EXECUTIVE SUMMARY

Readymade Garments Industry is the leading foreign currency earning sectors of Bangladesh.

Now-a-days Bangladesh financial sector is very much dependent upon this sector. The annual

export income of garments sector is driven from two sources one is woven garments and others

is knit wear. Redimet garments is a 100% export oriented garments. Redimet garments exports

various garments product in foreign market. The company makes shirts, ladies dress, shorts,

trousers, and others for U.S.A, U.K, Europian countries countries.

They use high tech machineries to produce a quality garments product. They also add new

machineries to increase their production line. They have a mission and the vision is profit

maximization. The merchandising philosophy of Redimet garments is to keep good relation with

their buyers.

The garments Industry maintains a good relationship with every buyer. Hard working and

commitment maintenance is their main strategy. They always try to satisfy their buyers. In this

perspective the merchandiser always try to do their merchandising activities in due time. The

merchandiser of this company is not very much skilled person. More over him has no assistant.

For this reason

Sometimes the company face problem. So, here Redimet garments can recruit high skilled

people with giving high salary.

The Redimet garments should improve their product quality, packing system, internal

environment, and other merchandising activities to satisfy their foreign buyers. This report is

prepared on “Merchandising activities and buyer satisfaction of Redimet garments. The OCP

report helps the reader to know about the merchandising activities, practiced in Redimet

garments And the buyer satisfaction level towards the merchandiser.

1.1             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.

1.2      Background of the Study:

MBA OCP report is an attempt to provide business students an orientation to a real life business

situation in which we can observe and evaluate the use and applicability of the theoretical

concepts. As per norm, this report is the requirement of the fulfillment of the MBA program. This

report “Garments Industry of Bangladesh: The Challenging Ahead” is the out come of 13 weeks

OCP work on Garments Sector. During this period, my job has related to this department. My

honorable supervisor Md. Mokhter Ahmad, Associate Professor & Coordinator,CENURC (Centre

for University Requirement Courses), International Islamic University Chittago, and Dhaka

authorized this report to me to acquire the practical knowledge.

1.4            Objectives of the Report:

Each & every study should have objectives. The objectives of my project have divided into two

parts.

Broad objective:

To know the overall activities of “Garments Industry of Babgladesh: The Challenging Ahed”.

Specific objective:

The key objectives of this report are as follows:

To know the duties and responsibilities of merchandising department.

To know the overall internal and external environment of “Garments Industry of Babgladesh: The

Challenging Ahed “.

Identify the major opportunity and threats of “Garments Industry of Babgladesh: The Challenging

Ahed”

1.5 Methodology

This report has been prepared on the basis of experience gathered during the period of

internship. For preparing the report, I have also got the information from annual report and

website of the Rising Apparels Ltd. I have presented my experience and finding by using different

chart and tables in the analysis part. I have also write down my report on the basis of primary and

secondary data.

v  Primary source:

From different employees in garments I get information. To collect this information I communicate

with this company’s different department employees such as Md. Azizur Rahman and Md.

Ashraful Alam.

v  Secondary source:

To prepare this report I user different news papers, books which are secondary information.

Especially I use various websites as well as bangladesh garments industry.

1.6. Limitations of the Report

Since our study is based on both primary and secondary data, there is a possibility of getting fake

information. If the surveyed personnel provide us with any fabricated information about their

opinion of their organization, then the report findings may be erroneous. Above all, this study is

weak in some points. The notable ones are as under:

The survey was conducted in a very short time so we were not able to collect more information.

This survey made on crisis situation of Bangladesh, so it was difficult to collect more samples.

Only the big and the reputed Garments Company consider here as sample.

The questionnaire contains some questions that, if answered properly, might damage the

company’s image. In this type of questions, the respondents might provide socially acceptable

answers. This risk was unavoidable.

Another limitation of this study is the person’s private information were not disclosing some, data

and information for obvious reasons, which could be very much useful.

Lack of experience in this field.

Lack of proper authority to conduct the interview program

Due to long distance between the factory and University campus it was very difficult to

communicate and meet with the supervisor.

Garment Industry of Bangladesh:

The garment industry has played a pioneering role in the development of industrial sector of

Bangladesh. Though it took a rather late start i.e., in 1976 but it soon established its reputation in

the world market within a short span of time. Resultantly garment is now one of the main export

items of the country. Besides, enriching the country’s economy it has played a very important role

in alleviating unemployment. At present there are more than two thousand one hundred garment

factories in the country employing more than 12 lack labors

For Bangladesh, the readymade garment export industry has been the proverbial goose that lays

the golden eggs for over fifteen years now.  The sector now dominates the modern economy in

export earnings, secondary impact and employment generated.  The events in 1998 serve to

highlight the vulnerability of this industry to both internal and external shocks on the demand and

supply side.  Given the dominance of the sector in the overall modern economy of Bangladesh,

this vulnerability should be a matter of some concern to the policymakers in Bangladesh.

Although in gross terms the sector’s contributions to the country’s export earnings is around 74

percent, in net terms the share would be much less partially because the backward linkages in

textile have been slow to develop.  The dependence on a single sector, no matter how resilient or

sturdy that sector is, is a matter of policy concern.  We believe the policymakers in Bangladesh

should work to reduce this dependence by moving quickly to develop the other export industries

using the lessons learned from the success of apparel exports.  Support for the apparel sector

should not be reduced.  In fact, another way to reduce the vulnerability is to diversify the product

and the market mix.  It is heartening to observe that the knit products are rapidly gaining share in

overall garment exports as these products are sold in quota-free markets and reflect the strength

of Bangladeshi producers in the fully competitive global apparel markets.

Preliminary data and informal evidence indicate that this sector seems to have weathered the

devastating floods relatively well.  The industry is one hundred percent export-oriented and

therefore insulated from domestic demand shocks; however, it remains vulnerable to domestic

supply shocks and the smooth functioning of the banking, transportation and other forward and

backward linkage sectors of the economy.  The Dhaka-Chittagong road remains the main

transportation link connecting the production units, mostly situated in and around Dhaka and the

port in Chittagong, where the raw material and the finished products are shipped in and out. 

Despite increased dependence on air transportation, trucks remain the main vehicles for

transporting raw materials and finished products for Bangladesh garment exports.  The floods

disrupted the normal flow of traffic on this road.

Eventually, this road link was completely severed for several days when large sections of the

road went under water for a few weeks during the latter phase of the floods.  This delinking of the

road connection between Dhaka and the port in Chittagong was as serious a threat as one can

imagine for the garment exporters.  The industry responded by calling upon the Bangladesh navy

to help with trawlers and renting a plane from Thai Air that was used to directly fly garment

consignments from the Dhaka airport to the Chittagong airport several times a day.

RMG business started in the late 70s as a negligible non-traditional sector with a narrow export

base and by the year 1983 it emerged as a promising export earning sector; presently it

contributes around 75 percent of the total export earnings. Over the past one and half decade,

RMG export earnings have increased by more than 8 times with an exceptional growth rate of

16.5 percent per annum. In FY06, earnings reached about 8 billion USD, which was only less

than a billion USD in FY91. Excepting FY02, the industry registered significant positive growth

throughout this period

In terms of GDP, RMG’s contribution is highly remarkable; it reaches 13 percent of GDP which

was only about 3 percent in FY91. This is a clear indication of the industry’s contribution to the

overall economy. It also plays a pivotal role to promote the development of other key sectors of

the economy like banking, insurance, shipping, hotel, tourism, road transportation, railway

container services, etc. A 1999 study found the industry supporting approximately USD 2.0 billion

worth of  economic activities (Bhattacharya and Rahman), when the value of exports stood at a

little over USD 4.0 billion.  One of the key advantages of the RMG industry is its cheap labor

force, which provides a competitive edge over its competitors. The sector has created jobs for

about two million people of which 70 percent are women who mostly come from rural areas. The

sector opened up employment opportunities for many more individuals through direct and indirect

economic activities, which eventually helps the country’s social development, woman

empowerment and poverty alleviation

History In 1888, New York state factory inspectors provided the following description of sweat-

shops: “In New York city, in the tenement house districts where clothing is manufactured, there

exists a system of labor which is nearly akin to slavery as it is possible to get. The work is done

under the eyes of task-masters, who rent a small room or two in the rear part of an upper floor of

a high building, put in a few sewing machines, a stove suitable for heating irons, and then hire a

number of men and women to work for them.” Explicit in the inspectors’ definition of a sweatshop

is the exploitation of garment workers by contractors, who forced their workers to labor for long

hours only to be paid insufficient wages. In addition to physically sweating as a result of their toil,

workers were also “sweated” in the same manner an animal would be milked or bled.

By the 1880s, for the most part, seamstresses no longer negotiated work on an individual basis

but were subsumed into a system of contracting. Contractors received components of garments

that they in turn assembled according to designs. These finished products were returned to the

manufacturers and marketed under the company’s label. As a result, manufacturers distanced

themselves from the hiring and equipping of a labor force, which became the responsibility of the

contractor. Manufacturers paid a set price for each finished garment they received from the

contractor, which was considerably lower then they would then charge retail. Consequently,

contractors, in order to make any profit, forced longer hours and lower wages on their workers.

Contractors, more often than not, exploited fellow immigrants from Eastern and Southern Europe

by using social networks and common dialects to hire their labor force. In many instances, a

sweatshop would be staffed by workers who all came to America from the same hometown in

Europe. The exploitation of the contractor, in his own mind, was justified by the fact that he

himself felt exploited by the manufacturers. Furthermore, many new immigrants were willing to

take any job offered to them at all, particularly during the economic hardships of the 1890s (See

Depression of 1893). The line that contractors straddled between being helpful employers and

ruthless exploiter to their fellow countrymen was indeed thin, and varied from shop to shop.

Because the equipment necessary for making garments was not cumbersome, most contractors

based their sweatshops out of the tenement apartments in which they lived with their family.

Within the Lower East Side, there was no pattern as to where one would find a garment

sweatshop. Research shows that in one year shops were in existence in tenements along

Delancey, Sheriff, Division, Hester, Essex, Ridge, Cherry, Ludlow, Monroe, Mulberry, Mott,

Baxter, Pitt, Rivington, Suffolk, Norfolk, Canal, Henry, Cannon, Stanton, East Houston, Attorney,

Allen, Eldridge, Bayard, Chrystie, Orchard (No. 180, in addition to 97), Willett, Jefferson,

Columbia, Clinton and Madison streets. The shop was run as a family affair. The wife of the

contractor would help out by cooking meals (for which the workers had to pay) and attending to

other tasks. Everything in the shop served both a domestic and business purpose. Stoves used

to heat irons were also used to cook meals. The average sweatshop employed anywhere from

four to 30 employees.

In 1904, the opening of the New York City subway system and other transportation networks

allowed the garment industry to move uptown, and to consolidate workers in more factories.

Although sweatshops in tenements remained, factories, such as the infamous Triangle Shirtwaist

Factory (see Triangle Shirtwaist Factory Fire) provided more consistent employment.

The Evolution of a Garment How the Sweatshop System Worked. Although certain retailers

employed “inside” shops, which eliminated contractors and paid sewing machine operators and

other workers at a piece-rate to work directly for them, most retailers relied on the system of

using “outside” shops organized by contractors.

Typically, a designer, either independent or working for a retailer, would design a garment based

on the latest fashions (particularly within the women’s clothing industry). Cotton, harvested by

underpaid sharecroppers (usually freed African-American slaves and poor Southern whites, who

lived in a type of veritable slavery where wages and rent were always manipulated to keep them

in debt) was shipped to the giant textile mills of New England and the mid-Atlantic. Textile

workers, often poor, underpaid immigrants working their own long hours, converted the fiber into

fabric.

Retailers purchased the fabric from the mills, and redistributed the material to a cutting

contractor, who would be paid a piece-rate to cut the material into the garment design. Upon

receiving the cut designs, the retailer would re-contract the material, this time to a sewing

contractor (i.e. Harris Levine). Often the system of contracting was highly diversified with each

sweatshop performing a specialized task. A single clothing firm might employ as many as 75

different contractors to work on their clothing line.

Roles within the Tenement Sweatshop

Sewing Machine Operator – Might have experience working as a tailor in Europe, almost always a

man. Often the operator was the contractor himself, who employed the workers in the sweatshop.

Baster – Prepared the garments for the operator by fitting the pieces together.

Finisher – Responsible for adding the finishing touches to the garment by hand; mostly women in

teens and early 20s. Because the finisher was often the only woman in the sweatshop, she might

suffer sexual harassment from her male co-workers. As a result, many preferred to work with

predominantly women workforces in factories or to get married and leave the shop.

Presser – Always a male as he had to lift the heavy irons, which weighed up to 20 pounds. Usually

an elderly male. First person accounts from workers in the sweatshops cite that many of the

pressers were Orthodox Jews.

(Most shops would also employ workers at an apprentice status who would perform

miscellaneous tasks such as hauling coal, sweeping the shop, and carrying finished goods to the

manufacturer.)

Seasonality in the Garment Industry:

Generally the garment industry responded to the seasonality of the fashion industry, in which

there was a “high” and a “slack” season. (Researchers for the sourcebook were unable to

determine whether the seasons of the garment industry adhered to the actual calendar months,

or followed only the trends of supply and demand.) During the high season contractors forced

workers to labor for even longer hours than usual, in order to meet the demand that had been

created by the issue of the latest fashion. During the slack season, sweatshop workers would find

themselves jobless or sitting around idle, unable to earn wages because a lack of pieces that

they could complete.

Contemporary Sweatshops:

There is a popular misconception that sweatshops no longer operate in the United States, and

exist only as a problem in “developing” nations that lack unions and other fair practice labor laws.

This is in fact false. In 2000, it was estimated that there were 93,000 workers in the New York

City garment industry. Of the shops that employed these workers, approximately 60% (7,000-

7,500 shops) could be deemed sweatshops in the sense that their operators abused and

disregarded laws designed to ensure that workers were treated decently.

Even as the 21st century begins, the Lower East Side and adjoining Chinatown remain intricately

tied to the garment industry. Along with the Sunset Park area of Brooklyn, many garment shops

in Chinatown still work on the system of contracting. Presently, Chinese workers constitute the

largest portion of immigrants working in both legal and illegal garment shops, although they are

joined by other recent immigrants from the Dominican Republic, Puerto Rico, Vietnam and myriad

other nations.

Many of the same issues persist. Contractors continue to be recent immigrants themselves and

seem to “aid” fellow immigrants by providing a job where they need not speak English, can bring

their children to the factory (often to work in violation of child labor laws), and receive payments in

cash so as to avoid taxation and possible detection by the Immigration and Naturalization Service

(INS). Like their historical counterparts, the contractors still sweat their workers as well. The

continued use of the piece-rate system, where workers are paid for each garment produced

rather than at a standard hourly rate, ensures that garment workers in sweatshops earn well

under the federally mandated minimum wage rate. Chinese sewing machine operators working in

Chinatown and Sunset Park often worke anywhere from 60 to 100 (!) hours a week, despite

earning only $150 to $400 per week. Furthermore, workers’ wages are often withheld for weeks

at a time or altogether, if the contractor decides to abandon his shop and move elsewhere.

The influx of numerous illegal immigrants along with immigrants who came to the United States

through legal means, further complicates the situation. Illegal immigrants, who are often coerced

into paying for their journey on credit, work long hours for clandestine operations. They are

worked even more harshly as bosses realize they are unlikely to form unions or level any type of

complaints, since many possess deeply rooted fears of attracting the attention of the INS.

Consequently, legal immigrants are forced to compete and match the output of illegal immigrants

in order to stay employed.

 

History

The history of the Readymade Garments Sector in Bangladesh is a fairly recent one.

Nonetheless it is a rich and varied tale. The recent struggle to realize Workers’ Rights adds an

important episode to the story. Below, we present a detailed narration of the evolution of the

RMG sector from its humble origins to the present day.

The shift from a rural, agrarian economy to an urban, industrial economy is integral to the

process of economic development (Kaldor, 1966, 1967). Although policymakers in the least

developed countries (LDCs) have, at various times, attempted to make agriculture the primary

engine of economic growth and employment generation, this approach has not worked, not least

because of the contributions of the Green Revolution, which has had the dual effect of increasing

agricultural productivity in the LDCs and displacing the rural labour force at the same time. Led

by the example of the East Asian economies, most LDCs now accept the need for greater

industrialization as the fastest path to economic growth. In particular, countries such as Japan,

Taiwan and South Korea have demonstrated that an export-oriented industrial strategy can not

only raise per capita income and living standards in a relatively short time; it can also play a vital

role in modernizing the economy and integrating it with the global economic system.

Bangladesh, one of the archetypal LDCs, has also been following the same route for the last 25

years. Once derided as a “basket-case” by Henry Kissinger (The Economist, 1996), the country

stumbled across an economic opportunity in the late 1970s. New rules had come to govern the

international trade in textiles and apparel, allowing low-cost suppliers to gain a foothold in

American and European markets. Assisted by foreign partners, and largely unaided by the

government, entrepreneurs seized the opportunity and exploited it to the fullest. Over a period of

25 years, the garments export sector has grown into a $6 billion industry that employs over a

million people. In the process, it has boosted the overall economic growth of the country and

raised the viability of other export-oriented sectors.

This essay analyzes the processes by which global trading rules came to help out a poor country

like Bangladesh. It demonstrates the impact of the rule changes on the garments sector, and the

response of the sector to multiple challenges and obstacles. It also discusses what steps

Bangladesh should take in order to deal with the full liberalization of the international garments

trade, which occurred in January 2005 and which could potentially threaten the country’s growth

prospects. Finally, it details some of the recent developments that have occurred since

liberalization took effect.

OVERVIEW OF THE BANGLADESHI ECONOMY:

Bangladesh is a tropical country in South Asia that is situated in the delta of two major rivers that

flow down from the Himalayas (the Ganges and the Jamuna). The country’s land surface is

therefore largely composed of alluvial silt, rendering the soil highly fertile. Historically, this has

made Bangladesh an agricultural nation; although agriculture contributes only about a fifth of the

national GDP, it employs three-fifths of the labour force (ADB, 2005).

Bangladesh has an estimated population of 140 million (circa 2005), living in an area of about

55,000 square miles. It thus has the unwanted distinction of being the world’s most densely

populated country, and this overpopulation is at the root of many of Bangladesh’s socioeconomic

problems. However, the population is largely homogeneous in terms of ethnicity, language, and

religion, and this provides a valuable element of national cohesion.

In spite of numerous constraints, the economy has been on a steady growth path for the last 15

years, mainly due to private sector dynamism. The constraints include pervasive political

instability and violence, endemic corruption and disregard for the law, frequent natural disasters,

inefficient state-owned enterprises that are hotbeds of trade unionism, lack of political will to carry

through necessary economic reform, inadequate infrastructure at all levels (power generation,

roads and highways, port facilities), etc.

 Nevertheless, the economy has proved to be resilient. Since 1990, it has grown at an average

rate of 5% per year. The Asian Development Bank projects that real GDP growth will increase to

6% in 2006 and 2007 (ADB, 2005). Bangladesh’s total GDP stood at $275 billion in 2004, and per

capita GDP was $2,000 (adjusted for purchasing power).

Sectorally, services constitute the largest portion of GDP with 51.7%. Industry accounts for 27.1%

and agriculture 21.2%. However, the distribution of the labour force is reversed, with most people

still working in agriculture (61%), followed by services (27%) and finally industry (12%). This

imbalance between output and employment is indicative of a large amount of “disguised”

unemployment and underemployment. Unemployment is estimated to be about 40%. The poverty

rate, as of 2004, is about 45%.

As shown by the above table, merchandise exports have been growing strongly in recent years

and this trend is set to continue. While imports also exhibit strong growth, it should be noted that

the bulk of imports consists of inputs into the production process, e.g. machinery and equipment,

fuel and petroleum products, chemicals, iron and steel, cement, fabric and accessories (for

garments production), etc. The breakdown of various exports by sector is given in the table

overleaf (Bangladesh Bank, 2005). The figures are for the 2003-2004 fiscal year.

As can be seen from Table 2, garments and textile items are the dominant export product,

accounting for 77% of the country’s total export receipts. This is a relatively new phenomenon.

For centuries, the chief export of the Bengal economy was jute, a natural fibre which is used in

making carpets, sacks and hessian, but whose economic value went into precipitous decline after

the advent of plastic bags and synthetic packaging material in the 1960s and 1970s. How the

garments sector claimed the position of top export earner in the years since is discussed in

Levels of Economic Integration:

1. Free trade area: A free trade area is an economic integration arrangement in which barriers to

trade among member countries are removed. Under this arrangement each participant will seek

to gain by specializing in the production of those goods and services for which it has a

comparative advantages and importing those goods and services for which it has a comparative

disadvantage. One of the best known free trade arrangements is the north American Free Trade

Agreement (NAFTA), a free trade area currently consisting of Canada, the Us and Mexico. Trade

between the three members of NAFTA is now in the range of &1 trillion annually.

2. Customs Union: A custom Union is a form of economic integration in which all tariffs between

member countries are eliminated and a common trade policy toward non member countries is

established.

This policy often results in a uniform external tariff structure. Under this arrangement, a country

outside the union will face the same tariff on exports to any member country receiving the goods.

3. Common Market: A common market is a form of economic integration characteristics by no

barriers to trade among member nations, a common external trade policy and mobility of factors

of production among member countries.

A common market allows reallocation of production resources such as capital, labor, and

technology based on the theory of comparative advantage. Example: EU is the successful

common market and is now focusing on political integration.

4. Economic Union: An economic union is a deep form of economic integration and is

characterized by free movement of goods, services and factors of production between countries

and full integration of economic policies.

An economic union 1) unifies monetary and fiscal policy among the member nations 2) has a

common currency and 3) employs the same tax rates and structures for all members.

5. Political Union: A political union goes beyond full economic integration, in which all economic

policies are unified, and has a single government.

This represents total economic integration, and it occurs only when countries give up their

national powers to leadership under a single government.

Example: We combined independent states into a political union. The unification of west and East

German in 1991 has also created a political union, the two nations now have one government

and one set of overall economic policies

Trade Creation:

Trade Creation occurs when members of an economic integration group begin focusing their

efforts on those goods and services for which they have a comparative advantage and start

trading more extensively with each other.

Example: The US and Mexico have an agreement that allows cars to be assembled in Mexico

and shipped into the US. As a result, Mexico, a low cost producer, supplies a large number of

vehicles sold in America and both countries prosper.

Trade Diversion:

Trade Diversion occurs when members of an economic integration group decrease their trade

with non- member countries in favor of trade with each other. One common reason is that the

removal of trade barriers among member countries makes it less expensive to buy from

companies within the group and the continuation of trade barriers with non member countries

makes it more difficult for the latter to compete.

Thus trade diversion can lead to the loss of production and exports from more efficient non

member countries to less efficient member countries that are being protected by tariffs or other

barriers. The creation of economic integration groups is beneficial only if trade creation exceeds

trade diversion.

The European Union:

The foundation of the European Union was laid in 1957 by the Treaty of Rome.

The six– Belgium, France, Italy, Luxembourg, the Netherlands and West Germany) nations who

created the ECSC were the original founders of what was initially called the European Economic

Community and later the European Community.

By 1991 six other national joined the EC (Great Britain, Denmark, Greece, Ireland, Portugal, and

Spain) and by 1995 Austria, Finland and Sweden were also admitted to the EC which was now

renamed the European Union.

The main provisions of the following treaty of 1957 were:

Formation of a free trade area among the members would be brought about by the gradual

elimination of tariffs, quotas, and other trade barriers.

Barriers to the movement of labor, capital and business enterprises would eventually be removed

Common agricultural policies would be adopted.

An investment fund to channel capital from the more advanced regions of the bloc to the less

advanced regions would be created.

A customs union characterized by a uniform tariff schedule applicable to imports from the rest of

the world would be created.

These nations formed the European Free Trade Association, whose primary goal was to dismantle

trade barriers among its member.

There are five major institutions that mange the EU:

The European Council is composed of the heads of state of each EU member country as well as

the president of the European Commission. The purposes of these meetings are to resolve major

policy issues and to set policy direction.

The Council Of Ministers is the major policy decision making body of the EU.

The European Commission has 20 members who are chosen by agreement of the member

government. France, Germany, Italy, Spain, and the UK have two representatives each, and the

other member’s one each. It handles a great deal of the technical work associated with preparing

decisions and regulations.

The European parliament currently has 630 members. The individual are elected directly by the

voters in each member country. The parliament serves as a watchdog on EU expenditures in

addition to evaluating other decisions of the Council.

The court of Justice has one judge appointed from each EU member country; this court serves as

the official interpreter of EU law.

Other Economic alliances:

Andean Pact:

The Andean Pact is an economic union that was formed in 1969 by Bolivia, Chile, Colombia,

Educador, and Peru. The original objectives of the Ancom

countries were to integrate themselves economically, to reduce internal tariffs, to create a

common external tariff and to offer special concessions to the two smallest members, Bolivia,

Educador. The group also agreed that no foreign direct investment would be allowed in sectors

such as banking, telecommunications, and retails sales and those foreign investors in all other

Sectors would be required to sell at least 51% of their holdings to local investors over a 15 year

period.

Mercosur:

Mercosur is a free trade group that was formed by Argentina and Brazil in 1988 to promote

economic cooperation. Today the group has been expanded to include Paraguay and Uruguay

with Chile and Bolivia as associate members. In 1995 the members agreed to a five year

program under which they hoped to perfect their free trade area and move toward a full customs

union.

ASEAN:

The Association of Southeast Asian Nations was formed in 1967 and now includes Brunei,

Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam. This

economic bloc is different from most others in that the primary emphasis is not on reducing trade

barriers among the members, although this has been done, but rather on promoting exports to

other countries.

FTAA:

The free Trade Area of the America was re launched in Quebec City in April 2001 to eliminates

most trade restrictions. All the economies of North, Central and South America, along with all

Caribbean economies have agreed to start the ETAA in 2005. It will be built upon the framework

of NAFTA.

 

 

 

Top leading garments companies

Fractal Fashion – India

Fractal Fashion is known as one of the most well-renowned manufacturers of knitwear for men,

women and children. Our company was incepted in the year 1996 in Mumbai known as the

commercial capital ofM.M.Traders, an ISO 9001:2008 certified company, is a highly reputed & experienced trader & exporter of best quality Raw cotton. We supply cotton Bales to textile mills across the country and in the international arena. We possess an in-depth knowledge & 40 years of vast experience of this business, which in turn helps us to deliver optimum products. We always endeavor to create a long lasting relationship of trust with our valued clients.

M.M. Group also houses a cotton Testing laboratory- Sim-Cot Testing Laboratory, which caters to

cotton testing requirements of clients across the nation M.M.Group is also engaged in

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M.M. Group is a professionally managed group having large network & infrastructure at home as

well as abroad with its own Star Export House.

MISSION

Our mission is to expand our business across the globe by ensuring best service, integrity,

reliability & quality

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VISION

Taking inspiration from the past, setting milestones in the present, we continually strive to unravel

the opportunities that the future has in store. Tapping the vast pool of available opportunities and

our tremendous experience, we wish to work with zeal to implement new ideas innovations,

better quality & providing best possible service to customers, which has kept us ahead.

QUALITY

Quality is never an accident; it is always the result of high intention, sincere effort, intelligent

direction and skillful execution. It starts from selection of raw cotton, which play important role in

determining the quality. We deploy skilled cotton selectors for selecting raw cotton from farm &

markets all over with worldwide-accepted parameters reach our customers. We have set

benchmarks in the national and international cotton markets with quality and performance of our

cotton. In future also, we look forward to innovative our Quality managements system and

continuously improve its effectiveness

.

Certification

M.M.TRADERS is an ISO 9001:2000 certified company carrying the brand name M.M.TRADERS

M.M.TRADERS also carrying a brand name of STAR EXPORT HOUSE

M.M.Group is also member of TEXPROCIL.

ProductSl VARIETY STAPLES LENGTH ORIGIN   (MM)(Inches) 1 V – 797 22-

24 7/8” Gujarat 2Y-123-25< 1”Maharastra / Madhya Pradesh3J-34 (S/G & R/G)25-271”-

1/16”Punjab / Hariyana / Rajasthan4NHH-4424-261”-1/16”Maharastra5L.R.A.25-271”-1/16” to 1”-

3/32”Maharastra / Madhya Pradesh6MECH – 127-291-3/32” to 1-1/8”Maharastra / Madhya

Pradesh7 Sankar – 6 27.5-29.5 1-3/32 to 1-1/8” Gujarat 8Bunny/Brahma29-321-5/32” to 1-

1/4”+Maharastra / Madhya Pradesh/ Andhra Pradesh9MCU-531-34<1-1/4”+Maharastra / Andhra

Pradesh/Tamilnadu/ Orissa10DCH –3234-361-3/8”+Andhra Pradesh /Tamilnadu11Suvin38-401-

7/16”+Tamil Nadu   LABORATORY 

SIM COT testing laboratory needs no introduction, as it is renowned in the cotton industry all over

India. We house “USTER HVI 900” a most reputed and globally accepted testing machine from

USA. We maintain the temperature and humidity as per the recommended international

standards.

Tests are conducted at 20 C & humidity 65 _+ 2

Tests at Sim-cot  are carried on in zellweger uster HVI 900 (USA) machine in HVI calibration

mode.

Sim-cot utilizes Bermer Certified (Germany) Machine for Testing.

 

 

Expo Dress Marketing – Bangladesh

Expo Dress Marketing is a buying house established by a group of company with highly skilled

Merchandisers to meet the challenge of the requirement of apparel sector in world market.

The Merchandisers to meet the challenge of the requirement of apparel sector in world

market. 

Gold Pacific Global Limited – China

Gold Pacific Global Limited is a leading ASIAN SOURCING & SUPPLY Company with its

sourcing office in China. This Enterprise is run by the highly professional and dedicated group of

people having a gre.

Rough Private Limited – Sri Lanka

Rough came into being in the year 2004 and ever since its establishment it has been a leading

manufacturer and marketer specializing in mens T-shirts and Jeans from Sri Lanka. The

company was incepted.

Nainas Apparel Private Limited – India

Nainas Apparel Pvt. Ltd. is one of those rare organizations to which success has come naturally

since its inception in 1994. Naina?s Apparel has been in the garment manufacturing field since

the last

Naina’s Apparel Pvt. Ltd. is one of those rare organizations to which success has come

naturally since its inception in 1994. Naina’s Apparel has been in the garment manufacturing field

since the last fifteen years and has never compromised on quality. It specializes in hand

embroidery which is done on both Indian and imported fabrics, such as chiffon, tulle, organza,

lycra, silk and various other stretch knits. It does so with quality which other companies are

unable to match.

After its initial success in the field of embroidered textiles, high-fashion garments were the natural

avenue to progress to. This segment of the company began in 1995 and has seen

tremendous success. The cornerstone of this success has been the conscious effort to

integrate great quality and value-for-money pricing, using the latest print techniques and garment

washes, etc. It has also been the result of commitment to delivery schedules and a continuous

process of technology and skills upgradation. Today these qualities are recognized and

appreciated by garment importers the world over who see Naina’s Apparel as an indispensable

partner to their business.

The company currently has about 150 machines for production with a capacity of 3500-5000

garments per month for the expansion plans for another 100 machines is currently on the cards.

We have been actively Pursuing the medium end youth fashion segment since the last 3 years

and have tasted immense success in this segment also with current capacity at 7000-7500

pieces per month. Impressive year on year growth has enabled the management to undertake

expansion plans in this product base, with an additional set-up of about 120 machines thereby

taking the production capacity to 30000 pieces per month. This would be operational by end of

2010.

We are also in the production of garment accessories like scarves, carry bags, Clutches &

Imitation Jewellery, though they are a small part of the turnover. Our expertise in segments of

value additions like Printing (Flat panels & All over Rotary), Machine embroideries &Technical

Garment Washes has given us a formidable edge in all garmenting segments over our

competitors. We have over 200 workers in-house for intricate handwork detailing for the first line

& the second line. In-fact the company had initiated its operations with the hand embroidery

panels segment, catering to some of the most well known names in the fashion Industry like

Versace, Gucci, Oscar De La Renta, and many others.

The clientele list would include some well known fashion houses like Pepe, Replay, Patrizia

Pepe, Liu Jo, Nolita, Paul & joe, Versace, Fashion box, Missoni, Ittierre (with whom we are

working for labels like Versace, Galliano, Cavalli, CNC, Exte & Gian Franco Ferre). The company

is also into retail operations under the name of NASHA, catering to the ever growing fashion &

design centric community in India.

We cater professionally driven designs and our product development team of 10 people which

form the core of the company considering our business structure. Each business segment

(Handwork panels, High fashion garments & Medium end youth fashion) has a separate team.

 

 

Bangladesh garments and itd product world market

Growth rate of the garments industry in Bangladesh

Economic contribution of the garments sector of Bangladesh economy:

Bangladesh is currently one of the 12 largest exporters of garments products in U.S.A and U.K. In

spite of this, the real situation does not come in front of the world. That is they are not becoming

influenced like before any more. We can see this by the price level of our garments products in

the world market. The quantity we are exporting is huge but at a very low price. In the statistics

the impact may be huge but the condition of Bangladesh is not improving at that satisfactory

level. In the term paper we will try to define the cause why the real situation is like this. It is

necessary because the sector is very promising in the environment of bbangladesh.

Bangladesh has a great comparative advantage in garments products that is low labor cost.

Because of this advantage Bangladesh can produce products more easily than other countries.

But labor is cheap here because people who are related to this sector are from very poor

background.

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Most of them are unskilled, uneducated. But if some steps are taken to improve the quality of

labor, the proper benefit of this comparative advantage can come out. The purpose of our term

paper is to overcome this problem and other related problems like cost of raw materials,

Insufficiency of loan in time, uncertainly of electricity, delay in getting materials, lack of

communication, problem in taxes etc. But in spite of these problems this can be the most

profitable sector of Bangladesh if we try to take some steps as follows:

Production of sufficient raw materials in the country.

Imparting training to make skilled workers.

Reduction of VAT and taxes

assurance of safety, salary and other facilities of the workers

More advanced of EPZ

Proper advantage of water houses

Removal of export problems etc.

Problems of Garments industry

 

The history of the Readymade Garments Sector in Bangladesh is a fairly recent one.

Nonetheless it is a rich and varied tale. The recent struggle to realize Workers’ Rights adds an

important episode to the story.

 

The RMG industry of Bangladesh has expanded dramatically over the last three decades.

Traditionally, the jute industry dominated the industrial sector of the country until the 1970s. Since

the early 1980s, the RMG industry has emerged as an important player in the economy of the

country and has gradually replaced the jute industry.

 

Although Bangladesh is not developed in industry, it has been enriched in Garment industries in

the recent past years. In the field of Industrialization garment industry is a promising step. The

sector now dominates the modern economy in export earnings, secondary impact and

employment generated. It has given the opportunity of employment to millions of unemployed,

specially innumerable uneducated women of the country. It is making significant contribution in

the field of our export income.

 

Bangladesh exports 35 types of garment products to about 31 countries around the world. The

RMG sector is a 100% export-oriented industry.

 

That Bangladesh today is considered an economic competitor in terms of international garment

manufacturing by other countries of the region and beyond is the country since gaining

independence in 1971. it appers much of the socio-economic development in the first decade of

the twenty-first century for Bangladesh and its approximately 1.5 million women workers depends

on the continuing success of the RMG industry.

Problems surrounding ready made garments sector:

The garment industry of Bangladesh has been the key export division and a main source of

foreign exchange for the last 25 years. 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 percent of industrial workers. But without the proper laws the worker

are demanding their various wants and as a result conflict is began with the industry

1. Raw materials:

Bangladesh imports raw materials for garments like cotton, thread color etc. This dependence on

raw materials hampers the development of garments industry. Moreover, foreign suppliers often

supply low quality materials, which result in low quality products

 

2. Unskilled workers: 

Most of the illiterate women workers employed in garments are unskilled and so their products

often become lower in quality.

 

3. Improper working environment:

Taking the advantages of workers’ poverty and ignorance the owners forced them to work in

unsafe and unhealthy work place overcrowded with workers beyond capacity of the factory floor

and improper ventilation.

 

Most of the garment factories in our country lack the basic amenities where our garment workers

sweat their brows from morning to evening to earn our countries the major portion of our foreign

exchange. Anybody visiting the factory the first impression he or she will have that these workers

are in a roost.

 

Improper ventilation, stuffy situation, filthy rooms are the characteristics of the majority of our

factories. The owners profit are the first priority and this attitude has gone to such an extent that

they do not care about their lives.

 

3. Lack of managerial knowledge:

There are some other problems which are associated with this sector. Those are- lack of

marketing tactics, absence of easily on-hand 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, fewer 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.

4. Gendered division of labor:

In the garment industry in Bangladesh, tasks are allocated largely on the basis of gender. This

determines many of the working conditions of women workers. All the workers in the sewing

section are women, while almost all those in the cutting, ironing and finishing sections are men.

Women workers are absorbed in a variety of occupations from cutting, sewing, inserting buttons,

making button holes, checking,cleaning the threads, ironing, folding, packing and training to

supervising.

 

Women work mainly as 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.

 

When asked why they prefer to emply women foe sewing, the owner and managers gave several

reasons. Most felt that sewing is traditionally done by women and that women are more patient

and more controllable than men.

 

5. Wages:

The government of Bangladesh sets minimum wages for various categories of workers.

According of Minimum Wage Ordinance 1994, apprentices’ helpers are to receive Tk500 and

Tk930 per month respectively. Apprentices are helpers who have been working in the garment

industry for less than three months. After three months, Apprentices are appointed as helpers.

Often female helpers are discriminated against in terms of wages levels, and these wages are

also often fixed far below the minimum wage rate. A survey conducted in 1998 showed that 73%

of female helpers, as opposed to 15% of their male counterparts, did not receive even the

minimum wage.

6. Insufficient of loan:

Insufficiency of loan in time, uncertainly of electricity, delay in getting materials, lack of

communication, problem in taxes etc. Often obstruct the industry. In the world market 115 to 120

items of dress are in demand where as Bangladesh supplies only ten to twelve items of

garments. India, south Korea, Hong Kong, Singapore, Thailand, Taiwan etc, have made

remarkable progress in garments industries. Bangladesh is going to challenge the garments of

those countries in the world market.

 

7. Unit labor cost:

Bangladesh has the cheapest unit labor cost in South Asia. It costs only 11 cents to produce a

shirt in Bangladesh, whereas it costs 79 cents in Sri Lanka and 26 cents in India. Clearly,

Bangladesh’s comparative advantage lies in having the cheapest unit labor cost.

 

8. Working hours:

Though the wages are low, the working hours are very long. The RMG factories claim to operate

one eight-hour shift six days a week. The 1965 factory Act allows women to work delivery

deadlines; however, women are virtually compelled to work after 8 o’clock. Sometimes they work

until 3 o’clock in the morning and report back to start work again five hours later ar 8 o’clock.

They are asked to work whole months at a time the Factory Act, which stipulates that no

employee should work more than ten days consecutively without a break.

 

 

9. Poor accommodation facilities:

As most of the garment workers come from the poor family and comes from the remote areas

and they have to attend to the duties on time, these workers have to hire a room near the factory

where four to five huddle in a room and spend life in sub human 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/-.They share this amount among themselves to minimize the

accommodation expense.

 

One cannot believe their eyes in what horrible condition they have to pass out their time after

almost whole day of hard work in the factory. After laborious job they come into their roost, cook

their food and have their dinner or lunch in unhygienic floor or bed and sleep where they take

their food. They share the single bed or sleep on the floor.

 

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. Will these selfish owners ever think of

these workers of their better living for the sake of humanity by providing better accommodation

for these workers in addition to providing with the job.

 

10. Safety Problems:

Because of the carelessness of the factory management and for their arrogance factory doors

used to be kept locked for security reason defying act

 

Safety need for the worker is mandatory to maintain in all the organization. But without the facility

of this necessary product a lot of accident is occur incurred every year in most of the company.

Some important cause of the accident are given below-

 

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

10. Political crisis:

Garments industries often pay dearly for political unrest, hartal and terrorism etc.  The

international market has withdrawn quota advantage over garments export form Bangladesh

since December 2005. Bangladesh has to advance cautiously for getting better position of her

garments in the world market. Finally destruction of twin tower in 11 September 2001. invasion on

Afghanistan and Iraq and depression in world Economy have seriously affected the export trade

of Bangladesh.

 

11. 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 categories by

46 per cent on average in the United States within a year, from $6.23 per sq metre in December

2001 to $3.37 per sq metre in December 2002. Bangladesh needs to respond to such price-

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

 

12. 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.

 

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

Prospect of Bangladesh garments industry

 

Bangladesh fears that its current political turmoil may lead to its garment industry losing out to

South and Southeast Asian competitors, including India.

Bangladesh’s prime export earnings, next only to India ($12 billion) with an annual turnover of $8

billion and rising at a rate of 30 percent rate, could dip if the Jan 22 general elections do not bring

back political stability. Political turmoil combined with labour trouble that erupted frequently during

2006 has adversely affected the garment industry. Over 200 of the 600-plus factories were

damaged or destroyed during an agitation last summer.

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.

 

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 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.”

Prospects of the RMG Industry:

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. 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 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.

 

Flow of Investment:

It is plausible 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. Figure 3

indicates that 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

Recommendation

Policy Regime of Government

Government of Bangladesh has played an active role in designing policy support to the RMG

sector that includes back-to-back L/C, bonded warehouse, cash incentives, export credit

guarantee scheme, tax holiday and related facilities. At present government operates a cash

compensation scheme through which domestic suppliers to export- oriented RMG units receive a

cash payment equivalent to 5 percent of the net FOB value of exported garments. At the same

time, income tax rate for textile manufacturers were reduced to 15 percent from its earlier level for

the period up to June 30, 2008. The reduced tax rates and other facilities are likely to have a

positive impact on the RMG sector.

 

Infrastructural Impediments

The existence of sound infrastructural facilities is a prerequisite for economic development. In

Bangladesh, continuing growth of the RMG sector is dependent on the development of a strong

backward linkage in order to reduce the lead time. However, other factors constraining

competitiveness of Bangladesh’s RMG exports included the absence of adequate physical

infrastructure and utilities.

 

Labor Productivity

The productive efficiency of labor is more important determinant for gaining comparative

advantage than the physical abundance of labor. In Bangladesh, the garment workers are mostly

women with little education and training. The employment of an uneven number of unskilled

labors by the garment factories results in low productivity and comparatively more expensive

apparels. 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.

 

Research and Training

The country has no dedicated research institute related to the apparel sector. RMG is highly

fashion oriented and constant market research is necessary to become successful in the

business. BGMEA has already established an institute which offers bachelor’s degree in fashion

designing and BKMEA is planning on setting up a research and training institute. These and

related initiatives need encouragement possibly intermediated by donor-assisted technology and

knowledge transfer. A facilitating public sector role can be very relevant here.

 

Supportive Government Policy

In contrast to the public sector-led import-substituting industrialization strategy pursued during the

first few years after independence, the industrialization philosophy of the government changed

rather dramatically from the late 1970s when the emphasis was on export-oriented growth to be

spearheaded by the private sector. Towards this end, various policy reforms were implemented in

the 1980s and 1990s. Some of these reformed policies contributed considerably to the growth of

the RMG industry in Bangladesh.

During the 1980s, a number of incentives were introduced to encourage export activities. Some

of them were new like the Bonded Warehouse Facility (BWF), while others like the Export

Performance License (XPL) Scheme

37 were already in operation and were improved upon. Also, rebates were given on import duties

and indirect taxes, there were tax reductions on export income, and export financing was

arranged. Under the XPL scheme, exporters of non-traditional products received import licenses

for specific products over and above their normal percentage allotment based on the f.o.b. value

of their exports. Under the Duty Drawback System, exporters of manufactured goods were

entitled to get refund of duties and taxes paid on imported inputs used in export production, and

also all excise duties paid on exported finished goods. For certain fast-moving items such as

RMG, a notional system of duty payments was adopted in 1982-83. Under this system, exporters

were exempted from paying duties and taxes on imports used in export production at the time of

importation, but were required to keep records of raw and 21packaging materials imported. The

duties and taxes payable on the imports were kept in a suspense account. Liabilities to pay the

amounts in suspense were removed on proof of exports.

The discussion in this section clearly points to the positive contribution made by policy reforms to

the growth of the RMG industry in Bangladesh. In particular, two policies– the SBW facility and

the back-to-back L/C system- led to significant reduction in cost of producing garments and

enhanced competitiveness of Bangladesh’s garments exports. It also allowed garment

manufacturers to earn more profit which, when necessary, could be used to overcome difficulties

arising from weak governance. Furthermore, poor governance, reflected in the leakage of duty-

free imported fabrics in the domestic market, paradoxically enough also helped the garment

manufacturers to earn extra ‘profit’ and thereby enabled them to absorb the ‘high cost of doing

businesses – a fall out of bad governance.

 

Things to be done for solving the problem:

Bangladesh economy at present is more globally integrated than at any time in the past. The

MFA phase-out will lead to more efficient global realignments of the Garments and Clothing

industry. The phase out was expected to have negative impact on the economy of Bangladesh.

Recent data reveals that Bangladesh absorbed the shock successfully and indeed RMG exports

grew significantly both in FY06 and (especially) in FY07. Due to a number of steps taken by the

industry, Bangladesh still remains competitive in RMG exports even in this post phase-out period.

Our Garments Industries can improve their position in the 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 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.

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.

 

Suggestions Regarding Fire Safety

We need to remember that when there is a fire, the first thing one should do is to run away from

it. And this is what everyone does in such a situation. But the situation become dangerous and

tragic when the escape doorways and gates are found locked. Precautionary should need to be

adopted are given below:

 

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 services should be established

Conclusion:

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 an insulated market under the provision

of Multi Fibre Agreement (MFA) of GATT, it attained a high profile in terms of foreign exchange

earnings, exports, industrialization and contribution to GDP within a short span of time. The

industry plays a key role in employment generation and in the provision of income to the poor. To

remain competitive in the post-MFA phase, Bangladesh needs to remove all the structural

impediments 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.