Report

On
RMG Sector of
Bangladesh

Prepared For:-
Engineer tamim jahan

Prepared By
Tanmoy chowdhury antu
Batch: FMP -4

Pearl Fashion Institute,

Bangladesh.
Introduction

In this report briefly discuss about RMG sector of Bangladesh which is content by about RMG,
Economic impact, Worker and at the end there are conclusion about RMG.

The ready-made garment (RMG) industry is huge economical supported sector in Bangladesh.
The economy of Bangladesh is largely dependent on agriculture. However, in recent years, the
Ready –Made Garments (RMG) sector has emerged as the biggest earner of foreign currency.
The RMG sector has experienced an exponential growth since the 1980s. The sector contributes
significantly to the GDP. It also provides employment to around 4.2 million Bangladeshis. An
overwhelming number of workers in this sector are women. This has affected the social status of
many women coming from low income families.
About (Ready Made Garments) RMG of Bangladesh

The ready-made garment industry in Bangladesh is not the outgrowth of traditional economic
activities but emerged from economic opportunities perceived by the private sector in the late
1970s. Frustrated by quotas imposed by importing nations, such as the United States,
entrepreneurs and managers from other Asian countries set up factories in Bangladesh, benefiting
from even lower labor costs than in their home countries, which offset the additional costs of
importing all materials to Bangladesh. Bangladesh-origin products met quality standards of
customers in North America and Western Europe, and prices were satisfactory. Business
flourished right from the start; many owners made back their entire capital investment within a
year or two and thereafter continued to realize great profits. Some 85 percent of Bangladeshi
production was sold to North American customers, and virtually overnight Bangladesh became
become the sixth largest supplier to the North American market.

After foreign businesses began building a ready-made garment industry, Bangladeshi capitalists
appeared, and a veritable rush of them began to organize companies in Dhaka, Chittagong, and
smaller towns, where basic garments--men's and boys' cotton shirts, women's and girls' blouses,
shorts, and baby clothes--were cut and assembled, packed, and shipped to customers overseas
(mostly in the United States). With virtually no government regulation, the number of firms
proliferated; no definitive count was available, but there were probably more than 400 firms by
1985, when the boom was peaking.

After just a few years, the ready-made garment industry employed more than 200,000 people.
According to some estimates, about 80 percent were women, never previously in the industrial
work force. Many of them were woefully underpaid and worked under harsh conditions. The net
benefit to the Bangladeshi economy was only a fraction of export receipts, since virtually all
materials used in garment manufacture were imported; practically all the value added in
Bangladesh was from labor.

Source: (BANGLADESH, Oct 25 2008, 12:11 AM EDT www.bengaliwiki.com/page/Ready-

made+Garments)

The RMG industry is the only multi-billion-dollar manufacturing and export industry in
Bangladesh. Whereas the industry contributed only 0.001 per cent to the country’s total export
earnings in 1976, its share increased to about 75 per cent of those earnings in 2005. Bangladesh
exported garments worth the equivalent of $6.9 billion in 2005, which was about 2.5 per cent of
the global total value ($276 billion) of garment exports. The country’s RMG industry grew by
more than 15 per cent per annum on average during the last 15 years. The foreign exchange
earnings and employment generation of the RMG sector have been increasing at double-digit
rates from year to year. Some important issues related to the RMG industry of Bangladesh are
noted in table 1.

Table 1: Important issues related to the Bangladesh ready-made garment industry

Year(s) Issue
1977-1980 Early period of growth
1982-1985 Boom days
1985 Imposition of quota restrictions
1990s Knitwear sector developed significantly
1993-1995 Child labour issue and its solution
2003 Withdrawal of Canadian quota restriction
2005 Phase-out of export-quota system

(Source: Compiled by the author from Quddus and Rashid (2000), Mainuddin
(2000) and databases of the Bangladesh Garment Manufacturers and Exporters Association, and
the Export Promotion Bureau, Bangladesh)

Currently, there are more than 4,000 RMG firms in Bangladesh. More than 95 per cent of those
firms are locally owned with the exception of a few foreign firms located in export processing
zones (Gonzales, 2002). The RMG firms are located mainly in three main cities: the capital city
Dhaka, the port city Chittagong and the industrial city
Narayangonj. Bangladesh RMG firms vary in size. Based on Bangladesh Garment Manufacturers
and Exporters Association (BGMEA) data, Mainuddin (2000) found that in 1997 more than 75
per cent of the firms employed a maximum of 400 employees each.
Garment companies in Bangladesh form formal or informal groups. The grouping helps to share
manufacturing activities, to diversify risks; horizontal as well as vertical coordination can be
easily found in such group activities.
(E.g. based on Quddus and Rashid (2000), Mainuddin (2000) and databases of the Bangladesh
Garment Manufacturers and Exporters Association, the Export Promotion Bureau of Bangladesh
and the World Trade Organization)
http://www.unescap.org/tid/publication/aptir2456_haider.pdf
BGMEA

Bangladesh Garment Manufacturers and Exporters Association (BGMEA)

Introduction:

The Bangladesh Garment Manufacturers and Exporters Association (BGMEA) is the apex trade
body that represents the export oriented woven knit and sweater garment manufacturers and
exporters of the country. Readymade Garment (RMG) is the leading sector of Bangladesh in
terms of employment, production and foreign exchange earnings. Readymade garment (RMG)
alone earned about 78% of the yearly foreign exchange earning of the country. About 3.5 million
people are employed in the garment - manufacturing sector. The growth rate of RMG export was
over 20% per over the last two decades. Total members number of BGMEA is 2915.

A Success Story of RMG Sector:

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 4825 in 2007-08 fiscal years. The growth of the industry
in terms of number of units and employment generation is shown in table - 1 below:

Table 1: Growth of the industry and Employment

Year Number of Garment Factories Employment in Million Workers

1983-84 134 0.040
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 1163 0.582
1992-93 1537 0.804
1993-94 1839 0.827
1994-95 2182 1.200
1995-96 2353 1.290
1996-97 2503 1.300
1997-98 2726 1.500
1998-99 2963 1.500
1999-2000 3200 1.600
 2000-2001 3480 1.800
2001-2002 3618 1.800
2002-2003 3760 2.000
2003-2004 3957 2.000
2004-2005 4107 2.000
2005-2006 4220 2.200
2006-2007 4490 2.400
2007-2008 4743 2.800
2008-2009 4825 3.100

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,
and 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.

Main Functions of BGMEA:

BGMEA is being run by a 27-member elected Board of Directors. Four Vice Presidents having
important portfolios, along with a secretariat of experienced officials, assists the Board in
formulating and executing vital policies and programs of the organization. The President is the
highest executive authority of the BGMEA.

The fundamental objective of BGMEA is to establish a healthy business environment for a close
and mutually beneficial relationship between the manufacturers, exporters and importers in the
process ensuring a steady growth in the foreign exchange earnings of the country. BGMEA
issues UD to its exporters thereby monitors export as well. BGMEA plays a very strong role to
lead the industry in concurrence with the government. The following are the regular activities of
BGMEA for its members, apparel buyers and other partners.

· To Protect and uphold the interest of the industry by aiding the formulation of government
policies consistent with a congenial growth of the sector.

· Committed to protect the interests of its members and their employees by implementing
 legitimate rights and privileges for garments workers.

· To negotiate and consult with foreign and local agencies to promote the garments sector in
every possible fields.

· To maintain liaisons with foreign buyers, business associations and chambers.

· To provide foreign buyers with all necessary information regarding all issues concerned
with the RMG sector.

· BGMEA brings the opportunities for local manufacturers to interact with foreign buyers
and form new rapport by arranging different apparel fairs at home and abroad.

· To keep the BGMEA factories child labor free through continued monitoring.

· Continue and expand collaboration with relevant Ministries of the Governments.

· Continue educational support to workers’ children and make a provision for skill training
for children removed from the BGMEA’s member factories.

· Provides information services to its members by publishing monthly newsletters, issuance

of circulars and through Dhaka's first B2B web portal which directly links exporters and
buyers around the world.

· BGMEA also established its own Institute called "BGMEA Institute of Fashion &
Technology (BIFT)" in 1999. Till the day BIFT is continuously developing professionals for
this sector through the courses of Fashion Designing and Garment Merchandising; and other
certificate, diploma and short courses. Transforming it into University is under process.

· Promotes computer oriented solutions for better management to its member units.

· Participates actively in all trade negotiations for the sector in order to get easier market
access and GSP benefits.

· BGMEA's appointed lobbyist firm has been working to get duty free access in the US
market. The New Partnership for Development Act (NPDA)of 2007 was introduced in the
US House of Representatives by Congressman McDermott and our lobbyist is working to get
the bill passed.

· BGMEA has introduced Service Books for each and every workers employed in the
factories.

· BGMEA is going to launch a workers welfare committee in the factories.

· BGMEA has ensured the minimum wage implementation to the tune of 99.49% of all
 factories.

· BMGEA has set up a Crisis Management Committee for emergencies.

· BGMEA regularly helps out the victims of natural calamity by providing relief,
rehabilitation and other support. BGMEA stood beside the SIDR affected people with huge
relief and support. BGMEA also rehabilitated 100 families by establishing a weaver's village
(Taath Palli) in Manikgonj.

· BGMEA provides scholarship to meritorious children of the garments workers. Each year
2000 students are getting the scholarships at Dhaka and Chittagong.

· BGMEA runs training programs through 27 Technical Training Centers and 3 other
centers with the objective of producing skilled workers for the RMG sector. More than 15000
trainees will be shaped up through this program and BGMEA will appoint them in the
factories. BGMEA has trained and employed 10,000 people till the date.

· BGMEA is in the process of taking over 34 vocational training centers to provide various
skill sets to the unemployed.

· BGMEA regularly conducts fire drills and fire safety program at the member factories.
Although 18 fire incidents took place in 2007 and 2008, there were no casualties.

· BGMEA runs 10 medical centers for its workers and provides HIV/AIDS awareness.
Around 4.5 million workers have already received medical treatment and 55,000 workers
have been made aware of HIV/AIDS and reproductive health.

· BGMEA is going to develop a central database system for the garment workers, which
will cover all workers' information of the readymade garment sector.

· BGMEA is going to start a UD automation system to speed up custom procedures. Such

online system will bring dynamism in a way that reduces lengthiness in custom procedures.

· BGMEA has distributed essential food items among workers at subsidized price during the
last Ramadan through 12 centers at Dhaka and Chittagong.

· A Memorandum of Understanding (MoU) has been signed between BGMEA and IFC-
SEDF on 17th June 2008 to monitor occupational safety and health status of the workers
employed in the member factories of BGMEA operating at Dhaka. Under this program all
the running factories at Dhaka have already been audited by the social compliance monitors
of BGMEA and a database in being prepared.
Mission
The BGMEA has a two-fold mission in its efforts to strengthen and promote the readymade
garments (RMG) sector and the economy of Bangladesh.

The primary mission objective of the BGMEA is to “Establish a healthy a business environment
for a close and mutually beneficial relationships among the manufacturers, exporters and
importers in the process ensuring a steady growth in the foreign exchange earnings of the
country”

The BGMEA secondary mission objective is to “Implement all legitimate rights and privileges
of garment workers regarding Health, Welfare and Safety”

The BGMEA also “stands to ensure child labour-free factories, women empowerment, gender
equality and other social standards” and “seeks to keep the environment clean and unaffected.”

Excellent standards in training and education in the RMG sector is also a long term goal of the
BGMEA.

Source: http://www.bgmea.com.bd/cafaxpo/bgmea2010.htm