Ready Made Garments Sohel

8/8/2019 Ready Made Garments Sohel

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Ready Made Garments

Revolution for an Efficient, Productive and Better Bangladesh

Submitted to:

Md. Gaji Salah UddinSenior LecturerInternational Trade &Business (ITB 301)

LecturerDepartment of Business Administration

Submitted by:

Saiful Islam SohelID: 2005-2-16-020

Department of Business Administration

Submission date:December 13, 2009


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Abstract

The success of readymade garment exports from Bangladesh over the past two decades has

surpassed the most optimistic expectations. The paper reviews the literature on this industry,

presents recent data on the sector's performance, and evaluates future trends in the

international and domestic clothing industry.

Acknowledgement

First thing first it has to be said that completion of this Term Paper was not a very easy task

for me. Its a very special thank from me to my instructor Mr. Gaji Salah Uddin for his ever

kind and intimate assistance and provided freedom for working on it.

The effort for this term paper will definitely strengthen my knowledge and sense about the

related field of ITB. I strongly believe that I will be able to utilize my knowledge and senses

in the practical field.

Such type of term paper, I may make some conceptual mistakes. I offer apology for any such

unexpected mistake if done.

Finally, I wish to mention that here I tried to follow the formal guidelines and it has been

casually written all through like usual term papers. It has been done willingly for its

uniqueness subject with its field of creative construction.


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Index

PART 1: Introduction -------------------------------------------- #04

1.1 Introduction1.2 Objective # 041.3 Methodology # 041.4 Limitations # 05

PART 2: Current scenario --------------------------------------- # 06

2.1. An overview of ready made garments of Bangladesh # 06

2.2. Market Access Issues # 07

2.3. Exporters of ready made Garment products; World perspective # 07

2.4. Foreign Demand # 08

Part Three: Prospective Analysis ------------------------------------ # 12

3.1. Prospect of ready made garment industry in Bangladesh # 12

3.2 Current scenario of garment industry in Bangladesh # 16

Part Four: Analysis ------------------------------------------------------ # 19

4.1. SWOT Analysis # 19

4.2. The Future of Garment Exports and the Economy of Bangladesh # 22

Part Five: Conclusion------------------------------------------------------- # 24


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Part One: Introduction

1.1 Introduction

The tremendous success of readymade garment exports from Bangladesh over the last two

decades has surpassed the most optimistic expectations. Today the apparel export sector is a

multi-billion-dollar manufacturing and export industry in the country. The overall impact of

the readymade garment exports is certainly one of the most significant social and economic

developments in contemporary Bangladesh. With over one and a half million women

workers employed in semi-skilled and skilled jobs producing clothing for exports, the

development of the apparel export industry has had far-reaching implications for the society

and economy of Bangladesh.

1.2 Objective:

I have tried to show that how much the garments sectors contributed for the betterment of

Bangladesh. We earn more than half of the total revenue by exporting RMG products to

different countries all over the world. It can be said that the Garments sectors have brought

about the revolutionary change for Bangladesh

1.3 Methodology:

In order to supplement my theoretical knowledge regarding ready made garments with the

field practical exposure, I contacted different buying houses and collected data regarding real

life scenario. I make an over view with their income and the necessary conceptualapplication.

I also tried to follow my concern course contents and necessary related materials to utilize for

an effective term paper.

1.4 Limitations


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First of all, the time duration I had for this particular term paper was not appropriate. In fact I

faced little bit difficulties to collect the information regarding this particular term paper.

There were limited surveys and analysis for the development might have been the other

drawback of this report.


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Part Two: Current Scenario

2.1. An overview of ready made garments of Bangladesh

For Bangladesh, the readymade garment export industry has been the proverbial goose that

lays the golden eggs for over fifteen years now. The sector now dominates the modern

economy in export earnings, secondary impact and employment generated. The events in

1998 serve to highlight the vulnerability of this industry to both internal and external shocks

on the demand and supply side. Given the dominance of the sector in the overall modern

economy of Bangladesh, this vulnerability should be a matter of some concern to the

policymakers in Bangladesh. Although in gross terms the sectors contributions to the

countrys export earnings is around 74 percent, in net terms the share would be much less

partially because the backward linkages in textile have been slow to develop. The

dependence on a single sector, no matter how resilient or sturdy that sector is, is a matter of

policy concern. We believe the policymakers in Bangladesh should work to reduce this

dependence by moving quickly to develop the other export industries using the lessons

learned from the success of apparel exports. Support for the apparel sector should not be

reduced. In fact, another way to reduce the vulnerability is to diversify the product and the

market mix. It is heartening to observe that the knit products are rapidly gaining share in

overall garment exports as these products are sold in quota-free markets and reflect the

strength of Bangladeshi producers in the fully competitive global apparel markets.

Preliminary data and informal evidence indicate that this sector seems to have weathered the

devastating floods relatively well. The floods did create a crisis for the tightly scheduled

export industry, but to its credit the firms responded swiftly and creatively to the unexpected

dislocation and transportation disruptions. The industry is one hundred percent export-

oriented and therefore insulated from domestic demand shocks; however, it remains

vulnerable to domestic supply shocks and the smooth functioning of the banking,

transportation and other forward and backward linkage sectors of the economy. The Dhaka-

Chittagong road remains the main transportation link connecting the production units, mostly

situated in and around Dhaka and the port in Chittagong, where the raw material and the

finished products are shipped in and out. Despite increased dependence on air transportation,

trucks remain the main vehicles for transporting raw materials and finished products for

Bangladesh garment exports.

2.2. Market Access Issues:


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a.Cheap labor cost: Compared to other countries Bangladesh got the advantage of cheap

labor that facilitated this particular industry to access in the global market. As it is cheaper to

purchase raw materials needed to procure the finished goods that results in the ultimate

products to be less costly.

b. Infrastructure: as this particular industry has been successfully running for two decades,

the related industries have grown quite strongly to make a supportive environment. As a

result Bangladesh has a favorable infrastructure for the garment industry to grow.

C. Government restriction: government plays an important role to grow this industry by

relaxing government taxes and other restrictions to encourage the business to invest and get

an access in the garment industry.

d.Labor insensitivity: as a labor intensive country Bangladesh naturally gets advantage in

manufacturing labor oriented products.

2.3. Exporters of ready made Garment products; World perspective:

Along side Bangladesh, there are quite a few countries exporting ready made garments

currently to meet up the world demand. Bangladesh is enjoying a healthy position as the

market leader in this sector with its comparative advantage of low cost labor resource. But

china and India are coming up creating threat for the Bangladesh. Since 2001 with the context

of open market and trade system this field has opened up with a challenge for the exporters to

grab more and more market share. Hong Kong, Vietnam and Srilanka are the other Asian

countries seek to get a chance of export.

Recently, news had emanated of the Bangladesh garment industry overtaking India, in

exports of apparels to the biggest market in the world; USA. More and more worldwide

clothing buyers are heading towards the shores of Bangladesh, since it is able to manufacture

apparels, competitive in pricing, than most other countries in Asia.


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From August 2008 onwards, the exports from the RMG sector from Bangladesh have grown

by a remarkable 10 percent, while that of India fell by 3 percent. The biggest advantage

Bangladesh clothing manufacturers have vis--vis Indian manufacturers are the disparity in

wages given to workers, due to which the sector in Bangladesh holds an edge.

2.4. Foreign Demand:

Demand for Bangladeshi garments in Sweden is growing gradually as the consumers, facing

hardship following the financial downturn in Europe; prefer cheaper goods, businessmen

said.

Now-a-days consumers look for cheap garments. Since the Bangladeshi products are

cheaper than that of other countries like China, they prefer that, Ms. Halen Agervi, a

manager of the H&Ms showroom in Stockholm told the FE.

Though the flow of customers has recently shrunk due to the financial dip, those who come to

the shops usually prefer cheap garments, she said.

The Swedish H&M (Hennes & Mauritz AB), Europes second largest buyer of Bangladeshi

garments, imports apparel from different countries including China, Mauritius and Turkey for

selling those to more than 1000 H&M retail shops in 34 countries across the globe.

Bangladesh has so far this year supplied some 120 million pieces of knit products worth

about $300 million and 50 million pieces of woven worth about $250 million to the H&M,

said Iqbal Khan, a senior executive of the H&M Dhaka office.

Due to financial meltdown our headquarters has asked us to offer fewer prices to the

suppliers. But the volume of orders to Bangladesh will not lessen, Mr. Khan who was

visiting their Stockholm headquarters told the FE.

H&M pays US$2.5 per unit to the Bangladeshi knitwear products and $4.5 per unit for the

woven goods on an average.

The orders from the H&M are increasing day by day even during this global recession,

Amal Poddar, Managing Director of Metro Knitting and Dying Ltd, a major knitwear

supplier to the Swedish company told the FE Friday.


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As the developed world is facing the financial meltdown, they prefer Bangladeshi products

for its competitive price than products from China and Turkey, he added.

Mr. Poddar said Bangladesh is slowly nudging China as the preferred choice for medium-to-

low priced ready-made garments in European markets.

And recession in the wealthiest countries would hasten that process, as the top retailers

would desperately hunt for factories, which can offer bargain prices, he said.

The H&M have been giving a lot of orders of knit garments especially sweater for acute cold

weather in the Scandinavian countries, Mr. Poddar who supplies about 2 million pieces of

garments per month to H&M said.

I dont think that our supply volume to the European market will shrink. The H&M has

recently shown us that it had a target of 150 per cent business growth during 2008-2013. The

projection has made us more bullish, he said.

Chinese apparels were occupying the H&M retail shops in Stockholm before the global

recession. But after the plunge, the consumers now prefer low-valued apparel. It has made a

room for the Bangladeshi products again, said Nahid Hossain, a Bangladeshi born Swedish

citizen.

H&M Dhaka offices Iqbal Khan said they are bullish about Bangladesh as they see the

countrys shipments gain on cheap labor and declining Chinese competitiveness despite its

major markets are on the brink of recession.

Amal Poddar said: Bangladesh is the third largest supplier of H&M at this moment. I think it

will be able to occupy first position within 2-3 years as our supply volume to the company is

growing every month. He said some 32 per cent of Bangladeshi exportable knit products are

imported by the Swedish company H&M.

The US and the EU are the major destinations of Bangladeshi garment exports, accounting

for some 90 per cent of the countrys US$10.7 billion garment shipments last year.


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Table 2.2: Top Five European Destinations for Bangladesh Apparel (July 1997- May 1998)

RANK COUNTRIES VALUE

(Millions,$)

1 Germany 434.77

2 United Kingdom 343.893 France 305.724 Netherlands 183.635 Italy 195.82

Source: Export Promotion Bureaus (EPB)

Table 2.1. Apparel Exports to Major Markets (1997 - 1998)

TOTAL APPAREL EXPORT IN MILLION US$

WOVEN KNIT TOTAL % OF TOTAL

COUNTRY

USA 1,443.21 228.69 1,671.90 44.21%

CANADA 66.89 27.88 94.77 2.51%

AUSTRIA 12.13 5.84 17.97 0.48%

BELGIUM 78.91 60.37 139.28 3.68%

DENMARK 16.69 23.81 40.50 1.07%

FINLAND 9.55 4.23 13.78 0.36%

FRANCE 206.78 137.43 344.21 9.10%

GERMANY 352.78 130.09 482.87 12.77%

GREECE 2.40 1.41 3.81 0.10%IRELAND 5.17 3.30 8.47 0.22%

ITALY 171.42 46.11 217.53 5.75%

NETHERLANDS 127.94 75.47 203.41 5.38%

PORTUGAL 1.97 0.83 2.80 0.07%

SPAIN 32.26 10.75 43.01 1.14%

SWEDEN 31.34 14.63 45.97 1.22%

UK 226.33 144.78 371.11 9.81%

OTHERS 58.66 21.89 80.55 2.13%

TOTAL 2,844.43 937.51 3,781.94 100.00%Source: Export Promotion Bureaus (EPB)


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Part Three: Prospective Analysis

3.1. Prospect of ready made garment industry in Bangladesh:

The apparel exporters of two neighboring countries- Bangladesh and India-have worries of

divergent nature.

Bangladesh apparel exporters are worried that their export orders have been on the decline for

a number of domestic and external reasons. Their counterparts in neighboring India are

anguished that Bangladesh is set to beat them in garment exports in the wake of an

appreciating rupee.

Bangladeshi exporters blame internal political disturbances, reduced demand in their key

markets-the USA and the European Union countries-for the decline in export growth inrecent months.

The Indian apparel manufacturers and exporters, it seems, are ashamed of the fact despite

having sufficient backup of raw materials they are lagging behind their Bangladeshi

counterparts, who are largely dependent on imported fabrics and other raw materials-- in the

international market. A recent Indian newspaper report quoted a number of apparel sector

leaders expressing their frustration over the rise of the Bangladesh apparel sector.

But the fact remains that with its low cost of labor and sufficient back-up support of raw

materials, including fabrics, apparel exporters of India-- a regional economic superpower--

should have competed with China rather than grumbling about RMG export performance by

a poor neighbor like Bangladesh.

The Indian apparel exporters must have forgotten the issue of value addition while becoming

jealous of the success of the Bangladesh RMG. The average value addition in case of woven

garment exports by Bangladesh still remains as low as 30 per cent and the same for knitwear

exports hovers around 60 to 70 per cent. Since Indian exporters do not have to depend on

imported raw materials, the value addition of their exports should be nearly 100 per cent.


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Table 3.1. ExportMarkets forBangladesh Apparels

YEAR

EXPORTS TOTHE U.S.

(millions, $)

U.S.MARKETSHARE(%)

EUROPEANUNIONSHARE(%)

CANADAANDOTHERS(%)

1991-1992 581.1 49.14 46.62 4.231992-1993 703.96 48.71 46.46 4.821993-1994 592.46 38.08 55.96 5.95

1994-1995 1006.08 45.07 49.67 5.081995-1996 1001.68 39.33 54.12 6.561996-1997 1245.14 41.49 54.11 2.11997-1998 1494.02 43.6 51.26 5.14

Source: BangladeshExports PromotionBureau (EPB)RDTI Cell ofBangladesh GarmentManufacturers and

Exporters Association(BGMEA)Our own calculationsof monthly averagesand growth factors

There is another dark side of such unnecessary moaning by the Indian RMG exporters: It,

rightly or wrongly, lends credence to widespread suspicion that the neighbors are involved in

conspiracy to cause damage to the emerging Bangladesh garment sector. Such suspicion had

become quite strong during a persistent campaign against Bangladesh RMG in the name of

child labor, the recent workers unrest in the garment sector and the buyers' insistence on so-

called compliance issues.

The socio-economic conditions in many Indian cities are almost similar to that of Bangladesh

cities where most garment units are located. It is highly unlikely that the working conditions


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or involvement of child labor in many RMG units have been very different from that of many

Bangladeshi RMG units. But has anyone ever heard a word or seen a report in the

international electronic and print media or deep concern among US trade union bodies about

the situation in apparel units in India?

However, Indian apparel exporters should have reasons to be happy to learn that the

Bangladesh RMG sector, which proved many doomsday preachers wrong following the total

phase-out of the multi-fiber arrangement (MFA) from January 1 2005 and recorded

impressive export growth, has for the first time in many years had a poor export performance

in recent months.

The country's apparel exports recorded a 31.28 per cent growth in the period between the

months of July and September of the just concluded financial year. But the average growth at

the end of May last stood at only 16.45 per cent.

Industry sources have claimed that export orders in recent months have declined by about 30

per cent. Many buyers had withdrawn from Bangladesh markets during political troubles in

the last months of 2006 and placed their import orders with apparel manufacturers in China,

the world's largest exporter of textile products having control over 70 per cent of the huge US

market, and Vietnam, an emerging apparel exporter. The Indian business leaders do need to

explore the reasons for buyers not going to India in large numbers. The appreciating rupee

may not be the only reason for that.

The political troubles that started from the month of October last took a heavy tool on

industrial production and exports. The Bangladesh exporters, who have invented their own

way of running their business operations amidst frequent shutdowns or blockades, also had

become helpless in the face of complete halt of operations at the Chittagong port, enforced by

the then opposition political activists led by mayor of Chittagong City Corporation ABM

Mohiuddin Chowdhury.

That disruption was followed by a slower demand from the buyers in the USA and the EU

countries. The intensity of cold being less than previous years during the last winter in most

EU countries, the demand for knitwear dropped this time. And in case of the USA, the


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consumers decided to spend less because of the rising oil prices.

The RMG exporters view these developments as temporary and are hopeful about their

exports picking up again in coming months. But the researchers on RMG markets are seeing

some ominous signs on the horizon. They feel that the buyers, who had withdrawn from the

Bangladesh and gone to other markets, may not come back again.

However, the exporters, it seems, would have to keep their finger crossed for a major

turnaround in demand for apparels in the developed markets.

The political troubles have proved more damaging to exports than any other factor. If the

same returns to the street-nobody, however, want that-the RMG exporters would find it really

hard even to keep their existing buyers satisfied.


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3.2 Current scenario of garment industry in Bangladesh

In a recent exclusive interview given to fiber 2fashion, Mr Surinder Anand, Executive

Secretary of Garment Exporters Association, listing out the advantages the Bangladesh

exporters have over India, had said, First and foremost is the lower manufacturing cost due

to cheap labor and simplified labor laws.

Going further, economies of scale because of bigger and larger manufacturing units;

availability of fabric at competitive rates, simplified procedures, labor laws are more flexible

and conducive and last but not the least full support and blessings of their Government, while

Indian conditions are discouraging to entrepreneurs, he added by saying.

Even in these recessionary periods, most of the garment companies had been humming with

winter clothing orders and except for may be a slight dip in orders; the Bangladeshi clothing

manufacturers are comfortably placed versus their Asian counterparts and could be among

the few countries that could be looking at a flat or marginal negative growth rate in 2009.

According to the statistics released by the Bangladesh Export Promotion Bureau, most of the

sub-sectors like woven and knitted garment have crossed their targeted figures in the period

July- December 2009. Knitted and woven garments grew by 2.16 and 2.45 percent

respectively, textile fabrics by 8.16 percent and terry towels by 10.96 percent.


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Table 3.2.: Apparel Exports from Bangladesh in Value and Volume

YEAR TOTAL APPAREL

EXPORT (Millions of$)

TOTAL APPAREL EXPORT

(Thousands of dozens)

WOVEN KNIT TOTALGrowthinMonthlyTotals

WOVEN KNIT TOTALGrowth inMonthlyTotals

T

otal

Mo

nthly

Tot

al

Mont

hly

Total Mon

thly

To

tal

Mo

nthly

Total

Mo

nthly

Total

Mo

nthly1992-93

1,240.48

103.37

204.54

17.05

1,445.02

120.42

36,053.88

3,004.49

10,663.56

888.63

46,717.44

3,893.12

1993-94

1,291.65

107.64

264.14

22.01

1,555.79

129.65

7.67%

34,351.00

2,862.58

10,815.00

901.25

45,166.00

3,763.83

-3.32%

1994-95

1,835.09

152.92

393.26

32.77

2,228.35

185.70

43.23%

47,210.00

3,934.17

15,301.90

1,275.16

62,511.90

5,209.33

38.40%

1995-96

1,948.81

162.40

598.32

49.86

2,547.13

212.26

14.31%

48,820.04

4,068.34

23,185.45

1,932.12

72,005.49

6,000.46

15.19%

1996-

97

2,237

.95

186.

50

763.

30

63.6

1

3,001

.25

250.

10

17.8

3%

53,45

0.33

4,454

.19

27,53

6.07

2,294

.67

80,986

.40

6,748

.87

12.47

%1997-98

2,844.43

237.04

937.51

78.13

3,781.94

315.16

26.01%

65,590.00

5,465.83

32,604.37

2,717.03

98,194.37

8,182.86

21.25%

1998-99(JULY-AUGUST)

561.54

280.77

177.21

88.61

738.75

369.38

17.20%

12,186.00

6,093.00

6,464.00

3,232.00

18,650.00

9,325.00

13.96%

Source: Bangladesh Exports

Promotion Bureau (EPB)RDTI Cell of Bangladesh GarmentManufacturers and Exporters Association(BGMEA)Our own calculations ofmonthly averages and growthfactors

Table 3.3. Major Items of Apparel Exportedfrom Bangladesh


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(Millions of $)

YEAR SHIRT T-SHIRT TROUSER S

JACKET SWEATER

TotalMonthlyAverage

Total

MonthlyAverage

TotalMonthlyAverage

Total

MonthlyAverage

TotalMonthlyAverage

1993-94

805.34

67.11

225.90

18.83

80.56 6.71 126.85

10.57 0.00 0.00

1994-95

791.20

65.93

232.24

19.35

101.23

8.44 146.83

12.24 0.00 0.00

1995-96

807.66

67.31

366.36

30.53

112.02

9.34 171.73

14.31 70.41 5.87

1996-

97

759.5

7

63.3

0

391.

21

32.6

0

230.9

8

19.2

5

309.

21

25.77 196.6

0

16.38

1997-98

961.13

80.09

388.50

32.38

333.28

27.77

467.19

38.93 296.29

24.69

1998-99(JUL-AUG)

201.12

100.56

49.05

24.53

60.51 30.26

105.25

52.63 81.61 40.81

Source: Bangladesh ExportsPromotion Bureau (EPB)RDTI Cell of Bangladesh Garment

Manufacturers and Exporters Association(BGMEA)Our own calculations of monthly averages andgrowth factors


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Part Four: Analysis

4.1. SWOT Analysis

SWOT analysis stands for Strength, weakness, opportunities and threats respectively.

Here based on our observation we try to find out some aspects of SWOT analysis for the

ready made garment industry in Bangladesh.

4.1.1 Strength

Considerable Qualified/keen to learn workforce available at low labour charges.

The recommended minimum average wages (which include Travelling

Allowance, House Rent, Medical Allowance, Maternity Benefit, Festival Bonus

and Overtime Benefit) in the units within the Bangladesh Export Processing

Zones (BEPZ) are given as below; on the other hand, outside the BEPZ the wages

are about 40% lower:

Energy at low price

Easily accessible infrastructure like sea road, railroad, river and air

communication

Accessibility of fundamental infrastructure, which is about 3 decade old, mainly

established by the Korean, Taiwanese and Hong Kong Chinese industrialists.

FDI is legally permitted

Moderately open Economy, particularly in the Export Promotion Zones

GSP under EBA (Everything But Arms) for Least Developed Country applicable

(Duty free to EU)

Improved GSP advantages under Regional Cumulative

Looking forward to Duty Free Excess to US, talks are on, and appear to be on

hopeful track

Investment assured under Foreign Private Investment (Promotion and Protection)

Act, 1980 which secures all foreign investments in Bangladesh

OPIC's (Overseas Private Investment Corporation, USA) insurance and finance

agendas operable


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Bangladesh is a member of Multilateral Investment Guarantee Agency (MIGA)

under which protection and safety measures are available

Adjudication service of the International Centre for the Settlement of Investment

Dispute (ICSID) offered

Excellent Tele-communications network of E-mail, Internet, Fax, ISD, NWD &

Cellular services

Weakness of currency against dollar and the condition will persist to help

exporters

Bank interest@ 7% for financing exports

Convenience of duty free custom bonded w/house

Readiness of new units to enhance systems and create infrastructure accordant

with product growth and fast reactions to circumstances

4.1.2. Weakness

Lack of marketing tactics

The country is deficient in creativity

Absence of easily on-hand middle management

A small number of manufacturing methods

Low acquiescence: there is an international pressure group to compel the local

producers and the government to implement social acquiescence. The US GSP

may be cancelled and purchasing from US & EU may decrease significantly

M/c advancement is necessary. The machinery required to assess add on a

garment or increase competence are missing in most industries.

Lack of training organizations for industrial workers, supervisors and managers.

Autocratic approach of nearly all the investors

Fewer process units for textiles and garments

Sluggish backward or forward blending procedure

Incompetent ports, entry/exit complicated and loading/unloading takes much time

Speed money culture


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Time-consuming custom clearance

Unreliable dependability regarding Delivery/QA/Product knowledge

Communication gap created by incomplete knowledge of English

Subject to natural calamities

4.1.3. Opportunity

EU is willing to establish industry in a big way as an option to china particularly

for knits, including sweaters

Bangladesh is included in the Least Developed Countries with which US is

committed to enhance export trade

Sweaters are very economical even with china and is the prospect for Bangladesh

If skilled technicians are available to instruct, prearranged garment is an option

because labor and energy cost are inexpensive.

Foundation garments for Ladies for the FDI promise is significant because both,

the technicians and highly developed machinery are essential for better

competence and output

Japan to be observed, as conventionally they purchase handloom textiles, home

furniture and garments. This section can be encouraged and expanded with

continued progress in quality

4.1.4. Threat

The exporters have to prepare themselves to harvest the advantages offered by the

opportunities.


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4.2. The Future of Garment Exports and the Economy of Bangladesh

Growth in overall exports from Bangladesh peaked in 1994-1995 at 40 percent a year, but

growth has remained strong. In the July 1997-February 1998 period, total export

earnings equaled $3.3 billion or 16.4% above the exports over the same period in the

previous year.1 The garment and knitwear exports accounted for the bulk of these

exports. The knitwear sector especially has been highly dynamic in recent years. Given

the fact that this market is outside the purview of MFA and not protected by quotas, this

bodes well for the post MFA future of the industry. Bangladesh apparel exports can now

point to a proven track record of successfully competing in a non-protected global

competitive environment. Unfortunately, other potentially promising exports from

Bangladesh such as leather, jute goods, and frozen foods have not fared as well over this

period. This has accentuated the already narrow export base of the country and is

certainly a matter of concern. The excess dependence on foreign exchange earnings and

export growth on garments and knitwear calls for policy attempts to diversify the export

base of Bangladesh.

What can be said about the future performance of the apparel export industry in

Bangladesh? What are the downside risks for apparel exports from Bangladesh?

Focusing on the most recent disaster, the debilitating floods of 1998 that shaved off

several percentage points from the expected GDP growth this year, we have ignored

another major crisis the industry seems to have weathered very well. We refer to the East

Asian economic debacle of 1997-1998. The financial panic and the following economic

meltdown that afflicted scores of dynamic economies neighboring Bangladesh -

Malaysia, Indonesia, Thailand, Philippine and South Korea- certainly have been a

restraining element in the economic performance of this sector.

What are the links between the East Asian economies and garment exports from

Bangladesh? There are several avenues by which negative economic shocks from these

emerging economies have impacted Bangladesh. First, several of these nations are also

big apparel exporters to the same markets where Bangladesh sells its apparels. The steep


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depreciation in their currency has made them more competitive, especially in the quota-

free apparel markets. Even in the markets protected by quotas, this would be a

deflationary force pulling down the unit prices and the profit margins for Bangladesh

exporters. Second, using the time-tested formula, most of these economies are trying to

export themselves out of their severe recessions. This has greatly increased competition

for Bangladesh exports. Third, to assist them in their time of need, the U.S. and other

developed nations have already relaxed quota restrictions on exports from the worst

affected economies, making the playing field less level for Bangladeshi exporters.

Fourth, prior to this crisis some of these nations were potentially big investors in

Bangladesh in the textile and infrastructure projects. Their economic troubles have

meant a dramatic scaling back in their direct investments in Bangladesh.


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Part Five: Conclusion

Conclusion:

At the starting verge of the twenty first century it is not possible for a country to move

ahead grabbing the agriculture based economy. Garment industry in Bangladesh has

helped Bangladesh to take it through and has been contributing significantly for the

sustainable development. It has created employment for the young women in Bangladesh

with the world of hope to be independent. Bangladesh can secure even a far better

situation utilizing its advantage of low labor cost to capture more markets across wide

world keeping its compotators behind. For that, government has to come forward to build

up a stronger infrastructure and communication.


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References :

www.alibaba.comwww.tradeindia.comwww.countryinformation.org

http://www.unescap.org/tid/publication/aptir2456_haider.pdf
http://www.alibaba.com/http://www.tradeindia.com/http://www.countryinformation.org/http://www.countryinformation.org/http://www.unescap.org/tid/publication/aptir2456_haider.pdfhttp://www.alibaba.com/http://www.tradeindia.com/http://www.countryinformation.org/http://www.unescap.org/tid/publication/aptir2456_haider.pdf

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