rmg sector

7/29/2019 RMG Sector

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Introduction on RMG Sector:

The ReadyMade Garments (RMG) sector of Bangladesh has emerged as the biggest earner of

foreign currency. The RMG sector has experienced an exponential growth since the 1980s. The

sector contributes significantly to the GDP. It also provides employment to around 4.2 million

Bangladeshis. An overwhelming number of workers in this sector are women. This has affected

the social status of many women coming from low income families. Bangladesh-origin products

met quality standards of customers in North America and Western Europe, and prices were

satisfactory. Business flourished right from the start; many owners made back their entire capital

investment within a year or two and thereafter continued to realize great profits. Some 85 percent

of Bangladeshi production was sold to North American customers, and virtually overnight

Bangladesh became the sixth largest supplier to the North American market.

After foreign businesses began building a ready-made garment industry, Bangladeshi capitalists

appeared, and a veritable rush of them began to organize companies in Dhaka, Chittagong, and

smaller towns, where basic garments--men's and boys' cotton shirts, women's and girls' blouses,

shorts, and baby clothes--were cut and assembled, packed, and shipped to customers overseas

(mostly in the United States). With virtually no government regulation, the number of firms

proliferated; no definitive count was available, but there were probably more than 400 firms by

1985, when the boom was peaking.

After just a few years, the ready-made garment industry employed more than 200,000 people.

According to some estimates, about 80 percent were women, which were never noticed

previously in the industrial work force. Many of them were woefully under paid and worked

under harsh conditions. The net benefit to the Bangladeshi economy was only a fraction of

export receipts, since virtually all materials used in garment manufacture were imported;

practically all the value added in Bangladesh was from labor.

The RMG industry cuts and stitches the finished product into apparel, which is then marketed.

Bangladesh entered the export market of apparels in 1978 with only 9 units and earned only

$0.069 million. During the last two decades this sector has achieved a phenomenal growth, due


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to policy support of the government and dynamism of the private sector entrepreneurs. Now the

number of RMG units is around 4,000 and the export earnings have reached at $6.40 billion. For

the moment, 2.0 million garment workers are working in the RMG units, of whom 80 per cent

are women. RMG roughly covers 76 per cent of the total export of the country and is the highest

earning industry in the economy. Study shows that the RMG sector and related upstream and

downstream activities are estimated to contribute an income of about $ 5.0 billion which is

equivalent to about 9.0 per cent of Bangladesh's current GDP. 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. 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. InFY06, 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

Figure: Trend of RMG Export Volume, Export Growth & Contribution to GDP

Contribution of RMG in our Economy:

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 20 years. By taking advantage of an insulated market under the provision


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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. Nearly two million workers are directly and more than ten million inhabitants are

indirectly associated with the industry. Over the past twenty years, the number of manufacturing

units has grown from 180 to over 3600. The sector has also played a significant role in the socio-

economic development of the country.

Major Product Export from Bangladesh

The Bangladesh RMG industry, with its woven and knit sub-components, is a predominantlyexport oriented sector, with 95 per cent of the woven and 90 per cent of the knit exports being

directed to foreign markets. The cumulative foreign currency earnings by the sector, since 1978,

when first export was registered, is estimated at 36.6 billion dollars. Bangladeshs RMG export

earning stood at 4.58 billion US dollars in FY2002. In 2002 this sector contributed 76.6% of the

total Bangladesh export of 5.9 billion dollars in the same year. RMG export in FY2002 was


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equivalent to 9.5% of Bangladeshs GDP over the corresponding year. At present the local value

addition by the RMG sector is estimated to be 45%. Accordingly, local value addition by the

sector in 2002 was about 2.1 billion US dollars which was equivalent to 4.3% of GDP for the

same year. The value addition created by the sector itself is estimated at 25% of total RMG

export earnings which amounted to about 1.2 billion dollars or equivalent to 2.4% of GDP

Employment in RMG Sector:

From spinning to weaving, from knitwear to leisurewear and high street fashions, the textiles and

clothing industry is Bangladeshs biggest export earner with value of over $ 16 billion of exports

in 2009-10. Our factories design and produce for the worlds leading brands and retailers. This

rapidly growing sector of the Bangladeshi economy offers a unique competitive edge thatsupports profitable expansion into new strategic markets.


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Key Statistics of RMG* SectorRMG EXPORTS AND IT'S SHARE IN TOTAL EXPORT OF

BANGLADESH

YEAR EXPORT OF RMG(IN MILLION US$)

TOTAL EXPORT OF

BANGLADESH

(IN MILLION US$)

% OF RMG'S TOTOTAL EXPORT

1983-84 31.57 811.00 3.89

1984-85 116.2 934.43 12.44

1985-86 131.48 819.21 16.05

1986-87 298.67 1076.61 27.74

1987-88 433.92 1231.2 35.24

1988-89 471.09 1291.56 36.47

1989-90 624.16 1923.70 32.451990-91 866.82 1717.55 50.47

1991-92 1182.57 1993.90 59.31

1992-93 1445.02 2382.89 60.64

1993-94 1555.79 2533.90 61.40

1994-95 2228.35 3472.56 64.17

1995-96 2547.13 3882.42 65.61

1996-97 3001.25 4418.28 67.93

1997-98 3781.94 5161.20 73.28

1998-99 4019.98 5312.86 75.67

1999-00 4349.41 5752.20 75.61

2000-01 4859.83 6467.30 75.14

2001-02 4583.75 5986.09 76.57

2002-03 4912.09 6548.44 75.01

2003-04 5686.09 7602.99 74.79

2004-05 6417.67 8654.52 74.15

2005-06 7900.80 10526.16 75.06

2006-07 9211.23 12177.86 75.64

2007-08 10699.80 14110.80 75.83

2008-09 12347.77 15565.19 79.33

2009-10 12496.72 16204.65 77.12

2010-11 (July-Sep) 3971.52 5029.05 78.97

Data Source Export Promotion Bureau Compiled by BGMEA


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Employment in RMG SectorYear No. of garment factories Employment (m workers)

2005-06 4,220 2.2

2006-07 4,490 2.4

2007-08 4,743 2.8

2008-09 4,825 3.1

Source:Bangladesh Garment Manufacturers and Exporters Association (BGMEA)

Main Apparel Items Exported From Bangladesh (m US$)Year Shirt Trouser Jacket T-shirt Sweater

2005-06 1,056.69 2,165.25 389.52 1,781.51 1,044.01

2006-07 943.44 2,201.32 1,005.06 2,208.90 1,248.09

2007-08 915.6 2,512.74 1,181.52 2,765.56 1,474.09

2008-09 1000.16 3,007.29 1,299.74 3,065.86 1,858.62

2009-10 993.41 3035.35 1350.43 3145.52 1795.39

Source:Bangladesh Garment Manufacturers and Exporters Association (BGMEA)
http://www.bgmea.com.bd/http://www.bgmea.com.bd/http://www.bgmea.com.bd/http://www.bgmea.com.bd/http://www.bgmea.com.bd/http://www.bgmea.com.bd/http://www.bgmea.com.bd/http://www.bgmea.com.bd/

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