Sei sulla pagina 1di 4

In the year 2016 Bangladesh textile & clothing industry has faced many challenges,

including worker unrest, gas crisis etc. and of course positives were many as it could
continue to contribute to the country economy and global trade very significant. The
purpose of the report is to give a brief view to the readers about 2016’s overall scenario
of Bangladesh RMG industry.

Contribution to the GDP:

According to the IMF, Bangladesh’s economy is the second fastest growing major
economy of 2016 (Dec), with 7.11 percent Gross Domestic Product (GDP) growth rate
where the growth rate was 6.12 percent in 2015. Contribution of industry to the GDP was
28.1%, where RMG sector donate the biggest part. Since 2004, Bangladesh averaged a
GDP growth of 6.5%, which has been importantly driven by its exports of readymade
garments.

FDI trends:

According to classical and neo-classical economic theory, economic growth depends on


the supply of capital as well as the supply of labor and technology. Developing countries
like Bangladesh face capital shortages that put a limit on investment and therefore growth,
which can be balanced with an inflow of funds from foreign private or public sector
(Hussain & Haque, 2016). Foreign Direct Investment (FDI) is very important for economic
growth as well as textile industries enhancement.

Bangladesh’s textile and clothing sector secured a growth in achieving Foreign Direct
Investment (FDI) in the FY 2015-2016. According to the Bangladesh Bank statistics, in
this sector FDI successfully stood up at $396 million which is 11 percent higher than
previous fiscal year when it was $351.62 million.

In South Asia, Bangladesh got good growth of all countries except India, where inflows to
Pakistan and Sri Lanka turned down to $ 865 million and $ 681 million respectively, a
World Bank report said. However FDI inflows are not yet of that level where it could be
said that it has been one of the most preferred industries by the global investors.
Capital machinery import:

The country’s overall imports grew by 14.75 percent in the first four months of the current
FY 2016-17, where 83 percent increase in import of capital machinery is significant. It
could be said that the growth in import is mainly due to higher import of capital machinery
and industrial raw materials, according to Bangladesh Bank. Garment factories, which
are obligated to become compliant, are importing most of the capital machinery, in recent
times for complying with the requirements of Accord and Alliance. More than 4,000 woven
and knitwear garment factories are under pressure from their Western buyers to improve
their workplace safety to global standards by June 2018. For this reason, capital
machinery particularly in the safety equipment import is increasing year by year.

Worker unrest:

In 2016, the textile industry has observed some incidents where the workers have come
down in the street and making insurgence on their demand and tried to destruct public
properties. Operations of 55 factories were stopped for few days. More than 1,000
workers have been accused of instigation, trespassing, vandalism and theft in seven
cases started over the unrest so far. As a result, companies lost working-hours and
production targets. It also hampered export earnings and the image of the country to the
international markets. Some of the leaders of the Bangladesh Garment Manufacturers
and Exporters Association (BGMEA) attributed the decline in apparel exports to the latest
labor unrest. Export earnings of woven garment declined by 9.36 per cent in July-
December period of 2016.

Compliance:

Accord and Alliance started inspection to the garment factories after Rana Plaza and
Tazreen fashion fire incidents. Accord and Alliance inspection found less than 2% factory
risky to safety, while the global safety risk rate is about 4%, according to BGMEA
President Siddiqur. International buyers are very particular about compliance with codes
of conduct before placing any import order. In 2016, RMG factories achieved a great
success on it and the sector is going ahead in being more environments friendly.
Moreover, the top three performing environment-friendly LEED certified garment and
textile factories in the world are located in Bangladesh. BGMEA president recently said,
“Environment-friendly factories have been established in the country, meeting the best
compliance standards of the world. Now 150 factories are being prepared as green
factories. That will increase confidence of buyers in our clothing industries. It will expand
business as well.”

Export scenario:

Table 1: value of total apparel export- calendar year basis. (Source- BGMEA)

Year USD (million) YonY Growth (%)

2007 9350.33 4.67

2008 11878.92 27.04

2009 11890.49 0.10

2010 14854.6 24.93

2011 19214.47 29.35

2012 19788.14 2.99

2013 23500.98 18.76

2014 24583.96 4.61

2015 26602.7 8.21

2016 28668.29 7.76

Bangladesh garment industry has generated $28.67bn exports in the calendar year 2016
which is 7.76% higher than the previous calendar year. The export in the last fiscal year
2015-16 was $28.09bn with a 10.21% growth from the previous fiscal year, according to
Export Promotion Bureau data. Of the total figure of 2016 export, the knitwear constituted
$13.74bn and woven products $14.93bn.
Table 1 shows that Bangladesh RMG have been securing a consistent growth through
the decade. From 2007 to 2016 average yearly growth was 12.84% which shows strong
potential of the sector. The data also shows that growth has been slowed down through
last five years which was 8.47 percent average. And this was even greatly contributed by
the spectacular growth of the year 2013. As Bangladesh RMG is moving towards
achieving a target of reaching USD 50 billion by 2021 the country requires more growth
than it has been getting for last three years in particular. 2017 is to be a very crucial year
in that path. If the country can secure a growth around of 15% in this year, it may proceed
well achieving the goal.

In conclusion, RMG sector is growing though there is a little bit slow down in last three
years but it could be enhanced to take some steps by government and others stake
holders. If the country could help bringing more investments to the sector and a strong
positive reformation continues the sector would reach its expected growth. More
investment behind the human capital of the sector would be key for coming days. To
secure more value addition companies must invest behind human resource. If not full
RMG sector a portion of must be transformed into world class best performing ones.
Product and process diversity is the key along with productivity and performance
improvement. At the same time, building proper infra-structure throughout the country and
special look should be given to the livelihoods of the workers and staffs in and around
RMG factories.