Report

On

RMG Sector of Bangladesh

Prepared For:-

Engineer tamim jahan

Prepared By

Tanmoy chowdhury antu

Batch: FMP -4

Pearl Fashion Institute, Bangladesh.

Introduction

In this report briefly discuss about RMG sector of Bangladesh which is content by about RMG, Economic impact, Worker and at the end there are conclusion about RMG.

The ready-made garment (RMG) industry is huge economical supported sector in Bangladesh. The economy of Bangladesh is largely dependent on agriculture. However, in recent years, the Ready –Made Garments (RMG) sector 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.

About (Ready Made Garments) RMG of Bangladesh

The ready-made garment industry in Bangladesh is not the outgrowth of traditional economic activities but emerged from economic opportunities perceived by the private sector in the late 1970s. Frustrated by quotas imposed by importing nations, such as the United States, entrepreneurs and managers from other Asian countries set up factories in Bangladesh, benefiting from even lower labor costs than in their home countries, which offset the additional costs of importing all materials to Bangladesh. 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 become 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, never previously in the industrial work force. Many of them were woefully underpaid 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.

Source: (BANGLADESH, Oct 25 2008, 12:11 AM EDT www.bengaliwiki.com/page/ Ready- made + Garments )

The RMG industry is the only multi-billion-dollar manufacturing and export industry in Bangladesh. Whereas the industry contributed only 0.001 per cent to the country’s total export earnings in 1976, its share increased to about 75 per cent of those earnings in 2005. Bangladesh exported garments worth the equivalent of $6.9 billion in 2005, which was about 2.5 per cent of the global total value ($276 billion) of garment exports. The country’s RMG industry grew by more than 15 per cent per annum on average during the last 15 years. The foreign exchange earnings and employment generation of the RMG sector have been increasing at double-digit

rates from year to year. Some important issues related to the RMG industry of Bangladesh are noted in table 1.

Table 1: Important issues related to the Bangladesh ready-made garment industry

Year(s) Issue 1977-1980 Early period of growth

1982-1985 Boom days 1985 Imposition of quota restrictions 1990s Knitwear sector developed significantly 1993-1995 Child labour issue and its solution 2003 Withdrawal of Canadian quota restriction 2005 Phase-out of export-quota system

(Source: Compiled by the author from Quddus and Rashid (2000), Mainuddin(2000) and databases of the Bangladesh Garment Manufacturers and Exporters Association, and the Export Promotion Bureau, Bangladesh)

Currently, there are more than 4,000 RMG firms in Bangladesh. More than 95 per cent of those firms are locally owned with the exception of a few foreign firms located in export processing zones (Gonzales, 2002). The RMG firms are located mainly in three main cities: the capital city Dhaka, the port city Chittagong and the industrial cityNarayangonj. Bangladesh RMG firms vary in size. Based on Bangladesh Garment Manufacturers and Exporters Association (BGMEA) data, Mainuddin (2000) found that in 1997 more than 75 per cent of the firms employed a maximum of 400 employees each.Garment companies in Bangladesh form formal or informal groups. The grouping helps to share manufacturing activities, to diversify risks; horizontal as well as vertical coordination can be easily found in such group activities. (E.g. based on Quddus and Rashid (2000), Mainuddin (2000) and databases of the Bangladesh Garment Manufacturers and Exporters Association, the Export Promotion Bureau of Bangladesh and the World Trade Organization)http://www.unescap.org/tid/publication/aptir2456_haider.pdf

BGMEA

Bangladesh Garment Manufacturers and Exporters Association (BGMEA) 

Introduction:

 The Bangladesh Garment Manufacturers and Exporters Association (BGMEA) is the apex trade body that represents the export oriented woven knit and sweater garment manufacturers and exporters of the country. Readymade Garment (RMG) is the leading sector of Bangladesh in terms of employment, production and foreign exchange earnings. Readymade garment (RMG) alone earned about 78% of the yearly foreign exchange earning of the country. About 3.5 million people are employed in the garment - manufacturing sector. The growth rate of RMG export was over 20% per over the last two decades. Total members number of BGMEA is 2915.

 A Success Story of RMG Sector:

The importance of RMG sector can hardly be over emphasized. There has been a steady growth in the field of RMG during last two decades. The RMG industry enjoyed a meteoric rise from 30 enterprises in 1980 increased to about 4825 in 2007-08 fiscal years. The growth of the industry in terms of number of units and employment generation is shown in table - 1 below:

Table 1: Growth of the industry and Employment

Year Number of Garment Factories Employment in Million Workers1983-84 134 0.0401984-85 384 0.1151985-86 594 0.1981986-87 629 0.2831987-88 685 0.3061988-89 725 0.3171989-90 759 0.3351990-91 834 0.4021991-92 1163 0.5821992-93 1537 0.8041993-94 1839 0.8271994-95 2182 1.2001995-96 2353 1.2901996-97 2503 1.3001997-98 2726 1.500

1998-99 2963 1.5001999-2000 3200 1.6002000-2001 3480 1.8002001-2002 3618 1.8002002-2003 3760 2.0002003-2004 3957 2.0002004-2005 4107 2.0002005-2006 4220 2.2002006-2007 4490 2.4002007-2008 4743 2.8002008-2009 4825 3.100

 

Out of 3.1 million manpower employed in BGMEA member factories, 2.38 million are women (85%), majorities of them are disadvantaged and economically poverty stricken women folk. The country's RMG sector, to a creditable level has relieved Bangladesh from over populous unemployment burden through providing the largest employment next to agriculture, transport, and trade and industry sector. This sector has uplifted the neglected section of the population, thus radically transforming the socio-economic condition of the country. Such empowerment and employment raised awareness regarding children education, health safety, population control disaster management only so for. It is an epoch making event in the history of Bangladesh.  

Main Functions of BGMEA: 

BGMEA is being run by a 27-member elected Board of Directors. Four Vice Presidents having important portfolios, along with a secretariat of experienced officials, assists the Board in formulating and executing vital policies and programs of the organization. The President is the highest executive authority of the BGMEA. 

The fundamental objective of BGMEA is to establish a healthy business environment for a close and mutually beneficial relationship between the manufacturers, exporters and importers in the process ensuring a steady growth in the foreign exchange earnings of the country. BGMEA issues UD to its exporters thereby monitors export as well. BGMEA plays a very strong role to lead the industry in concurrence with the government. The following are the regular activities of BGMEA for its members, apparel buyers and other partners.

 ·         To Protect and uphold the interest of the industry by aiding the formulation of

government policies consistent with a congenial growth of the sector.

·         Committed to protect the interests of its members and their employees by implementing legitimate rights and privileges for garments workers.

·         To negotiate and consult with foreign and local agencies to promote the garments sector in every possible fields.

·         To maintain liaisons with foreign buyers, business associations and chambers.

·         To provide foreign buyers with all necessary information regarding all issues concerned with the RMG sector.

·         BGMEA brings the opportunities for local manufacturers to interact with foreign buyers and form new rapport by arranging different apparel fairs at home and abroad.

·         To keep the BGMEA factories child labor free through continued monitoring.

·         Continue and expand collaboration with relevant Ministries of the Governments.

·         Continue educational support to workers’ children and make a provision for skill training for children removed from the BGMEA’s member factories.

·         Provides information services to its members by publishing monthly newsletters, issuance of circulars and through Dhaka's first B2B web portal which directly links exporters and buyers around the world.

·         BGMEA also established its own Institute called "BGMEA Institute of Fashion & Technology (BIFT)" in 1999. Till the day BIFT is continuously developing professionals for this sector through the courses of Fashion Designing and Garment Merchandising; and other certificate, diploma and short courses. Transforming it into University is under process.

·         Promotes computer oriented solutions for better management to its member units.

·         Participates actively in all trade negotiations for the sector in order to get easier market access and GSP benefits.

·         BGMEA's appointed lobbyist firm has been working to get duty free access in the US market. The New Partnership for Development Act (NPDA)of 2007 was introduced in the US House of Representatives by Congressman McDermott and our lobbyist is working to get the bill passed.

·         BGMEA has introduced Service Books for each and every workers employed in the

factories.

·         BGMEA is going to launch a workers welfare committee in the factories.

·         BGMEA has ensured the minimum wage implementation to the tune of 99.49% of all factories.

·         BMGEA has set up a Crisis Management Committee for emergencies.

·         BGMEA regularly helps out the victims of natural calamity by providing relief, rehabilitation and other support. BGMEA stood beside the SIDR affected people with huge relief and support. BGMEA also rehabilitated 100 families by establishing a weaver's village (Taath Palli) in Manikgonj.

·         BGMEA provides scholarship to meritorious children of the garments workers. Each year 2000 students are getting the scholarships at Dhaka and Chittagong.

·         BGMEA runs training programs through 27 Technical Training Centers and 3 other centers with the objective of producing skilled workers for the RMG sector. More than 15000 trainees will be shaped up through this program and BGMEA will appoint them in the factories. BGMEA has trained and employed 10,000 people till the date.

·         BGMEA is in the process of taking over 34 vocational training centers to provide various skill sets to the unemployed.

·         BGMEA regularly conducts fire drills and fire safety program at the member factories. Although 18 fire incidents took place in 2007 and 2008, there were no casualties.

·         BGMEA runs 10 medical centers for its workers and provides HIV/AIDS awareness. Around 4.5 million workers have already received medical treatment and 55,000 workers have been made aware of HIV/AIDS and reproductive health.

·         BGMEA is going to develop a central database system for the garment workers, which will cover all workers' information of the readymade garment sector.

·         BGMEA is going to start a UD automation system to speed up custom procedures. Such online system will bring dynamism in a way that reduces lengthiness in custom procedures.

·         BGMEA has distributed essential food items among workers at subsidized price during the last Ramadan through 12 centers at Dhaka and Chittagong.

·         A Memorandum of Understanding (MoU) has been signed between BGMEA and IFC-SEDF on 17th June 2008 to monitor occupational safety and health status of the workers employed in the member factories of BGMEA operating at Dhaka. Under this program all the running factories at Dhaka have already been audited by the social compliance monitors

of BGMEA and a database in being prepared.  

Mission

The BGMEA has a two-fold mission in its efforts to strengthen and promote the readymade garments (RMG) sector and the economy of Bangladesh.

 The primary mission objective of the BGMEA is to “Establish a healthy a business environment for a close and mutually beneficial relationships among the manufacturers, exporters and importers in the process ensuring a steady growth in the foreign exchange earnings of the country”

 The BGMEA secondary mission objective is to “Implement all legitimate rights and privileges of garment workers regarding Health, Welfare and Safety”

 The BGMEA also “stands to ensure child labour-free factories, women empowerment, gender equality and other social standards” and “seeks to keep the environment clean and unaffected.”

Excellent standards in training and education in the RMG sector is also a long term goal of the BGMEA.

Source: http://www.bgmea.com.bd/cafaxpo/bgmea2010.htm