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Monday, June 13, 2011

Garments Business: Success story of Bangladesh




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 4,825 in 2008-2009 fiscal year.

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“Bangladesh has many constraints… still the sincerity and commitment of its skilled as well as easily trainable abundant workforce made us convinced about the potentials of the country and therefore, we are successful here and still optimistic about our future growth”– commented by Mr. Kihak Sung, Chairman of Youngone Corporation. Youngone, the Seoul based world’s largest technical outerwear manufacturer started its business in Bangladesh with 200 workers in 1980 but now employs more than 40,000 people in its facilities.

Bangladesh –  a country, synonym for many people as an over populated country of natural calamities – a nation with political unrests, corruption, bureaucratic hurdles and inefficiency, has forced to change the impression about herself by presenting its success story of Readymade Garments (RMG) Industry.

Bangladesh exported its first garments consignment in 1977 and earned US$ 3,215 only! By exporting apparels, within 10 years of its first export, Bangladesh earned US$ 400 million, within 15 years US$ 1.4 billion and within 25 years almost US$ 5 billion! In fact, the magical growth of the apparel and its allied sectors changed Bangladesh from an agro product exporting nation to a world class apparels manufacturing country. Products with a label “Made in Bangladesh” are now available in USA, Europe, Canada and all other developed countries.

BANGLADESH APPAREL INDUSTRY AT A GLANCE
Sl.
No.
ITEMS
Qty, Status or Position
01
Year of first export of RMG
1976-1977
02
Total amount of export in the fiscal year 1976-77
US$ 3,125.00 (approx.)
03
Total units of Garments in this sector in 1983
47
04
Total units of Garments in this sector in 1993
1,480
05
Total units of Garments in operation in 2010-2011
5,150
06
Total units of new Garments going for production
Over 500
07
Total number of workers in this Sector (in 2010-2011)
3.6 Million
08
Total % of women workers in this sector
80%
09
Total export earnings from apparels in fiscal year of   2009-2010
US$ 12,496.72 Million
10
Percent in the National export earnings (in 2010-2011)
78.97%
11
Largest Buyer (Single country/2010-2011)
USA, US$ 4,625.16 Million
12
Largest buyers (Group of countries/2010-2011)
EU countries, US$ 10,519.84 Million
13
Apex trade body for woven garments sector
Bangladesh Garments Manufacturers & Exporters Association (BGMEA)
14
Apex trade body for knitwear sector
Bangladesh Knitwear Manufacturers & Exporters Association (BKMEA)

The growth of the industry in terms of number of units and employment generation is shown in the below table:

Growth of the Garments Industry and Employment
Year
Number of
Employment
Garment
(in million
Charts
Workers
1983-84
134
0.04


Growth of Garments Industries
1984-85
384
0.115
1985-86
594
0.198
1986-87
629
0.283
1987-88
685
0.306
1988-89
725
0.317
1989-90
759
0.335
1990-91
834
0.402
1991-92
1,163
0.582
1992-93
1,537
0.804
1993-94
1,839
0.827
1994-95
2,182
1.2
1995-96
2,353
1.29
1996-97
2,503
1.3


Growth of Employment
1997-98
2,726
1.5
1998-99
2,963
1.5
1999-2000
3,200
1.6
2000-2001
3,480
1.8
2001-2002
3,618
1.8
2002-2003
3,760
2
2003-2004
3,957
2
2004-2005
4,107
2
2005-2006
4,220
2.2
2006-2007
4,490
2.4
2007-2008
4,743
2.8
2008-2009
4,825
3.1


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, 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.

COMPARATIVE STATEMENT ON EXPORT OF RMG AND TOTAL EXPORT OF BANGLADESH

Year
Export of RMG

(in Million  US$)
Total Export of Bangladesh
(in Million  US$)
Share of RMG to
Total Export
( % )
1983-84
31.57
811.00
3.89
1984-85
116.20
934.43
12.44
1985-86
131.48
819.21
16.05
1986-87
298.67
1,076.61
27.74
1987-88
433.92
1,231.20
35.24
1988-89
471.09
1,291.56
36.47
1989-90
624.16
1,923.70
32.45
1990-91
866.82
1,717.55
50.47
1991-92
1,182.57
1,993.90
59.31
1992-93
1,445.02
2,382.89
60.64
1993-94
1,555.79
2,533.90
61.40
1994-95
2,228.35
3,472.56
64.17
1995-96
2,547.13
3,882.42
65.61
1996-97
3,001.25
4,418.28
67.93
1997-98
3,781.94
5,161.20
73.28
1998-99
4,019.98
5,312.86
75.67
1999-00
4,349.41
5,752.20
75.61
2000-01
4,859.83
6,467.30
75.14
2001-02
4,583.75
5,986.09
76.57
2002-03
4,912.09
6,548.44
75.01
2003-04
5,686.09
7,602.99
74.79
2004-2005
6,417.67
8,654.52
74.15
2005-2006
7,900.80
10,526.16
75.06
2006-2007
9,211.23
12,177.86
75.64
2007-2008
10,699.80
14,110.80
75.83
2008-2009
12,347.77
15,565.19
79.33
2009-2010
12496.72
16,204.65
77.21
2010-2011
3,971.52
5,029.05
78.97


T-Shirt


Jacket


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“Made in Bangladesh” garments not only are the major imported apparel items to USA, Canada and Europe from Bangladesh but also these are acting as the “Image Ambassador” of the country and its people. It helps to create a positive impression of Bangladesh. On a recent Board of Investment (BOI) statement, it is predicted Bangladesh expects US$ 10 billion plus worth of investment within next few years from countries i.e Taiwan, India, Middle East and Far East, besides direct investment from Europe and USA.  It has to be accepted here that the success story of Bangladesh’s RMG industry and its workforce plays a pivotal role there with the great potentials of the country!

The Readymade Garment sector’s success lies to the facts of having a skilled but economic workforce along with hardworking entrepreneurs who set up RMG factories capable of supplying high value products at a reasonable and competitive price.

Following comparative wage cost of a survey financed by World Bank shows one of the competitive advantages that Bangladesh enjoys in the RMG sector – the lower wage per hour. It should be mentioned that when the hourly wage has increased in all other countries including the neighbours, many RMG operators’ of Bangladesh in fact are getting lower wage than before in real monetary value!

Cost of some key production factors in textile sector

Labor costs incurred in the textile industry is the lowest compared to its Competitors.


Country
Wage Cost
(Per hour
in US$)

Bangladesh
0.25
China
0.35
India
0.60
Indonesia
0.40
Pakistan
0.40
Sri Lanka
0.45
Thailand
1.00
Vietnam
0.40



Energy cost in Bangladesh is lower compared to India and Pakistan.

India                            $ 0.095/KwH
Pakistan                      $ 0.08/KwH
Bangladesh                 $ 0.07/KwH

DATA ANALYSIS ON BANGLADESH APPAREL BUSINESS IN BRIEF

VALUE OF TOTAL APPAREL EXPORT
(Fiscal year basis)
YEAR
TOTAL APPAREL EXPORT
(In Million US$)
WOVEN
KNIT
TOTAL
1994-95
1,835.09
393.26
2,228.35
1995-96
1,948.81
598.32
2,547.13
1996-97
2,237.95
763.3
3,001.25
1997-98
2,844.43
937.51
3,781.94
1998-99
2,984.96
1,035.02
4,019.98
1999-2000
3,081.19
1,268.22
4,349.41
2000-2001
3,364.32
1,495.51
4,859.83
2001-2002
3,124.82
1,458.93
4,583.75
2002-2003
3,258.27
1,653.82
4,912.09
2003-2004
3,538.07
2,148.02
5686.09
2004-2005
3,598.20
2,819.47
6,417.67
2005-2006
4,083.82
3,816.98
7,900.80
2006-2007
4,657.63
4,553.60
9,211.23
2007-2008
5167.28
5532.52
10699.8
2008-2009
5918.51
6429.26
12347.77
2009-2010
6013.43
6483.29
12496.72


QUANTITY OF TOTAL APPAREL EXPORT
(Fiscal year basis)
YEAR
TOTAL APPAREL EXPORT
(In Million Dozens)
WOVEN
KNIT
TOTAL
1994-95
          47.21
           15.30
         62.51
1995-96
          48.82
           23.18
         72.00
1996-97
          53.45
           27.54
         80.99
1997-98
          65.59
           32.60
         98.19
1998-99
          64.79
           36.66
       101.45
1999-2000
          66.63
           45.27
       111.90
2000-2001
          71.48
           52.54
       124.02
2001-2002
          77.05
           63.39
       140.44
2002-2003
          82.83
           69.18
       152.01
2003-2004
          90.48
           91.60
       182.08
2004-2005
          92.26
         120.13
       212.39
2005-2006
        108.82
         165.02
       273.84
2006-2007
        133.08
         199.54
       332.62
2007-2008
        147.43
         241.60
       389.03
2008-2009
        169.59
         290.92
       460.51
2009-2010
        172.80
         292.70
       465.50


MAIN APPAREL ITEMS EXPORTED FROM BANGLADESH
(Value in Million US$)
Year
Shirts
Trousers
Jackets
T-Shirt
Sweater
1993-94
805.34
80.56
126.85
225.90
….
1994-95
791.20
101.23
146.83
232.24
….
1995-96
807.66
112.02
171.73
366.36
70.41
1996-97
759.57
230.98
309.21
391.21
196.60
1997-98
961.13
333.28
467.19
388.50
296.29
1998-99
1,043.11
394.85
393.44
471.88
271.70
1999-2000 
1,021.17
484.06
439.77
563.58
325.07
2000-2001
1,073.59
656.33
573.74
597.42
476.87
2001-2002
871.21
636.61
412.34
546.28
517.83
2002-2003
1,019.87
643.66
464.51
642.62
578.37
2003-2004
1,116.57
1,334.85
364.77
1,062.10
616.31
2004-2005
1,053.34
1,667.72
430.28
1,349.71
893.12
2005-2006 
1,056.69
2,165.25
389.52
1,781.51
1,044.01
2006-2007
943.44
2,201.32
1,005.06
2,208.90
1,248.09
2007-2008
915.60
2,512.74
1,181.52
2,765.56
1,474.09
2008-2009
1,000.16
3,007.29
1,299.74
3,065.86
1,858.62
2009-2010
993.41
3,035.35
1,350.43
3,145.52
1,795.39


Major Product Export from Bangladesh
(Value in Million US$)

Year 
Product 
Export
%
Chart
2008-09
RMG
12,347.77
79.33

Frozen Food
454.53
2.92
Tea 
12.29
0.08
Raw Jute 
148.17
0.95
Chemical Product
421.58
2.71
Jute Goods
373.18
2.40
Leather 
177.32
1.14
Agri Products
122.30
0.79
Others 
1,508.06
9.69
Total 
15,565.19
100.00




EXPORT DATA (WOVEN AND KNIT) CALENDER YEAR WISE
YEAR
Export of
Woven
(million US$)
Export of
Knitwear
(million US$)
Total Apparel
Export
(million US$)
Growth
Rate
(%)
1994
1,544.89
341.53
1,886.42
25.64
1995
1,976.4
512.18
2,488.58
31.92
1996
1,942.37
686.27
2,628.64
5.63
1997
2,621.33
810.49
3,431.82
30.55
1998
2,870.76
976.29
3,847.05
12.10
1999
2,987.73
1,169.90
4,157.63
8.07
2000
3,376.49
1,448.22
4,824.71
16.04
2001
3,162.28
1,432.72
4,595.00
(4.76)
2002
3,076.28
1,573.40
4,649.68
1.19
2003
3,398.84
1,850.36
5,249.20
12.89
2007
4,608.40
4,741.93
9,350.33
22.72
2008
5,655.50
6,223.42
11,878.92
31.24
2009
(Jan-April)
4,902.48
5,231.01
10,133.49
--


Comparative Export Performance of Bangladeshi Knit Products to Major Importing Countries:

Source: Export Promotion Bureau, Bangladesh.
Country
2007-2008
2006-2007
Growth

(in Million US$)
(in Million US$)
(%)
Germany
1245.07
1103.28
12.85
USA
807.28
762.39
5.89
France
639.55
475.86
34.40
UK
616.91
489.40
26.05
Spain
410.78
351.34
16.92
Italy
320.42
268.00
19.56
Canada
232.40
200.70
15.79
Netherlands
359.13
243.85
47.27
Belgium
183.59
163.60
12.22
Sweden
137.71
103.82
32.64

* FY = Financial Year (July-June )

TREND ANALYSIS OF BANGLADESH’S APPAREL MARKETS
Year
Export to USA
(as a % of total export)
Exports to EU
(as a % of total export)
Combine share
of USA and EU
export (%)
1991-92
49.14%
46.42%
95.56%
1992-93
48.72%
45.69%
94.41%
1993-94
38.08%
55.43%
93.51%
1994-95
45.15%
49.36%
94.51%
1995-96
39.33%
55.17%
94.50%
1996-97
41.49%
54.11%
95.60%
1997-98
44.23%
51.14%
95.35%
1998-99
43.24%
52.38%
95.62%
1999-2000
45.83%
49.93%
95.76%
2000-2001
45.24%
50.49%
95.73%
2001-2002
40.09%
52.72%
92.81%

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