RMG industry of Bangladesh: Past, present and future

The readymade garments industry acts as the backbone of our economy and as a catalyst for the development of our country. We take pride in the sector that has been fetching billions of dollars as export earnings and creating jobs for millions of people in the country.

The “Made in Bangladesh” tag has also brought glory for Bangladesh, making it a prestigious brand across the globe. Bangladesh, which was once termed by cynics a “bottomless basket” has now become a “basket full of wonders.” The country with its limited resources has been maintaining 6% annual average GDP growth rate and has brought about remarkable social and human development.

It is really a matter of great interest to many – how the economy of Bangladesh continues to grow at a steady pace, sometimes even when rowing against the tide. Now we envision Bangladesh achieving the middle-income country status by 2021. We firmly believe that our dream will come true within the stipulated time and the RMG industry will certainly play a crucial role in materialising the dream.

After the independence in 1971, Bangladesh was one of poorest countries in the world. No major industries were developed in Bangladesh, when it was known as East Pakistan, due to discriminatory attitude and policies of the government of the then West Pakistan. So, rebuilding the war-ravaged country with limited resources appeared to be the biggest challenge for us.

The industry that has been making crucial contribution to rebuilding the country and its economy is none other than the readymade garment (RMG) industry which is now the single biggest export earner for Bangladesh. The sector accounts for 81% of total export earnings of the country.

When our lone export earner – the jute industry – started losing its golden days, it is the RMG sector that replaced it, and then, to overtake it.

The apparel industry of Bangladesh started its journey in the 1980s and has come to the position it is in today. The late Nurool Quader Khan was the pioneer of the readymade garment industry in Bangladesh. He had a vision of how to transform the country. In 1978, he sent 130 trainees to South Korea where they learned how to produce readymade garments.

With those trainees, he set up the first factory – Desh Garments – to produce garments for export. At the same time, the late Akhter Mohammad Musa of Bond Garments, the late Mohammad Reazuddin of Reaz Garments, Md Humayun of Paris Garments, Engineer Mohammad Fazlul Azim of Azim Group, Major (Retd) Abdul Mannan of Sunman Group, M Shamsur Rahman of Stylecraft Limited, the first President of BGMEA, AM Subid Ali of Aristocrat Limited also came forward and established some of the first garment factories in Bangladesh.

Following their footsteps, other prudent and hard-working entrepreneurs started RMG factories in the country. Since then, Bangladeshi garment industry did not need to look behind. Despite many difficulties faced by the sector over the past few years, it has carved a niche in world market and kept continuing to show robust performance.

Since the early days, different sources of impetus have contributed to the development and maturity of the industry at various stages. We learned about child-labour in 1994, and successfully made the industry free from child labour in 1995.

The MFA-quota was a blessing to our industry to take root, gradually develop and mature. While the quota was approaching to an end in 2004, it was predicted by many that the phase-out would incur a massive upset in our export.

However, the post-MFA era is another story of success. Proving all the predictions wrong, we conquered the post-MFA challenges. Now the apparel industry is Bangladesh’s biggest export earner with value of over $24.49bn of exports in the last financial year (from July 2013 to June 2014).

Despite the epic growth of our RMG industry, and its bright prospects, challenges are still there. One of the biggest challenge currently faced by our RMG industry is to ensure workplace safety and better working conditions for the millions of garment workers.

Two major accidents, the Tazreen fire and the Rana Plaza collapse, have brought the issue of workplace safety to the fore and led all stakeholders to act accordingly. Following the unfortunate incidents, various platforms such as the Bangladesh Accord on Fire and Building Safety, the Alliance for Bangladesh Worker Safety and National Plan of Action have been formed to improve building and fire safety of Bangladesh’s garment industry.

All members of the BGMEA and BKMEA are working all-out to carry out the corrective action plans suggested by the Accord, Alliance and National Plan of Action after inspections, even investing huge amount of money.

Moreover, the factories which were set up in an unplanned way and housed in risky buildings have started relocating to safer buildings. Besides, a project has been taken to set up a well-planned garment industrial park beside the Dhaka-Chittagong Highway where the structurally weak garment factories will be able to relocate.

However, ensuring workplace safety at all garment factories is a gigantic task and will take time to accomplish. But we believe the government of Bangladesh, BGMEA and BKMEA, with the support of global brands and international development partners, will be able to ensure the safety of the RMG industry and maintain the momentum of socio-economic development in the country.

With challenges on one side, a more glittering future is waiting for the ready-made garment industry of Bangladesh on the other side; at least facts and figures have made us believe so. A recent study jointly conducted by the United States Fashion Industry Association (USFIA) and the University of Rhode Island (URI) has made us more optimistic about the potentials of our RMG industry.

According to the study, the US-based fashion companies are expected to boost their sourcing from Bangladesh in the next two years. McKinsey, a global management consulting firm, described Bangladesh as the next hot spot in apparel sourcing. The renowned firm forecasts export-value growth of 7-9% annually and our apparel export will double by 2015 and nearly triple by 2020 provided that we can successfully overcome a few challenges including developing infrastructure and skill workforce.

It is the responsibility of all of us to protect the interest of this industry which has given our economy a strong footing, created jobs for millions of people, especially for women, lifted them from the abyss of chronic poverty and given them a dignified life. Now what we need to do is deal with all the challenges facing our garment industry, paving the way for its further development.

The main highways namely Dhaka-Chittagong, Dhaka-Mymensigh, Dhaka-Tangail through which our apparel products and the raw materials for apparel and textile are transported from factories to port, are being widened (from two lanes to four lanes) and drive-worthy for tapping our export potential. This work needs to be completed as urgently, preferably by December 2014.

Connection of gas to the factories and uninterrupted power supply are prerequisite for the steady growth of the industry. So, the government should consider giving gas and electricity connections to RMG and textile units as the top priority. Producing the required number of skilled workers is another challenge and overcoming it will determine whether the country will be able to sustain the boom that is waiting to happen.

Although BGMEA along with the government and other international organisations has taken the initiatives of developing skills of workers, yet more initiatives as such are required to meet the demand of the industry and enhance the productivity of the industry. The budget allocation of the government for the skill development also needs to be increased.

BGMEA University of Fashion and Technology (BUFT) is offering graduate and post-graduate degrees to students on fashion design, knitwear technology and apparel merchandising related subjects. Nonetheless, to meet the current shortfall of competent professionals in the mid-level of our garment factories, fashion, textile and industrial merchandising related departments need to be established at all of our major public and private universities.

Bangladesh mainly produces five products – T-shirts, sweaters, trousers, men’s and women’s shirts. Moreover, we are dependent mainly on two markets namely the EU and North America (the US and Canada). Though we reduced our dependency on these two markets from 93% to 85% in last five years (From fiscal 2009-10 to 2013-14), we need to diversify the destinations of our apparel export and concentrate on high-end products like suits, lingerie, etc more for the sustained growth of our apparel industry.

Inadequate infrastructure, bureaucratic inefficiency and corruption are still the major problematic factors in industrialisation and for growth of an industry. These are also increasing entrepreneurs’ cost of doing business. We are also losing price and delivery competitiveness to our business competitor. The last but not the least, political stability of the country is the key to steady growth of the industry.

Starting from scratch, Bangladesh has come a long way and is now one of 10 new emerging countries in the world. The macroeconomic stability, 6% annual average GDP growth, robust performance of remittance and export, strong foreign currency reserve, and remarkable social and human development over the past decade – all reflect our underlying strengths.

Given the dominance of the RMG industry in the overall economy of Bangladesh, we have to protect this sector. Rather than basking in the glory we should work hand in hand to retain sustainable growth and competitive edge of this industry.