What Makes Bangladesh — A Hub of Garment Manufacturing?

Garment Manufacturing:- There’s no denying that Bangladesh has become a major garment manufacturing country over the past decade. Bangladesh has seen remarkable growth in the garment industry, and it now exports more garments to the United States than any other country: $4.3 billion worth of clothes in 2013 alone.

Bangladesh is the second-largest exporter of readymade garments globally, after China. The country’s apparel industry has grown at an annual rate of 20 percent. In this article, we explore how Bangladesh has become one of the most successful apparel industries in the world.

Bangladesh is the world’s second-largest Readymade Garment (RMG) exporter, just behind China. The country has 166 million people and employs more than 4 million workers in the RMG sector, earning $25 billion annually.

The textile and Apparel sector contributes around 20% to Bangladesh’s GDP, and it employs around 20 million people in the country and is the major driver of the economy. Furthermore, it is one of the largest employment sectors in Bangladesh.

Garment

Bangladesh will get a middle-income country status by 2021, and the RMG sector will play a major role in it. Starting from 2000, Bangladesh’s economy has grown by an average of 6%, which is considered the second-fastest growth in Asia. The annual growth rate of the garment sector was 8%, and it created a total export value of $19 billion.

Bangladesh has set itself a goal of exporting $50 billion worth of clothes by 2021, and it’s on the right track so far. Last financial year, FY18, the Bureau of Export Promotion (BEP) states that Bangladesh’s overall exports have grown by 5.81%, reaching $36.67 billion thanks to apparel exports. The garment exports have increased 8.76% as of this fiscal year, 1.51% higher than the set target.

Bangladesh’s RMG sector has many factors that attract global attention:

Quick Returns

Another factor is the quick return investors can get from this sector which is the only one in the country that gives them returns in 3 to 5 years. An additional benefit of the industry is that it is one of the biggest clothing exporters, giving rise to huge opportunities for future growth.

Labor Availability

Bangladesh has the world’s second-largest workforce. If Bangladesh continues to grow at its current rate, it will overtake India as the country with the largest number of working-age people by 2025.

While the average minimum wage in a country is typically higher than in Bangladesh, China, Cambodia, India and Vietnam have lower average wages.

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The Duty-free Advantage

Bangladesh has Least Developed Country status, a label given to countries with very low social, economic, and political development classified by the United Nations. Bangladesh is one of the world’s poorest countries, with a GDP per capita of less than $1,000. Despite its poverty, Bangladesh is making progress in improving its economy and has attracted large foreign direct investment.

Bangladesh enjoys duty-free access to around 52 countries, including countries in the EU, the USA, Australia, Switzerland, Japan, Turkey, Russia, Norway and New Zealand.

Bangladesh has also signed many trade deals offering Bangladesh exports a preferential treatment, like the SAARC Preferential Trading Arrangement, Asia-Pacific Trade Agreement, Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Co-operation, South Asian Free Trade Area, and the Trade Preferential System, among the OIC member states.

Garment
Bangladesh — A Hub of Garment

Technology Adoption

Bangladesh is a country that has undergone a lot of transformations. In recent years, the country has captured many global retail brands, and with the help of its compliance systems, Bangladesh has also seeped into the apparel manufacturing systems.

Bangladeshi manufacturers have built up excellent and previously unavailable (to China) vertical capacities, which help global brands to tackle transparency and coordination issues in their supply chains.

From this point on, the country has adopted the most sophisticated apparel manufacturing & management technologies to cater to its international customers. This has resulted in higher quality and compliance with technical requirements in Bangladesh’s RMG sector.

Future of Bangladesh’s RMG Sector

Bangladesh has been the world’s second-largest apparel exporter for the past three years. However, Bangladesh has three financial years left to match its annual apparel exports target of USD 50 Bn, and this requires the sector to grow at a war footing at a rate above 60%.

In 2016-17, the country’s growth was low due to low trade with America. The 2017 – 2018 season shows more promise, but the current trends make it difficult for Bangladesh to achieve the set target. However, it is not yet impossible.

What is holding Bangladesh Back?

After multiple incidents like Rana Plaza, Bangladesh came on the global radar for its labor practices and safety standards.

After the Rana Plaza tragedy, Bangladesh went on the radar for its labor practices and safety standards. The country has taken several measures to ensure occupational safety and health. However, it is still a developing country with many factories with outdated machinery, buildings in disrepair and proper fire exits.

I believe that Bangladesh has come a long way in its safety standards and factory regulations since then. They have managed to create many green factories and have met their standards.

What is still worrying experts in the industry is that garment workers are still being paid one of the world’s lowest minimum wages in the country.

The fashion industry has thrived in the west, but workers from third-world countries like Bangladesh have driven this prosperity. They’re struggling every day to survive above the poverty line.

The Road Ahead

In the last six months, Bangladesh has seen a significant increase in exports. It seems like hitting our USD 50 Bn target in the next three years is nigh impossible at first glance, but it’s not entirely impossible.

The favorable government policies and the global attention have accelerated the growth of this sector. Fast and consistent growth is expected to happen in the future. To facilitate the success of this process, it’s important to keep in mind that garment workers need to be brought along for the ride and their living standards improved. The government will have to take steps, which can include stricter regulation on garment monitoring and higher wages for these workers and a more holistic approach toward trade growth.

A technology advancement plan may also help. This is because they also focus on the skill development of the workers through regular training programs. The labor market in Bangladesh is poorly equipped to handle the rapidly changing needs of the garment manufacturing industry, which has led to a high turnover. This has caused wage stagnation, which hurts the investments and profitability of garment manufacturers.

The success of Bangladesh’s apparel industry, in the long run, depends on a holistic approach. Putting all the pieces together will help maintain sustainability.

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