Bangladesh Garments Birth 2 Future

8/2/2019 Bangladesh Garments Birth 2 Future

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ASSIGNMENT ON PRESENT SITUATI ON ANDFUTURE PROSPECTS OF READY-MA DEGARMENT SECTOR IN B AN GLADESH.

COURSE TITLE : APPAREL MANUFACTURING IIWITH LAB

COURSE CODE : TE-308

M A BASET ,Lecturer,

DEPT. OF TE.

Muhammad Shamsul Arefeen Siddiquee ,ID: 091-23-1294.SECTION: C (L3T2).

Dat e o f subm issi on : 15 -8 - 201 1 .

Submitted By

Submitted To


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CONTENTS PAGE NO.

1. ABSTRACT--------------------------------------------------------------- 32. I NTRODUCTI ON-------- ----- ------ ----- ------ ----- ----- ------ ----- ------ 43. CONTRI BUTI ON OF THE RMG I NDUSTRY---- -- -- --- -- -- -- -- -- -- -- -- -- -- --- -- 64. PROSPECTS OF THE RMG I NDUSTRY--- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- - 8 MARKET DI VERSI FI CATI ON---- --- --- --- --- --- --- --- --- --- --- --- --- - 8 PRODUCT DI VERSI FI CATI ON---- --- --- --- --- --- --- --- --- --- --- --- -- 10 BACKWARD I NTEGRATI ON---- --- --- --- --- --- --- --- --- --- --- --- --- -- 11 FLOW OF I NVESTMENT--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- -- 11 POLI CY REGI ME OF GOVERNMENT-- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- 12 LEAD TI ME------ ----- ------ ----- ------ ----- ------ ------ ----- ------ ----- 12 CHEAP LABOUR FORCE--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- -- 13

5. RMG LOOKS TO GOOD TI ME--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- -- 14

6. BANGLADESH OUTSHI NES I NDI A I N RMG EXPORTS-- -- -- -- -- -- -- -- -- -- - 18

7. RI DE BANGLADESH-CANADA TRADE WAVE-- -- -- -- -- -- -- -- -- -- -- -- -- -- -- - 19

8. EXPORT PERFORMANCEBELATED I MPACT OF RECESSI ON? ----------21

9. PROBLEMS OF TEXTI LE I NDUSTRY I N BANGLADESH-- -- -- -- -- -- -- -- -- -- 23

10 . SEVERE GAS SUPPLY SHORTAGE HI TS TEXTI LE PRODUCTI ON------- 25

11. RECOMMENDATI ON-------- ----- ------ ----- ------ ----- ------ ----- ----- ---- 26

12. SUGGESTI ONS REGARDI NG FI RE SAFETY-- -- -- -- -- -- -- -- -- -- -- -- -- -- -- 27

13. SOME COMPANY PROFI LE--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- 28

14. CONCLUSI ON--------- ----- ------ ----- ----- ------ ----- ------ ----- ----- ----- 29

15. REFERENCES--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- -- 30


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Abstract

Emergence of the global market has heightened the role of trade in world economy andmade industrialization as an integral system of global trade and production. Bangladesheconomy at present is more globally integrated than at any time in the past. The MFAphase-out will lead to more efficient global realignments of the textile and clothingindustry. After the introduction of Agreement on Textile and Clothing (ATC), the RMGindustry of Bangladesh is facing new and unique challenges. The paper attempts toidentify the prospects of RMG industry in the post-MFA period by analyzing the currentscenario along with different policy measures and the available options in order to bemore competitive in the new regime. The phase out was expected to have a negative

impact on the economy of Bangladesh. But recent data reveals that Bangladeshabsorbed the shock successfully and indeed RMG exports grew significantly. Due to anumber of steps taken by the industry (e.g., successful in diversifying products andmarkets, increased backward integration, high level of investment, and supportivepolicy regime), Bangladesh still remains competitive in RMG exports even in this postphase-out period. But much more needs to be done (e.g., removal of structuralimpediments, establishment of training and research institute, sharing of knowledgeand technology) in order to maintain the competitiveness in the global RMG market.


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Introduction

The RMG business started in Bangladesh in the 70s but it was then merely a casualeffort. The first consignment of knitwear export was made in 1973 and the firstconsignment of woven garments was made in 1977. In 1981-82 the contribution of

Woven garments in the total export was 1.10%. Afterwards it is a story of sustainedsuccess for the Bangladesh RMG sector. The knitwear sector has grown over the yearsin geometric progression and become the prime driving force of Bangladeshs exportearnings. Within a decade the contribution of Woven to the export basket became42.83% (1990-91) and the knitwear sectors contribution was 7.64% (1990-91). NowKnitwear has become the largest export earning sector of Bangladesh contributing40.01% to national export earnings at the end of FY 2009-10 (July-April).

The entrepreneurs of the knit sector stepped forward with their expertise in the late80's. With their earnest efforts they were able to export US$ 14.84 million in 1989-90.Out of this, US$ 12.22 million was exported to EU and US$ 2.02 million was exported toUS. The trend continued in the knit sector because of the market access opportunitiesprovided to the LDCs under the Generalized Systems of Preference (GSP) benefit.This isthe rejuvenated beginning of the epic story of Bangladeshi knitwear sector that in truesense has been possible due to massive industrialization in a sustainable way witheffect on all probable human development aspects which is the encouraging part of thestory.The growth of knitwear sector is increasing at an increasing rate. The cumulativeaverage growth rate of the sector is 20%. And it is continuously grabbing more portionsin the export pie of Bangladesh. This is mainly attributed to the facilities provided underthe EC GSP and ROO. The knitwear sector is heavily driven by the favorable policies and

took the opportunity to develop a strong backward linkage for the sector.


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Year Kn i tw ear Wov en Wear To ta l Expor t

Volume (%) change Share(%) in

BD Export

Volume (%) change Share(%) in

BD Export

RMG Bangladesh

89-90 14.84 0 0.77 609.32 29.34 31.67 624.16 1923.70

90-91 131.20 784.00 7.64 735.62 20.73 42.83 866.82 1717.55

91-92 118.57 -9.62 5.95 1064.00 44.64 53.36 1182.57 1993.90

92-93 204.55 72.51 8.58 1240.48 16.59 52.06 1445.03 2382.89

93-94 264.14 29.13 10.42 1291.64 4.12 50.97 1555.78 2533.90

94-95 393.26 48.88 11.32 1835.09 42.07 52.85 2228.35 3472.56

95-96 598.32 52.14 15.41 1948.81 6.20 50.20 2547.13 3882.42

96-97 763.30 27.57 17.28 2237.95 14.84 50.65 3001.25 4418.28

97-98 940.31 23.19 18.22 2843.33 27.05 55.09 3783.64 5161.20

98-99 1035.36 10.11 19.49 2984.81 4.98 56.18 4020.17 5312.86

99-00 1269.83 22.64 22.08 3082.56 3.27 53.59 4352.39 5752.20

00-01 1496.23 17.83 23.14 3364.20 9.14 52.02 4860.43 6467.30

01-02 1459.24 -2.48 24.38 3124.56 -7.12 52.20 4583.80 5986.09

02-03 1653.83 13.34 25.26 3258.27 4.28 49.76 4912.10 6548.44

03-04 2148.02 29.88 28.25 3538.07 8.59 46.54 5686.09 7602.99

04-05 2819.47 31.26 32.58 3598.20 1.70 41.58 6417.67 8654.52

05-06 3816.98 35.38 36.26 4083.82 13.50 38.78 7900.80 10526.16

06-07 4553.60 19.30 37.39 4657.63 14.05 38.25 9211.23 12177.86

07-08 5532.52 21.50 34.58 5167.28 10.94 32.30 10699.80 14110.79

08-09 6429.00 16.20 41.30 5918.51 14.54 38.02 12347.51 15565.19

09-10 6483.29 0.84 40.01 6013.43 1.60 37.11 12496.72 16204.65


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Contr ibut ion of the RMG I ndustry

RMG business started in the late 70s as a negligible non-traditional sector with a narrowexport 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 pastone and half decade, RMG export earnings have increased by more than 8 times withan exceptional growth rate of 16.5 percent per annum. In FY06, earnings reachedabout 8 billion USD, which was only less than a billion USD in FY91. Excepting FY02, theindustry registered significant positive growth throughout this period.

I n t he current year, the performance of bot h t he sectors is as follow s:

Knitwear Export US$ 6,483.29 million FY 2009-10 (July -June)

Woven Export US$ 6,013.43 million FY 2009-10 (July -June)


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In terms of GDP, RMGs contribution is highly remarkable; it reaches 13 percent of GDPwhich was only about 3 percent in FY91. This is a clear indication of the industryscontribution to the overall economy. It also plays a pivotal role to promote thedevelopment 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 4.0billion.One of the key advantages of the RMG industry is its cheap labour force, whichprovides a competitive edge over its competitors. The sector has created jobs for abouttwo million people of which 70 percent are women who mostly come from rural areas.The sector opened up employment opportunities for many more individuals throughdirect and indirect economic activities, which eventually helps the countrys socialdevelopment, woman empowerment and poverty alleviation.

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


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Prospect s of t he RMG I ndust ry

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 labour, 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 Diversificati on

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 Unionrespectively. The industry was successful in exploring the opportunities in markets awayfrom EU and US. In FY06, a successful turnaround was observed in exports to thirdcountries, which having a negative growth in FY05 rose three-fold in FY06, whichhelped to record 23.1 percent overall export growth in the RMG sector. It is anticipatedthat the trend of market diversification will continue and this will help to maintain thegrowth momentum of export earnings. At the same time a recent WTO review pointsout that Bangladesh has not been able to exploit fully the duty free access to EU that itenjoys. 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.

Region-wise Share of RMG Export


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Bangladesh Textile Mills Association Secretary General Taufiq Hasan said that becausetextiles and ready-made garments are the two largest export sectors and employers inBangladesh , government support will continue and there are no restrictions on

repatriation of profits and investment or tax-free imports of machinery and rawmaterials for export. The government also is liberal toward work permits.

According to the Bangladesh Garment Manufacturers and Exporters Association(BGMEA), the total fabric requirement in the captive market is about 3 billion yards, ofwhich roughly 85 to 90 percent is imported from countries such as China , India , HongKong , Singapore , Thailand , Korea , Indonesia and Taiwan . Fabric demand isincreasing at the rate of 20 percent per year.

Although the industry is one of the largest in Bangladesh and is still expanding, it facesserious problems, principally because the country does not produce enough of the rawmaterials necessary for the industry to expand. The primary materials used in thespinning sector are raw cotton and man-made fibers such as viscose and polyesterstaple fibers. Unfortunately, none of these raw materials are produced in Bangladesh .

The knitting and hosiery sectors look brighter than weaving, and about 80 percent ofgarment accessories like cartons, threads, buttons, labels, poly bags, gum tapes, shirtboards and neck boards now are being produced within Bangladesh and contribute tothe the national gross domestic product. However, the textile industry is just budding.


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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 phaseis 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 fashionworld, product diversification is the key to continuous business success. Starting with afew items, the entrepreneurs of the RMG sector have also been able to diversify theproduct base ranging from ordinary shirts, T-shirts, trousers, shorts, pajamas, ladiesand childrens wear to sophisticated high value items like quality suits, branded jeans,

jackets, sweaters, embroidered wear etc. It is clear that value addition accrues mostlyin the designer items, and the sooner local entrepreneurs can catch on to this trend thebrighter be the RMG future.

Export Performance of Different Apparel Items


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Backw ard I ntegration

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 stilldepends heavily on imported fabrics. After the liberalization of the quota regime someof the major textile suppliers Thailand, India, China, Hong Kong, Indonesia and Taiwanincreased their own RMG exports.

If Bangladesh wants to enjoy increased market access created by the global openmarket economy it has no alternative but to produce textile items competitively athome through the establishment of backward linkage with the RMG industry. To someextent the industry has foreseen the need and has embarked on its own capacitybuilding.

Trend of Back-to-Back Import

Flow of I nvestm ent

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 RMGdemand. It is important to have significant flow of investment both in terms of financeand technology. Figure 3 indicates that the investment outlook in this sector isencouraging, although the uncertainties before the MFA phase-out period caused asluggish investment scenario. In part the momentum in the post-MFA phase-out periodis indicative of the efforts underway towards capacity building through backwardintegration. This is evident in the pace of lending to the RMG sector and in the rising


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import share of RMG related machinery. However further progress would be necessaryto improve and sustain competitiveness on a global scale.

Trend of Total Lending and Capital Machinery Import in the Apparel Industry

Policy Regime of Governm ent

Government of Bangladesh has played an active role in designing policy support to theRMG sector that includes back-to-back L/C, bonded warehouse, cash incentives, exportcredit 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 FOBvalue of exported garments. At the same time, income tax rate for textilemanufacturers were reduced to 15 percent from its earlier level for the period up toJune 30, 2008. The reduced tax rates and other facilities are likely to have a positiveimpact on the RMG sector.

Lead TimeLead time is a crucial factor maintaining export competitiveness. Bangladesh happensto feature the longest lead time in the RMG world. The lead time for Bangladesh is 120

days on an average, while the corresponding period for Sri Lanka is about 19-45 daysand for India it is only about 12 days. Various factors like the distance from majormarkets, importation of raw materials, port congestion, strikes, poor roads, etc. aresome of the factors responsible for this. At present the fashion seasons are becomingshort with a changing trend, it would not be possible to compete if the lead timeextends beyond 30-40 days. Therefore, bringing down the lead time to about 30-40days is a major challenge for the countrys RMG sector. Clearly more business can becaptured only if the lead time could be improved.


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Cheap Labour Force

The strength of a firm depends on its specific comparative advantages, which itscompetitors do not possess. To date the local industry has flourished in spite of thechallenges cited above (e.g., lead time, infrastructure, and bureaucratic red tape) onthe back of cheap female labour. The wages paid to RMG workers in Bangladesh are

the lowest even by the South Asian regional standard. Figure 4 illustrates thecomparative average hourly wages in apparel industry of selected developed anddeveloping countries.

Figure : Comparative Average Hourly Wage in Apparel Industry


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RMG looks to good t ime

August 10, 2010

The contribution of readymade garment (RMG) to the national export increases with the

rebound of orders from international buyers following a recovery in the global economy,according to trade data of the Export Promotion Bureau.

The share of RMG products reached 77.17 percent in the July-November period from77.15 percent in July-October of the current fiscal year.

During the July-November period, the country exported woven garments worth $2.13billion and knitwear items of $2.59 billion totalling $4.72 billion.

The share of woven garments in the total exports of the country was 34.84 percent andthat of knitwear (including sweater) was 42.34 percent, the data said.

During the five-month period, the total national export was worth $6.10 billion.

In fiscal 2008-09 the RMG contribution was 79.33 percent, while woven segment added38.02 percent and knitwear items 41.30 percent.

Bangladesh exported woven garments worth $5.92 billion and knitwear worth $6.43billion in 2008-09, registering growths of 14.54 percent and 16.48 percent respectivelycompared to the previous year.

Shahadat Hossain Kiron, managing director of Dekko Group, said the flow of ordersfrom the international buyers was higher this winter compared to the last season as theglobal economy is recovering from the recession.

The number of orders outpaced the capacity of my factories, Kiron said.

Chairman and Managing Director of SQ Group Ghulam Faruque said the situation isimproving as the buyers are placing more orders.

The trend of order placement indicates that the countrys apparel export will go to itsprevious high level at the end of the year, he said. But the perennial problem of

offering low prices by the buyers remained the same, he added.

The sign of recovery in the RMG export is also seen in the increasing trend ofconsumption of Utilisation Declaration (UD) by the exporters from their respective tradebodies.Bangladesh had been experiencing a negative growth in UD consumption for thelast few months because of low orders following the global recession.


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The UD consumption improved in January by 4.0-5.0 percent compared to the samemonth last year, according to Bangladesh Garment Manufacturers and Exporters

Association (BGMEA) data.

But the concerns for Bangladesh are the sudden price hike of cotton by 25 percent on

international market and yarn price rise on the local market by 30 percent as the Freeon Board (FoB) value remained static, said BGMEA President Abdus Salam Murshedy.

If a commodity is quoted on an FoB basis it means the cost of the goods and theirloading on to a ship are included but not the insurance or freight charges.

He said the exporters cost increased as they have to send the goods by air to maintainthe lead-time.

Recently the exporters are continuously failing to maintain the lead-time due to failurein on-time production caused by low gas pressure in the plants, he said.

Borrowers are not taking loans, which means they are unsure about the viability oftheir investments, says Dr Zaid Bakht. Fear of a double-dip recession may be partly toblame. But the main reasons are internal. Having a good set of macro fundamentalswould be key to restoring investor confidence in 2010. This would include achievingreasonable fiscal balances, realistic exchange rate, low interest rates, and social andpolitical stability. There are major infrastructure issues, and the dismal situation in thepower sector is probably the most critical.

Hossain Khaled, managing director of Anwar Group and former president of Dhaka

Chamber of Commerce and Industries (DCCI) argues that a sense of security mustprevail if investment is to occur. We have had instances of mobs burning downfactories, and extortionists shooting at businessmen because they wouldnt pay. It isthe governments job to provide security for entrepreneurs. But apart from physicalsecurity, we need guarantees that we will receive enough gas and electricity to run ourfactories.

An improvement in power generation would probably top the New Years wish list ofany businessman in Bangladesh . Power shortages are the most serious and immediateof the infrastructure constraints, with damaging impact on productivity and investment.Hossain Khaled believes it is a lack of initiative rather than a lack of resources that is

holding back the power sector.

We have gas and coal, says Khaled. We must take immediate steps to explore andutilise our resources in the best manner possible. There are also various options we canexplore to overhaul or replace aging power stations. But delay in taking decisions iscosting us.


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The country has a shortage of 1300MW to 1500MW power, explains Prof MustafizurRahman. To ease the problem, the power plants that are near completion, includingrental ones, must be brought on-stream at once. Tender process for future plants mustbe rapid and transparent.

A broad swathe of economists and energy experts believe that Bangladesh s long-termenergy policy must rely on rapid and efficient extraction of domestic coal reserves. Fivegood quality coal deposits, with proven reserves of more than 2.5bn MT have beendiscovered in Bangladesh .

National Coal Policy needs to be finalised as soon as possible, says Prof Mustafiz.There is a debate going on about the local environmental and social effects of mining,but we should have an open dialogue about this as soon as possible. Coal can beextracted in a responsible way by ensuring the local inhabitants are taken care of. Thisis vital for sustainable development of the country.

Experts have also called for speeding up gas exploration in offshore blocks whilemaintaining transparency. If there is a lack of transparency then there is bound to beopposition, says Dr Bakht. The government must also actively resolve maritimeboundary disputes with India and Myanmar to facilitate exploration.

Following a slew of dismal data, economists are growing increasingly concerned aboutthe sustainability of GDP growth in the years ahead. According to a report by the WorldBank, if the energy situation stagnates or deteriorates and global recovery falters thenexport growth cannot be sustained at FY09 levels and real investment growth coulddecline further. On this trajectory, GDP growth would be unlikely to reach even 5.5 per

cent, let alone the 6+ growth that Bangladesh has seen through much of the decade.

Ironically, the economy is turning sluggish at a time when most of the developedcountries are exiting recession. Coupled with strong demand in countries like China andIndia , this recovery could drive up prices of commodities in 2010, warn experts.

One challenge for 2010 would be containing inflation, and ensuring food security, saysProf Mustafizur Rahman. The Aman crop has not been that good, and now we mustlook to the Boro. The government must be vigilant about the risk of spiralling prices.

According to data from the Bangladesh Bureau of Statistics, inflation rose by 46% on apoint-to-point basis and stood at about 6.71 percent in October. Rising food prices wereto blame, say market watchers. The salary of government employees was raisedrecently, and this could also feed into the inflation scenario.

It is vital for the government to stimulate job creation at this stage, says Dr. Bakht.For this the investment climate must be boosted, and the government must alsoimplement the Annual Development Programme (ADP) quickly and transparently.


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One of the few consistently bright spots for the economy has been robust remittanceinflow. But Bangladesh cannot take remittance for granted. Not only has theinternational trade of capital, goods and services slowed down during the recession, butso has the international movement of people.

The number of people going abroad for work has almost halved, says Prof Mustafiz,and this is something the government must look at very carefully. There is no scopefor complacency here.

The CPD executive director believes the government must take a number of urgentsteps in 2010 to handle the macroeconomic situation. The economic stimulus packagemust be spent wisely, and make sure credit is available and affordable. Decisions mustbe taken quickly regarding the power sector, and in a transparent manner. The healthof the RMG sector must be ensured, but we must also diversify our exports. Ourexporters are facing challenges because some of our competitors have made exportscheaper by devaluing currency. Provided adequate steps are taken, there is room forcautious optimism going into 2010.

The government has spoken of some ambitious infrastructure projects, assertsHossain Khaled, and these need to be implemented quickly to stimulate the economy

the Dhaka Chittagong highway, the Deep Sea Port , new EPZs. Let 2010 2020 bethe decade of implementation as we move towards 50 years of our independence.

The present government came to power on a platform of affordable food prices, andstable jobs. The honeymoon period is almost over and 2010 will be the time to startdelivering. Addressing the weaknesses of the investment climate, complemented by

appropriate policy reforms and good governance, should therefore be of top concern toenhance the economys productivity and long-term growth, and contribute to eventualpoverty reduction. The road ahead contains challenges that will test the governmentsresolve. Unfortunately, most of the heartache will be felt by Bangladesh s poor as theycontinue the perpetual struggle to put two square meals on the table.

Episode one of the global recession may have been a phantom menace as far asBangladesh is concerned. If there is an episode two, it may not be. The economy, forbetter or for worse, will take centre stage in 2010.


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Bangladesh outshines I ndia in RMG export s

August 18, 2010

Bangladesh and Vietnam proved stronger resilience in textile exports than India in theface of slowing demand, a study shows.India s textile and apparel exports to the USmarket shrank by over 10 percent in 2009 calendar year, much more than exports fromBangladesh , China , Vietnam and Indonesia , according to the study by the Federationof Indian Chambers of Commerce and Industry.

While this allowed Vietnam to go past India in terms of market share of US imports,others are also catching up, the study finds.

India s market share of US imports of textiles and apparels grew from 5.73 percent to

5.9 percent between 2008 and 2009, but during the same period the market share ofimport from Vietnam increased from 5.53 percent to 6.2 percent.

While Bangladesh s annual textile and apparel exports to the US were 11.5 per cent inthe last five years, India s exports reached 4.2 per cent in the same period, the FICCIsays.

Bangladesh s apparel exports to Europe rose 3.6 percent in 2009 over the previousyear, while countries like India , China and Turkey recorded lower exports, whichincreased the market share gap between Bangladesh and India .

The US and European Union are the main markets of Indian textile and apparels andaccount for more than 60 percent of the exports.

Source: thedailystar.net


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Ride Bangladesh-Canada t rade w ave

April 3, 2010

Masud Rahman, president of Canada Bangladesh Chamber of Commerce and Industry,

speaks at a ceremony marking the $1.4 billion bilateral trade between Canada andBangladesh in 2009, at Dhaka Sheraton Hotel yesterday. Dipu Moni, foreign minister,and Robert McDougall, Canadian high commissioner, are also seen. CanCham

The foreign minister yesterday asked businessmen to fully utilise the potential of theCanadian export market, as bilateral trade between Canada and Bangladesh is growingfaster.We will strengthen negotiations so that our businessmen can expand businesswith this North American country, Dipu Moni said.

The minister was speaking as the chief guest at a ceremony that celebrated anachievement of one billion dollars in annual two-way trade between Canada and

Bangladesh in 2009, at Dhaka Sheraton Hotel.

The minister asked the Canadian government for further mutual cooperation in ICT,telecom and energy sectors.

Canada Bangladesh Chamber of Commerce (CanCham) in Bangladesh organised thefunction to celebrate bilateral trade that reached C$1.4 billion (C$1=$0.98) in 2009.

In his speech, Canadian High Commissioner in Dhaka Robert McDougall saidBangladesh exported goods to Canada worth C$808 million, demonstrating 26 percent

growth from the previous year.

Canada exported goods to Bangladesh worth C$626 million, 118 percent up from thesame period of 2008.

Canadian exports to Bangladesh in 2009 featured grains and other foods,telecommunications and energy equipment and services, pulp and metals, whileCanadian imports included ready-made garments (RMG), hats, footwear, frozen foodsand ceramics.

The tremendous growth in business between our countries was possible because of

the relentless effort of the twinned business communities of the two nations.Congratulations on the fruitful results of your hard labour, McDougall said.

He said diversification of products and markets is an important element to future exportgrowth. Existing global competitiveness in garments and textiles can be replicated inother areas, like leather and pharmaceuticals.


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Despite widespread poverty, frequent natural calamities and the impacts of the globaleconomic crisis, Bangladesh has developed a much improved reputation for economicmanagement and an emerging middle class, McDougall added.

CanCham President Masud Rahman said the chamber would shortly organise the

Showcase Canada programme to further promote and facilitate inter-trade.

He said the mutually beneficial relationship between Canada and Bangladesh has notyet peaked. There is room for growth and it is in the interest of both to make everyeffort to seize this opportunity, he added.The Export Promotion Bureau (EPB) ofBangladesh , in association with the Bangladesh High Commission in Ottawa , Canada ,will shortly organise a solo exhibition of Bangladeshi products in Toronto , Rahmansaid.

Meanwhile, the top five products exported to Canada in 2009 included woven apparelworth C$367.18 million, knitwear apparels worth C$336.93 million, other textile articles

worth C$72.86 million, headgear worth C$8.69 million and fish and seafood worthC$6.90 million.

On the other hand, the top five products exported to Bangladesh in 2009 included,cereals worth C$246.59 million, vegetables (mainly lentils) worth C$242.50 million,other grains and seeds worth C$54.89 million, iron and steel worth C$53.18 million andwood pulp worth C$7.42 million.

In 2008, total export to Canada was worth C$648.82 million against imports worthC$286.99 million; in 2007, export to Canada was worth C$542.45 million against

imports worth C$368.89 million; in 2006, export to Canada was worth C$543.32 millionagainst imports worth C$164.73 million, according to Canadian High Commission data.


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Expor t performancebelated im pact of r ecession?

It is good to know that improved export performance in April has helped pull export toa positive zone albeit marginally. Overall export in the first ten months registered agrowth of 0.97% over the same period last year. However, it was 8.67% behind the

target fixed for the period. It is a matter of greater concern that performance ofgarment sector, which accounts for more than 75% of our export, still shows a negativegrowth. Knitwear and woven garment exports are 2.06 and 1.38 percent down over theactual performance of the first ten months of last year.

However, improved performance of RMG sector in April and excellent exportperformance of jute goods, raw jute, petroleum and engineering products have beenable to bring the exports figure to the green zone from a negative growth figure of -0.80% at the end of March.

Export target for the year has been fixed at $ 17.6 billion against actual export of $

15.5 billion last year. From the past trend, target for the year appears to be reasonable.However, actual export up to the end of April was only $ 12.8 billion. Therefore,maintaining last years performance has become a challenge and reaching the targetappears to be extremely unlikely. Our export performance obviously depends on RMGsector. Therefore , this years downturn needs to be seen in the context of garmentsector performance. Defying global recession, RMG export registered a healthy growthduring 2008-09 financial year. This was possible due to certain favorable factors likeextremely low wage level, concentration on low end products, huge work force, cheaperwater and energy, aggressive entrepreneurship, political stability and nearly thirty yearsof experience.

However, the scenario started changing from the beginning of the current year. Stiffglobal competition forced exporters to allow more discounts which reduced valueaddition. To keep the factory running, industrial units within the country werecompeting with each other for securing orders. Buyers naturally took advantage of thisvulnerability. There was also increasing trend of expenditure. Shortage of gas andelectricity was a major problem. It affected production level and increased productioncost. Besides, a nagging gas and power crisis disrupted export schedule forcing theexporters to send consignments by air at a higher cost. A large number of the industrialunits are merely manufacturers without much of contract. They lack marketing andnegotiating skill. Therefore, for the purpose of finding out possible export market, they

are often dependant on intermediaries like buying houses. A large number of buyinghouses have grown up for the purpose and they have their contribution in bringingmore business to the country. But the current competitive environment may haveallowed them to dictate terms. Having better knowledge of local condition, they areable to procure at the lowest price from the helpless manufacturers thus fattening theirown profit and pleasing the buyers. After all, this is a buyer dominated sector and thereis no bottom line of price.


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Garment manufacturers were loud about possible adverse effect of global recessionfrom the beginning. But the government and other experts failed to pay attention to ittill the exports actually started showing a downturn from beginning of the current year.In appreciation of the difficulties of the exporters, the government ultimately declaredan incentive package. However, there are allegations that the package lack

transparency and there are procedural difficulties hindering the process.

RMG sector faced many problems in the past. Many people predicted dooms day in thepost MFA period. But the sector proved to be extremely competitive and resilient. Thistime also they are facing serious problem due to external and internal factors.Externally, they are facing aftermath of the global recession and internally the sector isconfronted with serious energy crisis. The industry is also under increasing pressurerelating to social compliance issue, which obviously has a cost implication. Interestingly,the importers insist on social compliance and also ask for more discounts.

At a time when the industry looks rather vulnerable and beset with problems, the longneglected issue of poor wages to the workers has come to the forefront. There is nodenying that the garment sector made immense contribution to the national economy.But it is also true that the industry paid extremely low wages to the laborers andexploited them shamelessly. The issues of safety and welfare of the workers havealways been neglected. The minimum wage- which is outrageously low- was fixed in2006. It appears that there has not been any revision since then although cost of livingincreased manifolds. Price of rice has gone up by about 50% since then. Simmeringdiscontent of the laborers and periodic violence is now visible. The issue needs to be

addressed immediately by the owners, the government and social stakeholders. Theimporters have also been a willing party to this exploitation and they have theirresponsibilities in addressing the minimum needs of the workers.

It is reported that minimum wage of a worker in RMG units is only taka 1662, which isthe lowest in the country. No argument is necessary to justify the need for substantialincrease of the minimum wage level. It has been reported in the newspapers that fifthmeeting of the wage commission ended recently without much progress.


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PROBLEMS OF TEXTI LE I NDUSTRY I N BANGLADESH

The garment industry of Bangladesh has been the key export division and a mainsource of foreign exchange for the last 25 years. National labor laws do not apply in theEPZs, leaving BEPZA in full control over work conditions, wages and benefits. Garment

factories in Bangladesh provide employment to 40 percent of industrial workers. Butwithout the proper laws the worker are demanding their various wants and as a resultconflict is began with the industry.

Low working salary is another vital fact which makes the labor conflict. Worker madestrike, layout to capture their demand. Some time bonus and the overtime salary arethe important cause of crisis. Insufficient government policy about this sector is a greatproblem in Garments Company.

There are some other problems which are associated with this sector. Those are- lackof 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, fewerprocess units for textiles and garments, sluggish backward or forward blendingprocedure, incompetent ports, entry/exit complicated and loading/unloading takes muchtime, time-consuming custom clearance etc.

According to our survey in five leading Company we found some problem which aregiven in a chart with their percentage-

Bangladesh Faces the Challenge of Globalization

Bangladesh faces the challenge of achieving accelerated economic growth andalleviating the massive poverty that afflicts nearly two-fifths of its 135 million people. Tomeet this challenge, market-oriented liberalizing policy reforms were initiated in themid-1980s and were pursued much more vigorously in the 1990s. These reforms wereparticularly aimed at moving towards an open economic regime and integrating with theglobal economy.

During the 1990s, notable progress was made in economic performance. Along with

maintaining economic stabilization with a significantly reduced and decliningdependence on foreign aid, the economy appeared to begin a transition fromstabilization to growth. The average annual growth in per capita income had steadilyaccelerated from about 1.6 per cent per annum in the first half of the 1980s to 3.6percent by the latter half of the 1990s. This improved performance owed itself both to aslowdown in population growth and a sustained increase in the rate of GDP growth,which averaged 5.2 percent annually during the second half of the 1990s. During thistime, progress in the human development indicators was even more impressive.


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Bangladesh was in fact among the top performing countries in the 1990s, whenmeasured by its improvement in the Human Development Index (HDI) as estimated bythe United Nations Development Project (UNDP). In terms of the increase in the valueof HDI between 1990 and 2001, Bangladesh is surpassed only by China and Cape Verde.

While most low-income countries depend largely on the export of primary commodities,Bangladesh has made the transition from being primarily a jute-exporting country to agarment-exporting one. This transition has been dictated by the country's resourceendowment, characterized by extreme land scarcity and a very high population density,making economic growth dependent on the export of labor-intensive manufactures.

In the wake of the 2001 global recession, Bangladesh 's reliance on foreign countries asa market for exports and as a source of remittances has become obvious. If Bangladeshis to become less vulnerable to the economic fortunes of others, it will need tostrengthen its domestic economy, creating jobs and markets at home. A strongdomestic sector and an improved overall investment environment will provide a morestable source of income - like what the garment industry has provided so far - and willrekindle and sustain Bangladesh 's economic growth.

BGMEA demands nonstop power, gas supply

March 25, 2010

Leaders of the countrys apparel manufacturers Tuesday demanded uninterruptedsupply of power and gas to ensure steady production in their units.They said power and

gas crises have severely hampered production in factories of Dhaka and Chittagong .

The situation in ready-made garments industry is not good because of the prevailinggas and power crises, Abdus Salam Murshedy, president of Bangladesh GarmentManufacturers and Exporters Association (BGMEA) said at a press briefing following hismeeting with Prime Ministers Advisor for Power, Energy and Mineral Resources Tawfiq-e-Elahi Chowdhury and State Minister for Energy and Power Enamul Huq at thesecretariat.

There is no alternative to continuous power and gas supply for saving this labour-oriented industry and the supply has to be ensured giving it top priority, said Murshedy

who led a delegation of the BGMEA.He also demanded subsidy on diesel and furnacefuel prices.

If the government fails to provide steady supply of power and gas, it can temporarilystay the raise in their prices. The separate rates of peak and off-peak hours may bedissolved into a steady flat rate.

Source: http://www.thefinancialexpress-bd.com


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Severe gas supply short age hits tex t ile product ion

January 20, 2010

The countrys textile, knitwear and readymade garment industries leaders urged thegovernment to take immediate steps in restoring gas supply as production in theirfactories has declined by around 50 per cent due to gas crisis Tuesday.

Textile production has nearly halved due to severe interruption in gas supply,Bangladesh Textile Mills Association (BTMA) President Abdul Hai Sarker told the FE.

Textile sector consumes 70 per cent of the total gas used by the private sector and ifthe gas crisis continues for long, then the sector may not be able to sustain, heexplained.

The BTMA president said: We need 2,000 mw power per day whereas now we aregetting only 1,200-1,400 mw power which is 40 per cent less than the demand.

According to the BTMA, the country has 1,350 textile mills with cumulative investmentof Tk 400 billion (40,000), the highest by any industrial sector.

Mr Sarker said: Spinning, dyeing and finishing factories need 24-hour uninterruptedgas supply for full-fledged production.

He said, due to interruption in gas supply the production, quality and quantity hadfallen which would hamper product delivery consignment.

We have been facing gas crisis since March, 2009 and recently it has turned worse inDhaka , Chittagong , Gazipur, Savar and Narayanganj zones, he added.

We are still recovering from the impact of the global recession and at this moment thegas crisis has been the biggest menace for us causing loss of our international market.

Fazlul Hoque, president of Bangladesh Knitwear Manufacturers and ExportersAssociation (BKMEA) said.

To complete a batch of knit product a dyeing factory needs at least 10-11 hours ofuninterrupted electric supply he said adding that the lack of gas supply hampers thequality and quantity too.

Abdus Salam Murshedy, president of Bangladesh Garment Manufacturers and ExportersAssociation (BGMEA) said if the problem is not solved on priority basis, more thanhundred factories will have to shut down.


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Recommendation

Bangladesh economy at present is more globally integrated than at any time in thepast. The MFA phase-out will lead to more efficient global realignments of the Garmentsand Clothing industry. The phase out was expected to have negative impact on theeconomy of Bangladesh . Recent data reveals that Bangladesh absorbed the shocksuccessfully and indeed RMG exports grew significantly both in FY06 and (especially) inFY07. Due to a number of steps taken by the industry, Bangladesh still remainscompetitive in RMG exports even in this post phase-out period.

Our Garments Industries can improve their position in the world map by reducing theoverall problems. Such as management labor conflict, proper management policy,

efficiency of the manager, maintainable time schedule for the product, proper strategicplan etc.

Government also have some responsibility to improve the situation by providing- properpolicy to protect the garments industries, solve the license problem, quickly loadingfacility in the port, providing proper environment for the work, keep the industry freefrom all kind of political problem and the biasness. Credit must be provided when theindustry 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 andpolicy strategies our country will take the apex position in future.


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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 situationbecome dangerous and tragic when the escape doorways and gates are found locked.Precautionary should need to be adopted are given below:

1. Building should be constructed with fire resisting materials

2. Adequate exits and proper escape routes should be designed

3. Protection against fire and smoke should be ensured

4. Electrical wiring must be properly designed, installed and maintained

5. Escape routes should be lighted at all times, kept clear, be indicated by signs

6. Regular fire drills should be held

7. Doors should be protected and should open along the direction of escape

8. Doors should not open on the steps and sufficient space should be provided.

9. Smoke/Fire alarm systems must be installed

10. adequate number of extinguishers should be provided

11. Prior relationship with local Fire services should be established


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SOME COMPANY PROFI LE

By taking information from four leading garments company to identify the problem of

this sector. Short profile of the Company are given below-

Millenium Garments Limited

It is a manufacturing company, established in 1990. More than 1200 employees foundtheir working place in this organization. Different types of modern equipment in here torun the production smoothly. Such as- 450 pcs of different type of cutting, sewing andfinishing machines supplied by mostly Singer and Brother. Its main market for exportingis European Countries, USA . And the other customer groups are Ekinsa, Spain; Vesage,UK; Etam, Singapore; Vetura, France; Amcobus, U.S.A; Miles, Germany; Star Wear,U.S.A. It is one of the leading exports Garment Company of our country.

RAHAN GARMENTS (PVT) LTD

It was founded in 1993. Rahan started manufacturing and exporting from 1995.Manufacturer and exporter of all type of apparels, specialized in under garments,sportswear and knit & woven garments. The total working area comprises of 29,000square feet in one floor. Their plant and office is located in the central part of the city.This give security and convenience for the transportation of goods and all kinds ofsupports needed for daily production and financial facility.

TOKIO MODEL LIMITED.

The company was established in 1990 as a Public Limited Company. The companyauthorized capital was in US $ 12.7 Million. Its production capacity is 29,000 Doz/Month Approx. Oven & Knitwear Items. More than 750 employees participate here inthe manufacturing activities. It is another leading Garment Company of our country.

FABRICS & COMMODITIES EXCHANGE LTD

Fabrics & Commodities Exchange Ltds a well reputed Garments Exporters inBangladesh . Accordingly as a first step of their customer familiarization process, they

would like to brief with their business process and how this could be of any interest totheir organization. Based in Dhaka , Bangladesh they manufacture over 200,000 units amonth including Knit, Woven and Sweater. A highly qualified team of QA foresees themanufacturing process. Reliability and cost effectiveness are on the utmost prioritywhile we provide value added services to our vast growing client list.


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CONCLUSI ON

T he textile industry has played an important role in Bangladesh s economy for a longtime. Currently, the textile industry in Bangladesh accounts for 45 percent of allindustrial employment and contributes 5 percent to the total national income. The

industry employs nearly 4 million people, mostly women.

A huge 78 percent of the countrys export earnings come from textiles and apparel,according to the latest figures available. Bangladesh exports its apparel products worthnearly $5 billion per year to the United States , European Union (EU), Canada and othercountries of the world. It is the sixth largest apparel supplier to the United States andEU countries.

Major products exported from Bangladesh include polyester filament fabrics, man-madefilament mixed fabrics, PV fabrics, viscose filament fabrics and man-made spun yarns.Major garments exported include knitted and woven shirts and blouses, trousers, skirts,

shorts, jackets, sweaters and sportswear, among other fashion apparel.

The Ready-Made Garments (RMG) industry occupies a unique position in theBangladesh economy. It is the largest exporting industry in Bangladesh , whichexperienced phenomenal growth during the last 25 years. By taking advantage of aninsulated market under the provision of Multi Fibre Agreement (MFA) of GATT, itattained a high profile in terms of foreign exchange earnings, exports, industrializationand contribution to GDP within a short span of time. The industry plays a key role inemployment generation and in the provision of income to the poor. To remaincompetitive in the post-MFA phase, Bangladesh needs to remove all the structural

impediments in the transportation facilities, telecommunication network, and powersupply, management of seaport, utility services and in the law and order situation. Thegovernment and the RMG sector would have to jointly work together to maintaincompetitiveness in the global RMG market. Given the remarkable entrepreneurialinitiatives and the dedication of its workforce, Bangladesh can look forward toadvancing its share of the global RMG market.


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References

Abdullah, Md. Abu Yousuf, 1997, I nternational Trade I mplications andFut ure of Ready-Made Garments Sector of Bangladesh Journal ofBusiness Administration, Vol. 23, No. 3 & 4, Page 41-69 .

Azim, M. Tahlil, and Nasir Uddin, 2003, Challenges for Garm entsSector in Bangladesh After 2004: Avenues for Surv ival and Grow thBangladesh I nstit ut e of I nt ernational and St rategic Studies Journal,Vol. 24, No. 1, Page 49-82.

Bhatt acharya, D and M. Rahman, 2007, Prospect s for I nt ernalizingGlobal Opport unit ies in Bangladesh ' s Apparel Sector , UNRI SDOccasional Paper.

Bhatt acharya, D and M. Rahman, 2009, Experi ence w it hI mplement ation of WTO-ATC and I mplications for Bangladesh , CPDOccasional Paper Series, Paper 7.

Bhatt acharya, D, M. Rahman and A. Raihan, 2010, Cont ribut ion of t heRMG Sector t o t he Bangladesh Economy , CPD Occasional Paper Series,Paper 50.

BANGLADESH BANK Policy Note Series: PN 0702

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Bangladesh Garments Birth 2 Future