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RMG added a plenty to the half century of Bangladesh

After the independence, Bangladesh started its journey with the export of $348.40 million mainly dominated by jute, jute goods and tea.

The apparel industry, the largest contributor to the national exports, was not on the list but in courses of time it took the lead.

When Bangladesh is celebrating the golden jubilee of its birth, the apparel exports stood at $28 billion, which is 83% of total exports.

As per the data of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), in the fiscal year 1983-84, Bangladesh’s apparel exports were only $31.57 million, which was 3.89% of total exports of $811 million.

However, after the independence, Bangladesh’s exports were $348.40 million of which 90% or $313 million came from jute and jute goods.

After the jute and jute goods, tea and frozen foods were the two largest export earners. It contributed about 7.25% to the total exports.

5-significant-years-Bangladesh-RMG-exports

In course of time, jute and tea exports lost their glory and the apparel industry RMG, which employed over 4 million workers mostly rural women.

In its long journey, the exports earnings from the RMG sector stood at $27.95 billion as of the fiscal year 2019-20, which is 83% of the country’s total exports of $33.67 billion.

In the FY19, apparel exports were $34.13 billion and it contributed 84.21% to the national exports but recorded a decline in FY20 as the Covid-19 pandemic hit the sector badly.

Journey of RMG Sector

The journey of RMG exports started primarily in 1978 but it was not 100% export-oriented.

On 28 July 1978, Reazuddin, the owners of Reaz Garments established in 1960 as a small tailoring outfit, exported 10,000 pieces of Reaz Shirt to French buyer Holander France.

The journey of the full-fledged export-oriented RMG industry started in 1978 by M Noorul Quader, who set up the first readymade garment industry in 1978. HE is the pioneer of the Bangladesh RMG sector.

Quader set up Bangladesh’s very first 100 percent export-oriented Ready Made Garment factory Desh Garment in Kalurghat, Chittagong.

On the 4th of July 1978, that landmark joint venture agreement was signed with South Korean company Daewoo Corporation and the journey began.

Bangladesh-Top-apparel-export-performance

Quader took 130 people to South Korea for training and the selected trainees returned home after a six-month training period to form the nucleus of the RMG sector’s technology and its core human resource base.

Desh Garment began its journey with the first shipment of just 1.2 lakh pieces of boy’s shirts to a German company called MNR.

In the journey of Bangladesh’s 50 years, to build the country’s economy and pave ways to a developing country status, the RMG sector played an important role.

It helped to reduce the poverty rate at a time when there was not truly a manufacturing industry after independence.

“Soon after independence, a new entrepreneur class emerged who invested without calculating the risk. For the economic development they played a significant role,” Dr. Zahid Hossain, former lead economist of the World Bank, Dhaka told Textile Today.

We did not have raw materials and backward linkage for the apparel sector. Despite having such constraints, we are the second-largest exporter of apparel goods, said the economist.

Besides, we have now a backward linkage industry such as textile, garment accessories and packaging and knitting and dyeing. The “apparel industry” is our great achievement in the golden jubilee of our independence and the credit goes to our young and resilient entrepreneurs, said Zahid.

“Today’s apparel sector is a great achievement of independence, which is contributing to the national economy and providing the highest number of jobs mostly for the rural women,” BGMEA President Dr. Rubana Huq told Textile Today.

As of Fiscal Year 2019, Bangladesh exported apparel goods worth over $34 billion to 167 countries and the sector employed 40 lakh people. The apparel industry invested about $20 billion, which created jobs for 25 lakh women, the business leader explained to present the contribution of the sector.

If the apparel industry did not develop, these rural and underprivileged women could not get opportunities to involve economic activities on a larger scale, said Rubana.

“The sector not only ensured the employment of the women but also it economically empowered them and gave them a social identity with dignity.”

All these achievements were possible due to the government’s continuous policy support and incentives, which made the exporters competitive in the global markets.

“Continuous government policy and fiscal support was the growth driver of the sector. From the very beginning, the sector was enjoying duty-free benefits and cash incentives, which made the manufacturers more competitive in the global markets” Abdus Salam Murshedy, former President of BGMEA.

After the independence, we have two crore export items jute and tea. There was no such manufacturing industry which could create employment for the economically vulnerable country. But the apparel exports contributed lots, said Salam, also managing director of Envoy Textile.

Paths to reach target were not rosy

In its journey for the last three decades, the apparel industry faced several challenges but it handled those with care and became a successful case to the globe.

During the late 1990s, the elimination of child labor from the apparel industry was a threat but with a concerted effort, Bangladesh was successful to do that.

“In reaching today’s status of compliant RMG sector, the path was not covered with roses rather filled with challenges and obstacles,” former BGMEA Senior Vice President Faruque Hassan told Textile Today.

The elimination of child labor was a threat for us but with the help of the International Labour Organization (ILO), local and international non-government organizations (NGOs) and global brands, government policy support and the willingness of entrepreneurs we have been successfully removed it, said Hassan, also managing director of Giant Group.

The sector became child-labor-free by the end of 2004.

Another crucial challenge and obstacle was the withdrawal of the Multi-Fibre Arrangement (MFA) quota, which left the exporters in tougher competition in the global markets. MFA quota was over for Bangladesh in 2005.

“The MFA quota opened a new window for Bangladesh in global textile and clothing exports. But the withdrawal left us in competition,” said Shahidulah Azim, a former Vice President of BGMEA.

Though it was said that the sector would not survive after the withdrawal of the MFA quota it remained competitive even after the erosion of the facilities, said Azim.

“We have the comparative advantage of the then cheap and available workforce, cash incentives against export, and a new entrepreneurial class who focused on skills development.”

As a result, Bangladesh is the test case of success in the apparel industry and the second-largest exporters of clothing goods after China said Azim.

The toughest challenge for the sector emerged soon after the collapse of the Rana Plaza, which raised the question about workplace safety and compliance issues. It was also addressed successfully and now the sector is the world’s safest one.

“After the unprecedented collapse, the sector faced pressures from buyers and international rights group to improve workplace safety and structural safety, Atikul Islam, the then BGMEA president told Textile Today.

With the help of global retailers and government policy support, we have improved our safety standards to an international level and installed sophisticated fire safety equipment, said Islam.

Now, the safety standard of the RMG sector is certified by Accord and Alliance, two platforms of the global retailers, and the sector is the safest one in the globe, he added.

The industry has also worked on making a favorable carbon footprint for itself. At present, Bangladesh has more than 108 Leadership in Energy and Environmental Design (LEED) certified green garment factories, which is the highest in the world. The country is also home to the highest number of platinum-rated garment factories globally. As many as 26 Bangladeshi factories have achieved the highest certificate provided by the US Green Building Council (USGBC) with seven out of the top 10 LEED-certified factories worldwide situated there. Also, more than 500 RMG factories have been registered with the USGBC for LEED certification.

In this regard, Rubana Huq said, “In the coming days, the RMG sector will uphold its leading role as the sector is entering into a new era. The sector people are building green factories and introducing the latest technology.”

However, the country’s apparel sector is going through a tough time as the Covid-19 pandemic hit the sector badly.

Though there was an improvement in the recent week, the infection rate surged suddenly, which made the exporters fearful about the future of business.

In combating the economic fallout of the ongoing pandemic, the government has provided financial support and loans but it is not enough as claimed by the sector people.

In face of the sudden rise and prevailing global situation, the sector people are calling for further financial support to remain in business.

Needs more to grow to its fullest

BD-RMG-Focusing-areas- industry-grow
Figure: Focusing areas for BD RMG industry to grow its fullest.

However, the sector people opined that the opportunities of the RMG sector are not tapped to its fullest. To this end, the sector needs more support to come out of the present situation.

“If we could cash the opportunity to its fullest, today’s RMG industry could have been better than that of today. We are at a stage now where more opportunities are waiting for Bangladesh,” said Rubana Huq, Managing Director of Mohammadi Group.

The establishment of Padma Bridge opened opportunities for decentralization of industry, while the development of infrastructure is paving more ways for investment, said Rubana.

Moving towards value-added products is a great opportunity ahead for us and we are moving in this direction. For this government support is needed as it was always, she added.

Besides in recent years, the sector has been increasing R&D to produce design in-house. In recent years, the apparel value chain has been going all-out with automation. Whereas, Bangladesh RMG is labor-intensive. It is high time for manufacturers to adopt more and more automation.

As automation needs higher investment, govt. economic incentives and packages are inevitable to make the apparel sector automation-centric.

Also, the industry leaders opined that amid COVID-19 disruptions, a strong locally sourced supply chain proved vital to sustaining in the long run.

Not to mention, having a robust backward linkage industry is a must to the post-COVID era.

If anyone has any feedback or input regarding the published news, please contact: info@textiletoday.com.bd

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