Project: The Economic Impact of Bangladesh's RMG Sector

This project provides a comprehensive overview of Bangladesh's ready-made garment (RMG) sector, tracing its historical development from the 1970s to its current status as a major economic driver. It examines the types of garments produced, key raw materials, major export markets, and the sector's substantial impact on Bangladesh's economy, including its contribution to export earnings and employment. The project also delves into the challenges faced by the RMG sector, such as reliance on imported raw materials, working conditions, and the need for product and market diversification, and proposes potential solutions. Data from primary and secondary sources, including interviews with apparel manufacturers, are used to support the analysis, providing insights into the industry's growth, challenges, and future prospects, supported by data from McKinsey surveys and government statistics. The project highlights the RMG sector's pivotal role in Bangladesh's economy and its potential for continued growth.

A project on Bangladesh's "RMG Sector"
Abstract:
This term paper focuses on Bangladesh's ready-to-wear garment industry. As far back as the
1970s, Bangladesh's garment industry has been steadily increasing. The Bangladeshi ready-to-
wear industry was extensively examined in this term paper. An overview of Bangladesh's
garment industry includes information on the types of garments produced, the key raw materials
utilized in their manufacture, the countries that buy them, and the economic effect they have. The
challenges that the RMG sector confronts and possible solutions were also discussed.
Introduction:
Over the previous two decades, Bangladesh's readymade garment exports have enjoyed
unprecedented success, far beyond even the most optimistic predictions. The clothing export
business is now worth billions of dollars to the country's economy. One of the most important
social and economic trends in Bangladesh today is the export of ready-made garments. Since the
emergence of the garment export sector in Bangladesh has more than a million women working
in semi- or highly skilled occupations creating clothes for export, the impact on Bangladesh's
society and economy has been enormous.
Bangladesh's RMG Industry's History:
The textile industry had its start in the late 1860s of the nineteenth century. In 1965-66, the
business began exporting shirts produced in Karachi, Pakistan, to the European market. This area
has nine export-oriented enterprises in 1977-78. At the time, Riaz Garments, Jewel Garments,
and Paris Garments were the top three. One of the oldest and most well-known of these
companies at the time was Riaz Garments.

As an entrepreneur, Mohammad Reaz Uddin began a small tailoring company named Riaz Shop,
which grew into Riaz Garments. Over the next several years, the company's name was shortened
to "Riaz Garments" from "Riaz Shop," and in 1978, it started exporting garments to South Korea
by delivering 1 million shirts to "Olanda," a local apparel maker. Another pioneer in the business
is "Desh Garments," an RMG in Bangladesh. Working on a joint initiative since 1979, Desh
Garments with the South Korean enterprise "Daiyuu"
Shamsur Rahman's Stylecraft Limited, AM Subid Ali's Aristocraft Limited, Engineer
Mohammad Fazlul Zaidi's Azim Group, and Major (Retd) Abdul Mannan's Sunman Group all
made their debuts around the same period, as did the other companies.
This sector's early adopters inspired several RMG entrepreneurs to start their own enterprises and
follow suit. Since then, Bangladesh's RMG business has grown steadily and without looking
back. There have already been a lot of trials and tribulations in this industry's history. Child labor
was first brought to our attention in 1994, and by 1995, it had been completely eradicated from
the apparel industry.
A look at where the data comes from:
It was necessary to gather data from both primary and secondary sources for the evaluation. I
used a pre-made questionnaire to conduct in-depth interviews with five apparel manufacturers.
When interviewing respondents for the survey, we used a personal interviewing style. The
interviewees' sample clothing businesses are included in a table:
Why is RMG in Bangladesh?
Our nation's potential to advance has been hindered by the fact that the bulk of our population is
poor. We have the power to improve this situation if we make good use of the people we have.
Due to our huge staff, we are able to keep our labor expenses low. In addition, our parents forced
us to work at an early age so that they could support us. Child labor is ubiquitous in Bangladesh,
with 4.7 million or 12.6 percent of the country's 5- to 14-year-olds working in the economy.

Most child labor is concentrated in rural regions, with just 17% of the workforce in cities. The
informal sector includes employment like farming and domestic service, while the official sector
includes jobs like those in the textile industry. The apparel industry is the biggest formal sector
employer of child labor. It developed rapidly from 1983 to 1999, becoming the country's main
export source. Bangladesh is one of the top 10 garment exporters in the world. More
employment for women were established in urban areas thanks to the garment industry's impact
on the economy. As a consequence, an increasing number of metropolitan areas hire young
people as day workers. The clothing industry employs a significant number of women and girls..
Teenage girls working 11-hour days in Bangladeshi textile factories to produce goods for
Western retailers have been accused, even though they are just 13 years old.
List of Garment Manufacturers
Incorporated Millenium Garments
It is owned and operated by Rahan Garments (PVT) LTD
Limited by ALAM FIBER IMPEX
Fabrics and Commodities Exchange, Inc.
TOKIO MODEL LIMITED is the manufacturer.
Materials in their natural state

The RMG industry in Bangladesh is significantly dependent on imports of raw materials from
outside. Bangladesh imports several raw materials for garments from the United States and other
nations. The apparel industry's reliance on natural resources is a cause of concern. A poor quality
product is generally the result of poor quality materials provided by foreign suppliers.. RMG
imports a significant percentage of its raw materials from nations including China, India, and
Thailand using back-to-back letter of credit. For the RMG business in Bangladesh, this is
welcome news indeed. When it comes to raw resources, Bangladesh has access to some of the
best in the world. Bangladesh produces more than 70 percent of the world's knit raw materials.
90% of woven textiles and 30% of knitted textiles are imported, respectively.
The Importance of Bangladesh's Export Earnings from Ready-Made Garments:
Most of Bangladesh's overall export earnings comes from the sale of ready-made clothing to
countries in North America and Europe. There is no doubt that the economies of these countries
are in shambles. It turned out that the garment industry was spared most of the repercussions of
the global financial crisis, even though many business executives, politicians, and economists
were concerned. International Trade Administration data shows that RMG exports rose by 16.16
percent from July 2008 to January 2009 of the current fiscal year.
Ready-made garments (RMG) are Bangladesh's most important export, driving the country's
total export income. Today, RMG is making great strides. RMG has not yet been affected by the
global economic crisis, but the future is still uncertain.
RMG exports from Bangladesh are expected to reach more than $24 billion in 2013-14, up from
$4.91 billion in 2002-03. It's also the country's most significant export industry.

There are a number of big purchasers of Bangladesh RMG products.
Bangladesh's apparel industry is expanding at an incredibly fast pace. The clothing industry is a
great illustration of economic activity. This industry employs a large number of people. In terms
of foreign currency earnings, it is Bangladesh's primary source of income at the moment.
Compared to garments from other countries that produce them, this country's is of a better
standard of craftsmanship. Bangladesh has a wealth of advantages when it comes to the clothing
business. As a result, Bangladeshi apparel is in high demand. Most of the world's leading
economies import Bangladeshi clothing. Most of our customers came from North and South
America as well as the UK and Europe as a whole, as well as Australia and New Zealand. There
are many different types of garment-related items exported from Bangladesh to nations across
the globe.
It is true that the bulk of our RMG product purchasers this year were from the United States.
German RMG is the second-largest purchaser of their merchandise.
The RMG Sector's Economic Impact:
The RMG industry in Bangladesh has a tremendous influence on the economy, there is no
question about it. Over the last decade, the RMG business has had a considerable impact on the
national economy. The RMG sector provides for almost 76% of total export revenues. The RMG
industry in Bangladesh made $5,686.06 million in 2003-2004, $6,417.67.67 million in 2004-05,
$7900.80 million in 2005-06, $9211.23 million in 2006-07, $12.35 billion in 2008-09, and
$24.49 billion in 2013-14, according to data compiled by the government. These figures are
based on the GDP per capita of the nation.

Optimistic about Bangladesh's RMG sector
According to a McKinsey survey of buying executives at major garment firms in Europe and
North America, there is an 86% possibility that sourcing from China will be decreased by 86%
during the next five years.
Many buying executives in the West are looking at sourcing options in the Far East and
Southeast Asia, with Bangladesh being one of the most often mentioned options. Purchasing
managers in the ready-to-wear industry regularly mentioned Bangladesh as a possible hotspot.
According to McKinsey, the country's most significant manufacturing sector is ready-made
clothing, contributing 13% of GDP and 75% of its total exports. Expansion of the global export
market is expected to occur at an annual rate of between seven and nine percent between now
and 2020 according to McKinsey.
RMG is difficult for Bangladeshis to understand.
Over the previous two decades, Bangladesh's foreign exchange has mostly come from garment
exports. For this reason, the BEPZA has total control over working conditions, wages, and
benefits in EPZs. Garment factories employ 40% of Bangladesh's industrial labor. In the absence
of adequate laws, employees will continue to press for their various demands, leading to conflict
amongst sectors.
There are a number of raw materials:
Other nations provide Bangladesh with cotton, thread color, and other clothing-related supplies.
Bangladesh also exports garments to other nations. The utilization of raw materials in the apparel
business might lead to problems. Low-quality goods are sometimes sent by overseas vendors
because of subpar production procedures in their home countries. As a result of inefficient
production methods, the final product is of poor quality.

Unsuitable working conditions:
In order to force workers to work in dangerous circumstances with insufficient ventilation and in
a packed atmosphere, owners took advantage of their employees' lack of resources and
information. All day long, workers in garment factories earn a substantial portion of the country's
foreign currency by working long hours and putting in long hours for little compensation. An
outsider's initial impression of these workers is that they live in a roost.
Hours of work:
Many folks struggle to make ends meet because they work too many hours for too little pay.
According to RMG, there are six eight-hour shifts every week at their plant. Since to the 1965
factory Act, women are effectively forced to labor beyond 8 p.m. because they are permitted to
meet delivery deadlines. As a rule, they labor till the wee hours of the morning, returning to the
office five hours later. Employees must not work more than 10 days in a row without a break
under the Factory Act. For months at a time, they're expected to work.
Untrained employees:
Unskilled workers make up a substantial portion of the garment industry's illiterate female
workforce, resulting in subpar products.
Bangladesh's RMG issue can be solved
Despite the industry's many difficulties in recent years, its robust performance and competitive
strength remain obvious. Because of the above challenges, our RMG sector will grow swiftly if
RMG makes certain steps to remedy this problem:

Diversifying your product line:
It is possible to categorize RMG exports into two distinct phases. In the early phases, the woven
category gave the most. Knitwear goods were introduced in the second phase in FY04, which has
been the driving factor behind the double-digit surge in sales. In today's global economy and
ever-changing fashion business, product diversification is critical. Additionally, RMG
entrepreneurs have had the option of expanding from basic shirts, T-shirts, slacks and shorts to
more upscale goods like suits, jackets, and embroidered garments from a modest base of a few
items in their product line.
Legally correct
If the government is successful in resolving legal challenges and implementing new laws, RMG
production may benefit.
Diversification of the market
Bangladeshi RMG products find their biggest customers in the United States and Europe. When
it comes to exporting garments to America, Bangladesh ranked 7th in 1996/97 and 5th in
1997/98. Industry was able to effectively enter new markets outside of the European Union and
the United States. During FY07, RMG shipments to third countries increased by three times,
leading to a 23.1 percent rise in total exports from FY06. Market diversification is projected to
lead to increased export income. As observed in a recent WTO study, Bangladesh has not fully
used its duty-free access to the EU. Even if tight rules of origin (ROO) regulations are to blame,
the stagnation of EU exports demands more inquiry.

Conclusion
Bangladesh's garment industry contributes 70% of the country's GDP, with women making up
80% of the industry's workforce. Female textile workers have had a positive impact on their
personal and professional lives, yet the overall state of these women remains gloomy. Women in
the RMG industry encounter a variety of challenges. In spite of widespread criticism in the
media, little progress has been made in resolving the problems of low pay and poor working
conditions, as well as health and nutrition difficulties, insurance, and other challenges. These
restrictions will almost certainly continue to have a negative impact on the RMG industry's
output and the environment in the foreseeable future. Lastly, there's the young woman who is
depressed
References
A. Raihan (2002). The RMG Sector's Economic Contribution to Bangladesh.
M. S. Islam, M. A. Rakib, and A. T. M. Adnan collaborated on this study (2016). Bangladesh's
ready-to-wear clothing industry: its contributions and difficulties to growth. Stud, 5(2).
Rakib, M. A., & Adnan, A. (2015). There are ways to solve the challenges facing Bangladesh's
ready-made garments business. The BUFT Journal, 3(1), 84-85. BUFT.
In N. Khosla (2009). To what extent may women in Bangladesh benefit from the Bangladeshi
ready-made clothing industry? International Women's Studies, 11(1), 289-303.
Shirin, S., & Mohammad Akter (2019). Industry Growth and Challenges in Bangladesh: The
Ready-Made Garment Sector. Applied Economics, 7(1), 17-26.

There are a number of factors that contribute to a person's risk of developing a brain tumor; they
include genetic predisposition to the disease, genetic predisposition to cancer, and genetic
predisposition to other cancers (2017). Job satisfaction for working moms in Bangladesh's
readymade-garment manufacturing industry. 5(2), 25-36 in the Journal of Business Management
and Economics