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History of Development of RMG in Bangladesh

Present Global and Local Scenario of Textile and Apparel Business

Md. Arafat Hossain Lecturer Department Of Textile Engineering BGMEA University Of Fashion And Technology
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The RMG business started in Bangladesh in the 70s but it was then merely a casual effort. In 1981-82 the contribution of Woven garments in the total export was 1.10%. Within a decade the contribution of Woven to the export basket became 42.83% (1990-91) and the knitwear sectors contribution was 7.64% (19902 91).

History of Development of RMG in Bangladesh cont..

Advancements of RMG Sector in Bangladesh

Ready made Garments sector is a near self-sufficient sector in all respect. In Knitwear sector currently BKMEA members are supplying 90% of the knit fabric requirements of the sector. Local yarn suppliers provide around 75% of the total requirement of the sector.
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Now Knitwear has become the largest export earning sector of Bangladesh contributing 40.01% to national export earnings at the end of 2009-10 (July-June). At present, Bangladesh knitwear industry is the second largest supplier in the world.(iART report)
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Advancements of RMG Sector in Bangladesh

We have more than 250 composite factories; besides the composite units many garments have their own dyeing and finishing units. Bangladeshi garments are now exported to about 150 countries in the world. EU and the USA are the major importer.
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Advancements of RMG Sector in Bangladesh

Capacity is increasing at a good rate to cope with the future demand of this sector. Bangladesh provides labor forces unparallel in stitching capability and skill.

Advancements of RMG Sector in Bangladesh

However, the performance of knitwear is much better than woven in terms of domestic value addition and net retention. The domestic value addition is 75% for the knitwear sector while it is 26% for the woven. Now, the net retention rate for knitwear is 70% and for woven it is 25%.
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Woven Fabric & Knitted Fabric

Structural Difference:

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Woven & Knit

Spandex uses

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Dresses in Bangladesh

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Export Processing Zone (EPZ)

In order to stimulate rapid economic growth of the country, particularly through industrialization, the government has adopted an Open Door Policy to attract foreign investment to Bangladesh.

Export Processing Zone (EPZ)

Following this, EPZs have been created to provide complete infrastructural facilities including communication and utility connection where potential investors would find a pleasant investment climate. The Bangladesh Private Export Processing Act allows establishment in private EPZs entirely through foreign investment or through joint ventures or local initiative.
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Objectives of Export Processing Zones (EPZs)

Promotion of foreign (FDI) & local investment Diversification of export Dev. OF backward & forward linkages Generation of employment Transfer of technology Up gradation of skill Development of management

Export Processing Zone (EPZ)

Followings are the Eight which are in operation now: EPZs of Bangladesh

Dhaka EPZ, Chittagong EPZ, Comilla EPZ, Mongla EPZ, Ishwardi EPZ, Adamze EPZ Uttara EPZ (at Nilphamari) Karnaphuli EPZ
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Cost Of Some Key Production Factors In Textile Sector

Labor costs (compared to competitors)
Thailand India Srilanka Vietnam Indonesia Pakistan China Bangladesh USD 1.00/hour USD 0.60/hour USD 0.45/hour USD 0.40/hour

Cost Of Some Key Production Factors In Textile Sector

Energy cost in Bangladesh is lower compared to India and Pakistan

India
USD 0.40/hour USD 0.40/hour USD 0.35/hour USD 0.25/hour
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USD 0.095/KwH USD 0.080/KwH USD 0.070/KwH

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Pakistan Bangladesh

Export Trend in Bangladesh Apparel

Items wise Export Pie from Bangladesh (2010-11)

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Annual Export of Bangladesh Apparel

(Value in USD)

Knit vs Woven

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Knit vs Woven

Share (%) of Knitwear & Woven Garments in Total RMG Export

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Monthly knitwear export variation

Markets for Bangladeshi Apparel & Clothing

The EU and the USA are the major destinations of Bangladesh apparel products. For knitwear, the EU 27 Countries especially Germany, UK, Italy, France, Spain and Netherlands are the prime importers of Bangladesh. About 73% of Bangladesh knitwear export goes to the EU. The EU also source significant amount of Woven products from Bangladesh. On the other hand, the USA is the largest market for woven and second largest for knitwear items.
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Yearly RMG export (Destination wise)

Major exports 2010-11

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Country wise knitwear import, EU27

Country wise Woven wear import, EU27

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Country wise knitwear import, USA

Country wise Woven wear import, USA

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Where is knits?

Where is woven?
In Leisure wear and Formal wear

In Sports

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Knitwear Items Exported

Product wise Knitwear export to EU27

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Product wise Woven wear export to EU27

Product wise Knitwear export to USA

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Product wise Woven wear export to USA

Strength of Bangladesh Knitwear

Strong & Expanding Backward Linkage especially in Cotton items 90% of Domestic Supply Meet Total Fabric Requirement and 75% of the total Yarn Requirement. Easy and Abundant Access to Skilled Labor Force Flexible Labor Market Laws and Regulations Price Competitiveness Improved Product Diversification and Upgrading Meeting World Standard on Social Compliance Issues Pull of Courageous and Intelligent Entrepreneurs Export Friendly Policy, Govt. Support and Flexible Financial Market Continuous Effort for Image Building and Market Promotion

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Facts About Bangladesh Knitwear

Export Earnings : US$ 9.48 billion Export Quantity : 729.88 million Kg./Pcs World Exports : 148 Countries Average Growth : About 21% (Last 12 years) and 16.20% during recession (FY 2008-09) Highest Share in Garments Export : 52.93% Highest Share in National Export : 41.36%

Facts About Bangladesh Knitwear

Net Retention Value : US$ 6637.44 million Net Retention Rate : About 70% Domestic Value Addition : About 75% Export Concentration : EU 27 - 73%, USA 12% and Canada - 5% Employment Generation : Direct 1.2 million & Indirect 0.4 million, 70% represents women and World Knitwear Market Position : 2 largest after China 42

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