Readymade Garments Industry In Bangladesh : A Critical Analysis

Abstract

The present paper is a comprehensive description of Readymade Garments (RMG) Industry of Bangladesh based on secondary data touching on issues which are important in the present state of affairs. Readymade Garments Industry of Bangladesh started at a slow pace in late 1970s and has now become a major contributor to the economy. The industry has been contributing to export earnings in terms of foreign exchange, employment creation, poverty alleviation and the empowerment of women in Bangladesh. The export-quota system and the availability of cheap labor are two main reasons behind the success of the industry. Currently there are about 5150 units of RMG factories in Bangladesh. This sector accounts for about 70% of the total export earnings and about 10% of the GDP of Bangladesh. It is making significant contribution to the economic development of our country which is growing at an average rate of 6.25% per annum (GDP Growth). At present our country earns about $18 billion by exporting ready-made garments products to other countries. In terms of exports we are now second in the world. We have not achieved this success overnight but some important comparative advantages helped us in this regard. At present we are competing with our neighboring countries like India and China. Though we are earning a large amount of foreign currency each year from this sector, the readymade garment sector is suffering from a number of problems. Problems include narrow line of product & lack of market diversification, uncertain investment situation, lack of skilled manpower at mid level, labor related problems & capacity problems etc. We must address these negative phenomenons by ensuring appropriate steps. We have strength in low wage rate structure for labor, quota advantage, and government and institutional support etc. The garment sector has provided employment opportunities to women from the rural areas who previously did not have any opportunity to be a part of the formal workforce. Almost 80% employed labor force in the RMG sector consist of women. This has given a large section of women in Bangladesh the chance to be financially independent and have a strong voice in the family. The present paper encompasses a detailed description of the development of RMG Industry in Bangladesh, particularly focusing on the major policy issues, which needs to be streamlined appropriately.