Bangladesh's RMG industry:.......................................................................................6
People in Bangladesh have a hard time with RMG.........................................................................7
Solution RMG problem in Bangladesh............................................................................................8
Conclusion.......................................................................................................................................9
References......................................................................................................................................10

Abstract:
The Readymade Garments Industry in Bangladesh is the subject of this term paper. It has been
practically continuously expanding since the 1970s that the garment industry in Bangladesh has
flourished. Throughout this term paper, the ready-made clothes sector in Bangladesh was
discussed. There is a brief history of the garments industry in Bangladesh, as well as varieties of
garments, the primary raw materials used in garment production, export, the primary purchasers,
and the impact on our GDP. It was also spoken about the obstacles that the RMG industry faces
and how we may overcome these obstacles.
Introduction:
The tremendous success of readymade garment exports from Bangladesh over the last two
decades has surpassed the most optimistic expectations. Today the apparel export sector is a
multi-billion-dollar manufacturing and export industry in the country. The overall impact of the
readymade garment exports is certainly one of the most significant social and economic
developments in contemporary Bangladesh. With over one and a half million women workers
employed in semi-skilled and skilled jobs producing clothing for exports, the development of the
apparel export industry has had far-reaching implications for the society and economy of
Bangladesh.
History of RMG Sector in Bangladesh:
In the 1960s of the nineteenth century, the first foundations of the textile industry were laid.
First, the industry exported shirts (Mercury shirts) made in Karachi to the European market in
1965-66. In 1977-78, there were nine exporting industries in this region. Riaz Garments, Jewel
Garments, and Paris Garments were the three most important at the period. At the time, Riaz
Garments was the most well-known and oldest of these businesses.
Mohammad Reaz Uddin's Riaz Garments started off as a little tailoring shop called Riaz store.
Later, in 1973, the name was changed to Riaz Garments from Riaz shop, and in 1978, the
company began exporting items to South Korea by shipping 1 million shirts to "Olanda," a South
Korean clothing manufacturer. An RMG company in Bangladesh known as "Desh Garments" is
another pioneer in the industry. Desh Garments and the South Korean firm "Daiyuu" began
working together on a collaborative project in 1979.
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Stylecraft Limited by Shamsur Rahman, Aristocraft Limited by AM Subid Ali, the Azim Group
by Engineer Mohammad Fazlul Zaidi, and the Sunman Group by Major (Retd) Abdul Mannan
were all introduced at around the same time.
Some entrepreneurs in the country's RMG sector followed in the footsteps of the sector's early
adopters, and created their own businesses as a result. From that point on, the RMG industry in
Bangladesh continued to grow steadily without looking back. It's important to note that this
industry has already made it through a number of testing times in its journey. In 1994, we learnt
about child labor, and in 1995, we successfully eliminated child labor from our clothing sector.
Sources of Data collection:
For the assessment, both primary and secondary data were collected. For this, I interviewed 5
garments company by using a structured questionnaire. A personal interview technique was
applied while filling up the questionnaire on respondents. The sample garments companies who
are interviewed are given in a chart:
Why RMG in Bangladesh?
Since the majority of our populace is impoverished, our nation's ability to progress has been
hampered. By utilizing our people wisely, we have the opportunity to change this status. Our low
labor costs are actually due to the fact that we have a large workforce. In addition, our parents
put their children to work at a young age in order to make money. 4.7 million or 12.6 percent of
Bangladesh's 5-14-year-olds are employed in the workforce, making child labor a widespread
problem. There are 83 percent of child laborers working in rural areas, and only 17 percent
working in urban areas. Agriculture and domestic service are examples of work in the informal
sector, while jobs in the garment industry are examples of jobs in the formal sector. Among the
formal sector's largest employers of child labor, the clothing industry ranks first. From 1983 to
1999, the industry grew at a rapid pace, becoming the country's primary export source. Among
the world's top ten garment exporters, you'll find Bangladesh. In addition to boosting the
economy, the garment sector created more jobs in metropolitan areas, particularly for women. As
a result, the number of urban regions employing juvenile laborers has risen. There are a large
number of women and girls employed in the garment sector. Young girls in Bangladesh's
garment factories have been accused of working 11-hour shifts to create clothing for Western
merchants, even if they are just 13-years-old.
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List of the Garments Company
Millenium Garments Limited
RAHAN GARMENTS (PVT) LTD
ALAM FIBER IMPEX Ltd.
FABRICS AND COMMODITIES EXCHANGE LTD.
TOKIO MODEL LIMITED.
RAW MATERIALS
Bangladesh's RMG sector is heavily reliant on foreign raw materials imports. Many raw
materials for clothing are imported to Bangladesh from the United States and other countries.
There is a problem with the clothing industry's dependency on raw resources. Foreign vendors
often provide low-quality materials, which in turn leads to a low-quality final product. Under
back to back letter of credit, a substantial amount of RMG's raw materials are imported from
countries such as China, India and Thailand. This is good news for Bangladesh's RMG industry.
Bangladesh has the ability to import raw materials from the finest sources, depending on the
buyer's needs. Bangladesh is home to the manufacture of over 70% of the world's knit raw
materials. Imports account for 90% of woven textiles and 30% of knit materials, respectively.
The Important Role of Ready Made Garments to Bangladesh’s Export
Earnings:
Approximately 75 percent of Bangladesh's total export revenues come from the export of
readymade garments (RMG) to North American and European nations. These nations are clearly
suffering from an economic crisis. Even though many business leaders, politicians, and
economists were worried about the global financial crisis, it turned out that the garment sector
was spared the worst of the effects. Between July 2008 and January 2009 of this fiscal year,
RMG exports climbed by a total of 16.16 percent, according to the International Trade
Administration, which monitors trade.
Bangladesh's most significant export sector is ready-made garments (RMG), which drives the
country's overall export revenues. Today, RMG is progressing admirably. Although the global
economic crisis has yet to have a negative impact on RMG as of today, the future is yet
unknown.
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More than 24 billion dollars in RMG products would be exported from Bangladesh by the year
2013-14, up from 4.91 billion dollars in 2002-03. And it is the country's most important export
sector.
Major buyers of Bangladesh RMG product
Bangladesh's clothing sector is seeing rapid growth. When it comes to economic activity, the
garment sector is an excellent example. There are a vast number of people that work in this
business. As things are right now, it is Bangladesh's principal source of revenue in terms of
foreign currency profits. When compared to apparel from other nations that create them, the
clothing from this country is of higher quality. When it comes to the garment manufacturing
industry, Bangladesh offers a plethora of benefits. As a consequence, shoppers are eager to get
clothing from Bangladesh. The apparel produced in Bangladesh is imported by the majority of
the world's top economies. Our most frequent clients were residents of North and South
America, the United Kingdom, Europe as a whole, and Australia. In addition to this, Bangladesh
exports a diverse variety of garment-related products to countries all over the world.
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In fact, the majority of our RMG product consumers are from the United States, who purchased
Bangladeshi RMG products in 2019. The German RMG product they purchased is the second-
largest buyer.
Contribution of RMG Sector to the National Economy:
There is no doubt that Bangladesh's RMG sector has a significant impact on the country's
economy. The RMG industry has made a significant contribution to the national economy over
the last decade. The RMG industry accounts for approximately 76% of overall export revenues.
A look at the numbers shows that Bangladesh's RMG sector earned $5,686.06 million from
2003-2004, $6,417.67.67 million from 2004-05, $7900.80 million from 2005-06, $9211.23 from
2006-07, $12.35 billion from 2008-09, and $24.49 billion from 2013-14. Those numbers are
based on the country's GDP per capita.
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Hopeful for Bangladesh's RMG industry:
There is an 86% chance that sourcing in China will be reduced by 86% over the next five years,
based on McKinsey's poll of purchasing executives in prominent garment companies in Europe
and North America.
Western buyers are considering a multitude of sourcing choices in the Far East and Southeast
Asia, with many purchasing executives citing Bangladesh as the next hot spot in the poll. In the
ready-to-wear sector, Bangladesh was frequently identified as a potential hotspot by purchasing
executives.
Also, according to a McKinsey survey, ready-made clothes are the country's most important
industrial sector; this represents 13% and 75% of GDP and total exports, respectively. In the next
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ten years, according to McKinsey, export values will expand by 7 to 9 percent each year,
meaning the market will have doubled in size by 2015 and nearly tripled in size by 2020.
People in Bangladesh have a hard time with RMG
Garment exports have been a major source of Bangladesh's foreign cash over the last 25 years.
Because EPZs are exempt from national labor regulations, the BEPZA has complete authority
over working conditions, compensation, and benefits. 40% of Bangladesh's industrial workforce
is employed in garment manufacturers. Without suitable legislation, workers are demanding their
diverse desires, resulting in a confrontation between industries.
1. Raw materials:
People in Bangladesh buy cotton, thread color, and other things for clothes from other countries.
Bangladesh sells clothes to other countries as well. Issues arise when raw materials are used in
the clothing industry. As a result of poor manufacturing practices, many international suppliers
send low-quality materials. This leads to low-quality items because of poor manufacturing
practices.
2. Improper working environment:
Owners took advantage of the employees' lack of resources and lack of education to push them to
labor in hazardous conditions with inadequate ventilation and in an environment that was already
congested. Workers at garment factories all day long earn a large amount of the country's foreign
cash by working long hours and putting in long hours for little reward. The first impression a
visitor to the plant will have is that these employees are living in a roost.
3. Working hours:
Working long hours, despite poor income, is a problem for many people. There are six eight-
hour shifts a week at the RMG factory, according to their claims. After 8 p.m., women are
practically required to work because of the 1965 factory Act, which permits women to fulfill
delivery deadlines. It's not uncommon for them to work until 3 a.m. and return to work at 8 a.m.
five hours later. The Factory Act mandates that no employee shall work longer than 10 days in a
row without a break. They are expected to labor full months at a time.
4. Unskilled workers:
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A large percentage of the illiterate female employees engaged in the garment industry are
unskilled, which results in lower-quality goods.
Solution RMG problem in Bangladesh
This industry's strong performance and competitive strength have been evident despite the
industry's various challenges in recent years. Our RMG industry will expand rapidly if the
aforementioned issues are addressed, thus RMG can take some efforts to alleviate this problem:
i. Product Diversification:
Exports of RMG may be broken down into two main stages. The woven category provided the
most in the early stages. The advent of knitwear items in the second phase, beginning in FY04,
has been the driving force behind the current double-digit increase. Product diversity is essential
in today's international economy and ever-evolving fashion industry. It has also been possible for
RMG entrepreneurs to broaden their product line from simple shirts, T-shirts, pants, shorts and
pajamas to high-end products such as suits, coats, embroidered apparel, etc., from a small basis
of a few things.
ii. Proper law:
RMG production may benefit if the government is successful in resolving legal issues and
enacting new regulations.
iii. Market diversification:
The United States and the European Union are the primary markets for Bangladeshi RMG goods.
Bangladesh was the world's 7th biggest garment exporter to the United States in 1996-97, and
the EU's 5th largest importer in 1997-98. Markets outside of the EU and the US were
successfully explored by industry. RMG exports to third countries, which had a negative growth
rate in FY06, saw a three-fold increase in exports in FY07, contributing to an overall export
growth rate of 23.1 percent. Export revenues are expected to continue growing as a result of the
trend toward market diversity. Bangladesh has not taken full advantage of its duty-free access to
the EU, as noted in a recent WTO evaluation. The relative stagnation of exports to the EU
necessitates more investigation, even if the strict rules of origin (ROO) standards are to blame.
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Conclusion
Bangladesh's garment sector accounts for more than 70% of the country's GDP, with women
accounting for 80 percent of all garment workers. Women who work in the garment business
have seen improvements in their life and social standing as a consequence of their employment,
yet the overall condition of these women is quite depressing. Women working in the RMG
business face a wide range of difficulties. Poor pay, unfriendly working conditions, health
troubles and nutrition, insurance, and other concerns have all been portrayed in a negative light
by the print and broadcast media, but little progress has been achieved in resolving these issues.
It is likely that the production and environment of the RMG industry will continue to be badly
affected in the near future unless these limitations are lifted. Last but not least, there's the sad
young lady.
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References
Raihan, A. (2002). Contribution of the RMG Sector to the Bangladesh Economy.
Islam, M. S., Rakib, M. A., & Adnan, A. T. M. (2016). Ready-made garments sector of
Bangladesh: Its contribution and challenges towards development. Stud, 5(2).
Rakib, M. A., & Adnan, A. (2015). Challenges of ready-made garments sector in Bangladesh:
Ways to overcome. BUFT Journal, 3(1), 84-85.
Khosla, N. (2009). The ready-made garments industry in Bangladesh: A means to reducing
gender-based social exclusion of women?. Journal of International Women's Studies, 11(1), 289-
303.
Mia, S., & Akter, M. (2019). Ready-Made Garments Sector of Bangladesh: Its Growth,
Contribution and Challenges. Economics, 7(1), 17-26.
Akter, A., Wali, S. B., Kamal, M. R., Mukul, A. Z. A., & Mahmuda, M. (2017). Factors affecting
job satisfaction of working mothers of readymade garments sector in Bangladesh. Issues in
Business Management and Economics, 5(2), 25-36.
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