nymul haque id 111-12-0026 (5).docx

Chapter One

Introduction

1.0 Introduction

1.1 Background of the Study

1.2 Objectives of the Study

1.3 Method of data collection

1.4 Scope of the study

1.5 Limitation of the study

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1.0 Introduction

Bangladesh is a developing country RMG play a vital role in our economy. It's contribution in

GDP 76%. Bangladesh has recently emerged as an important supplier of quality readymade

garments in the global market. Initially the market for this product was limited to a few west

European countries, which have been subsequently expanded to the U.S.A. Canada.

Scandinavian, Nordic, Middle East countries. It is a fact that increasing production and export

earnings of RMG hold the key to save the country from the present economic depression. The

sector has now occupied an important place in our national economy. 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.

1.1 Background of Study

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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.

This report may help one to know about the whole contribution of garments industry, different

types of garments product, whole L/C process and procedure, necessary documents for exporting

product, employment facilities in garments sectors and contribution in economy and how they

are processing garments activities.

1.2 Objectives of the study

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To know the export performance of Bangladesh garments in international

market;

To identify the difficulties and barriers faced in the international market;

To identify possible threats to the Bangladesh garments in the international

market in near future;

To identify the opportunities of the Bangladeshi garments that may be realized

in the international market.

To recommend the measurers needed to be taken for increasing the

export volume.

To know the current RMG export status of Bangladesh.

To analyze the recent labor unrest in the garment industry of Bangladesh.

1.3 Method of Data Collection

1. Primary Data: Basically this type of information is very much difficult to collect from

direct source, that’s why I have not used any primary date in the project work.

2. Secondary Data: Certainly I have used secondary data for preparing this project work.

Few sources of secondary data are as follows:

Publications obtained from different libraries and from internet

Export volume report

bangladeshgarments.info

Documents

BGMEA report

1.4 Scope of the Study

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Scope means how many uses for completing this report space. The scopes are given bellow-

Library work

Discussion

Internet

1.5 Limitations of the Study

From the beginning to end the study has became a challenge for me to prepare this report into a

presentable form. During the period of preparing this report I have to face some kinds of

problems such as-

Time limitation: The time allotted for doing the project work in not adequate; as this

type of project work requires minimum 1 years to be accomplished.

Lacking of adequate information in internet: It is very difficult to collect this type of

information through internet as they don’t want to expose their internal data.

Lacking of primary sources: For this kind of project work primary data collection is

somehow impossible.

Expenditure: This type of project work requires huge amount of expenditure but we are

not funded by any one rather we are bound to do this with own funding.

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Chapter Two

Performance of RMG in Bangladesh

2.1 Contribution of RMG in Bangladesh

2.2 Reason behind the growth of RMG in Bangladesh

2.3 Current export of RMG in Bangladesh

2.4 Export facilities of RMG industry

2.5 History of RMG industry in Bangladesh

2.6 Export activities of different garments association

2.1 Contribution of RMG in Bangladesh

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The readymade garments (RMG) industry of Bangladesh started in the last 1970s and became a

prominent player in the economy within a short period of time. The industry has contributed to

export earning, foreign exchange earnings, employment creation, poverty alleviation and the

empowerment of women. The export- quota system and the availability of cheap labor are the

two main reasons behind the success of the industry. Shirts, T-shirts, trousers, sweaters and

jackets are the main products manufactured and export by the European Union. The Ready Made

Garments (RMG) sector plays a pivotal role in the economy of Bangladesh. This sector accounts

for approximately 76% of the total export earning and nearly 10% of GDP.

2.1.1 Macro Contribution

The Bangladesh RMG industry, with its woven and knit sub-components, is a pre-dominantly

export oriented sector, with 95 per cent of the woven and 90 per cent of the knit exports being

directed to foreign markets. The cumulative foreign currency earnings by the sector, since 1978,

when first export was registered, is estimated at 36.6 billion dollars. Bangladesh’s RMG export

earning stood at 4.58 billion US dollars in FY2002. In 2002 this sector contributed 76.6% of the

total Bangladesh export of 5.9 billion dollars in the same year. RMG export in FY2002 was

equivalent to 9.5% of Bangladesh’s GDP over the corresponding year. At present the local value

addition by the RMG sector is estimated to be 45%. Accordingly, local value addition by the

sector in 2002 was about 2.1 billion US dollars which was equivalent to 4.3% of GDP for the

same year. The value addition created by the sector itself is estimated at 25% of total RMG

export earnings which amounted to about 1.2 billion dollars or equivalent to 2.4% of GDP.

Macro Contribution of RMG sector

RMG Earnings Amount(billion US$) As Percentage of GDPTotal RMG Exports 4.5 9.5Local Value Retention 2.1 4.4Direct Value-Addition by RMG Sector

1.2 2.4

Emergence of Knit-RMG

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The growth dynamics of the sector over the last decade evince two clearly discernible phases:

during the initial period it was the woven-RMG which dominated the structure of apparel exports,

whilst in recent years which could be termed as a second phase, it is the knit-RMG which

emerged as no less of an important segment in the RMG sector with its share growing up steadily

and local value retention fast approaching the level of woven-RMG.

Diversification

Within the apparels sector, Bangladesh has been able to accomplish product diversification.

RMG sector has been able to extend its product line from T-shirts, pajamas, ordinary shirts,

shorts, caps, women’s and children’s wear to shirts of complicated designs and jackets; and some

brand items have also emerged where the value was added to both the export earnings and the

local value retention.

2.1.2 Sectoral Contribution

Backward and Forward Linkages

Growth of RMG sector has spawned a whole new set of linkage industries and facilitated

expansion of many service sector activities. The RMG industry not only propelled the growth of

spinning, weaving, dyeing and finishing industries, production of accessories and spare parts, but

also rendered large externalities by contributing to other economic activities in such areas as

banking, insurance, real estate, packaging, hotels and tourism, recycling, consumer goods utility

services and transportation.

Banking and Insurance

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Growth of the RMG sector and the related activities has contributed a lot to the robust growth of

the financial sector in Bangladesh. In FY 2002 the banking sector earned about 37 million dollars

from business with the RMG sector in the form of interest and charges and L/C charges. More

than one-tenth of the commercial banks’ asset portfolio belongs to the RMG and textile sector in

the country. In FY 2001 commercial banks lent Taka 4400 crore to the textile sector, while the

amount lent to the woven-RMG sector was Taka 812 crore. The export financing business of the

commercial banks is largely dependent on the textile and RMG sectors. The RMG sector

received Taka 2175 crore as export-finance in FY 2001 which was 46.14% of the total export

financing portfolio of the banks. A World Bank survey revealed that almost all firms (98%) are

the clients of the commercial banks for working capital and procurement of machines and

equipment (57%). The RMG sector has also contributed to the growth of the country’s insurance

sector.

On average, every year the premium paid by the RMG sector to the insurance companies was

about 6 million dollars. All firms have their machines and plants insured and, additionally, 87%

of importers of input and 15% of the RMG exporters get their imports/exports insured.

Shipping and Logistics

The RMG sector has contributed to the shipping business in Bangladesh and stimulated setting

up of several container yards, expansion of port facilities to handle large container carrying

trains, increase of cargo handling and storage facilities. RMG manufacturers also extensively use

services of Clearing & Forwarding Agents for the purpose of customs clearance of inputs and

finished goods. It is estimated that port usage fees earned from the RMG sector account for more

than 40% of the income of the port authority. RMG sector contributed about US$65 million in

FY2002 to earnings of the Shipping business of the country by way of port charges, C&F

Agent’s commissions, freight charges, forwarding charges etc.

Transport Communication

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The growth and development of inland transport services to a considerable extent owe to the

growth of the RMG industry. Both wheel transport service and railway service are widely used

by RMG sector for activities related to manufacturing and cargo movement. The concept of

covered van emerged in Bangladesh for safe transportation of the RMG products in particular. In

2002 the inland transport industry received about 27.3 million dollars as revenue from the RMG

sector.

Contribution to Government Exchequer

The RMG sector contributes to the government exchequer both directly and indirectly. In FY

2002 the sector paid 6.3 million dollars as stamp and postage, license renewal fee etc. Payments

made for visa form, license form, GSP form and other forms to the Export Promotion Bureau

amounted to 58.85 million dollars in FY 2001. The sector also paid USD 2.4 million to the

government as direct taxes in FY 2002.

Professional Services

The RMG sector extensively uses professional services from CA firms, legal agencies, and

business consultants. In FY 2002 total payment for professional services is estimated at 3.61

million dollars.

Engineering Sector

The RMG industry paid 14.2 million dollars to the engineering sector which included payments

to repairing and maintenance service industry (USD 4.29 million), electrical engineering (USD

4.38 million), transport vehicle maintenance service ( USD 2.87 Million), and machine tools

service (USD 2.63 Million).

Utility Services

Payment of Electricity bill by the RMG industry is estimated to be 14.74 million dollars in

FY2002. Utility payments for gas, WASA etc. amounted to an additional 3.75 million dollars.

Information and Communication Technology

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The RMG sector also plays a catalytic role in the growth of the country’s ICT sector. The

services consumed by the RMG industry generated revenue for the ICT sector. Payments for ICT

services which include communication, hardware and software services are estimated at 9.88

million dollars in FY 2002.

Real Estate

Demand for real estate development by the garment industry to accommodate offices and

factories of over 3400 garment units has generated a lot of activities in the Construction Industry.

The RMG industries paid approximately 26.24 million dollars as factory, office and garage rent

in FY 2002.

Hotel and Tourism

About 1000-1500 overseas apparel buyers and their representatives visit Bangladesh every year

for business purpose. In FY2002 the RMG industry created a business of approximately 4.42

million dollars for the country’s tourism industry.

Waste Recycling Industry

Approximately 0.2 million people are engaged in waste (mainly, the waste out prices of fabrics)

recycling industry of the country which get their materials from the RMG industries. With these

waste materials, they are making stuff toys, patterns, quilts, cushions etc.

Emerging Consumer Market

The 1.6 million workers in the industry have created a large demand for consumer goods. A

regular source of earning increases the basic consumption needs such as improved diet, better

healthcare, improvements in family utensils and housing conditions etc. The sector has created

an increasing demand for consumption of low cost commodities, cosmetics items, dresses,

footwear, fast food and other products. A whole industry has been created to service this growing

demand and created employment opportunities for hundreds of thousands of people.

2.1.2 Contribution of the Knitwear in Bangladesh

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The RMG sector of Bangladesh contributed a lot in terms of employment generation,

involving women in the formal sector, increased substantial export earnings etc. One

significant aspect of the RMG's contribution is in human development aspect. The sector has

been contributing a lot in the following areas:

Women empowerment

Reduce Child Labor

Gender equality

Improved health & nutrition

Reduced child marriage

Reduced infant mortality

The sector's unique contribution is in the growth and development of backward linkage

industry of the country. Country's total backward linkage industry in the RMG sector has

flourished based on the knitwear industry. It is providing crucial impetus to the spinning,

fabric, and dyeing industry. A good number of printing factories are totally dependent on knit

sector as well.

2.1.4 Contribution in National Income

When the garment industries 1st started to export, the sector was not gain much attention but the situation has changed and at present it is earning the highest amount of foreign currencies in our country.

Major product export from Bangladesh

Year Product Export %RMGFrozen Food

1234777454.53

79.332.92

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2012-2013TeaRaw JuteChemical ProductJute Goods LeatherAgricultural productsOther

12.29148.17421.58373.18177.32122.3

1508.19

0.080.952.712.401.140.799.69

Total=15565.19 =100.00

Source: Export Promotion Bureau, Bangladesh (Value in Million us $)

Bangladesh Export by Major Product during 2012-13

2.2 Reason behind the growth of RMG in Bangladesh

The prime reason why garment industries have come out to be the champion in the cheap labor. Women contribution to the working force in these garment factories, as they are relatively cheapest them men.

Low cost labor: As Bangladesh is an over populated country it is very easy for the garment

industries to hire labors at a lower rate. At present the government of our country has announced

minimum wage to the garment worker’s but the industries can still earn a handsome amount of

profit by exporting their product, although it is still low

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Class Existing wage Announce wage Increase in %Grade- 1 5,140.00 9,300.00 80.93%

Grade- 2 3,840.00 7,200.00 87.50%Grade- 3 2,449.00 4,120.00 68.23%Grade- 4 2,200.10 3,763.00 67.24%Grade- 5 2,046.00 3,455.00 68.87%Grade- 6 1,851.00 3,210.00 73.47%Grade- 7 1,662.00 3,000.00 80.45%

Apprentice 1,200.00 2,500.00 108.33%

Source: Ministry of labor and Employment, Bangladesh, July 26, 2010.

Export-quota system

The export quota system in trading garment products played a significant role in the success of

the industry. However, that quota system came to an end in 2004. Therefore, the competitiveness

issuer needs to be addressed, with special attention given to the long-term sustainability of the

industry. Unilateral restriction, short-term arrangement(STA), long- term arrangement (LTA),

Multi-fiber arrangement(MFA) and finally the WTO agreement and Textiles and clothing (ATC)

are the chronological steps through which the “export-quota system was administered Unit it was

finally abolished an 31 December 2004, making worldwide textile and garments trade quota-free.

Easy communication

It is very easy industries to collect raw materials from other countries and they can easily export

their produced goods to the other countries.

Government support

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Government is supporting directly and indirectly the industries and monitors their activities so that they can perform properly. Government reduces tariff and supply production factors like electricity and water to them.

Product Tree

Bangladesh exports about 63 items to different apparel markets. Readymade garments

manufactured in Bangladesh are divided mainly into two broad categories: woven and knit

products. Shirts, T-shirts and trousers are the main woven product and under garments, socks,

stockings, T – shirts, sweaters and other casual and soft garments are the main knit products.

Woven garment products will dominate the garment export earning of the knit country, the share

of knit garment products has been increasing since the early 1990s; such products currently

account for more than 40 per cent of the country is total RMG export earnings (BGMEAA

website) Main apparel items exported from Bangladesh in shown in the tree-diagram drawn

below:

2.3 Current export performance of RMG

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Readymade Garment

Woven

Trousers Shirts Jackets

Knitwear

T. Shirt Sweater Polo shirt

There is that old adage, don’t kill the golden goose. Why I compare Bangladesh garments sector

with the golden goose? The reason is the garment sector in Bangladesh has been giving for many

years. Bangladesh is the second largest exporter of readymade garment products trailing China

according to the McKinsey report (2011). Bangladesh’s garment exports during July-June 2012-

13 period climbed by about 12.7 percent to US$ 21.515 billion over exports of US$ 19.089

billion made during the corresponding period of 2011-12. In 2012-13, the top three export

destinations for Bangladesh garments were Europe, which accounted for US$ 12.56 billion,

followed by the US and Canada, which accounted for US$ 4.99 billion and US$ 980 million,

respectively. But now it has received bad news. Recent incidents like fire in the Tazreen

Fashions factory in November last year that killed more than 110 and the collapse of the Rana

Plaza garment factory building in April that killed over 1,100 people and more than 2,500 were

injured in the disaster. It may be the second biggest industrial accident in recent history.

As a result, The President Barack Obama-led US government in June suspended Bangladesh

from the Generalized System of Preferences (GSP), which allows duty-free entry of over 5000

goods to the US market from least developed countries. Now, RMG products (which make up

most of the US import from Bangladesh) are not included in the list of duty-free products in

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GSP, there will an export fall of about $40 million .At present, Bangladesh exports about $5

billion worth of goods (mostly RMG products) to the USA every year and hence, the suspension

from US GSP will account for a fall in export of about 0.8 %.

Losing the GSP facility will cost Bangladesh millions of dollars in taxes. It is also influence the

European Union to take similar action, which would have a much bigger impact on Bangladesh

and its garment sector. In August, Garment factory workers clashed demanding a Tk 8,000

minimum monthly wage. Many factories closed for clashing. The owners finally agreed to pay

Tk 5,300 as prescribed by a government-endorsed wage board on Nov 4.In November, 18,800

people lost their work for fire in Standard Group. The factory was among the ten biggest in the

country and it was the biggest supplier of Gap in Bangladesh. The loss to the firm could run into

more than US$100-million.In December, The European Parliament has threatened to withdraw

GSP, the duty and quota-free access to EU market that Bangladesh enjoys. The European Union

buys more than $12 billion in Bangladeshi garments each year, or roughly three-fifths of the

country’s production. If the EU were to withdraw or suspend the facility, the price per unit of

garment will rise and this may lead to many European buyers turning their backs on our

products. So, Bangladesh would suffer a huge setback. Due to the recent political unrest,

Bangladesh RMG sector losses in billions of taka every day. The blockades have put the garment

sector in a tight corner as exporters are counting losses from order cancellation and rising

transport costs.Buyers are cancelling orders as exporters fail to meet the lead time due to

transport crisis. Some buyers are also imposing penalties in case of delayed shipment, cutting

prices of garment products and transport costs have surged by around 30 percent due to

expensive air shipment. Many factories have halted production as they can’t bring imported raw

materials from ports.The BGMEA’s research and development team has collected three-day data

(December 1-3) from 10 exporters to assess the overall losses caused by the blockade.

Orders worth $3.96 lakh were cancelled during the period, while the exporters spent $3.08 lakh

on air shipment. Many small factory owners may go bankrupt due to failing shipment on time.

So that’s the trap: the golden goose is caught between a rock and a hard.

Membership & Employment

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Year Number of Garment Factories

Factory Growth Rate

Employment in Million Workers

Workers Growth Rate

1984-85 384 - 0.12 -1985-86 594 54.69 0.20 66.671986-87 629 5.89 0.28 40.001987-88 685 8.90 0.31 10.711988-89 725 5.84 0.32 3.231989-90 759 4.69 0.34 6.251990-91 834 9.88 0.40 17.651991-92 1163 39.45 0.58 45.001992-93 1537 32.16 0.80 37.931993-94 1839 19.65 0.83 3.751994-95 2182 18.65 1.20 44.581995-96 2353 7.84 1.29 7.501996-97 2503 6.37 1.30 0.78

1997-98 2726 8.91 1.50 15.381998-99 2963 8.69 1.50 0.001999-00 3200 8.00 1.60 6.67

2000-01 3480 8.75 1.80 12.50

2001-02 3618 3.97 1.80 0.002002-03 3760 3.92 2.00 11.11

2003-04 3957 5.24 2.00 0.002004-05 4107 3.79 2.00 0.002005-06 4220 2.75 2.20 10.00

2006-07 4490 6.40 2.40 9.092007-08 4743 5.63 2.80 16.67

2008-09 4925 1.73 3.50 10.71

2009-10 5063 2.80 3.60 2.87

2010-11 5150 1.72 3.60 0.002011-12 5400 4.85 4.00 11.112012-13 5600 3.70 4.00 0.00

Source: BGMEA

RMG Export & Total Export

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Year Export of RMG(In Million US$)

RMG Export (%)

Total Export of Bangladesh(in Million US$)

Total Export (%)

% of RMG’S To Total Export

1983-84 31.57 - 811.00 - 3.891984-85 116.2 - 934.43 - 12.441985-86 131.48 13.15 819.21 -12.33 16.05

1986-87 298.67 127.16 1076.61 31.42 27.741987-88 433.92 45.28 1231.2 14.36 35.241988-89 471.09 8.57 291.56 4.90 36.471989-90 624.16 32.49 923.70 48.94 32.451990-91 866.82 38.88 717.55 -10.72 50.471991-92 1182.57 36.43 993.90 16.09 59.311992-93 1445.02 22.19 382.89 19.51 60.64

1993-94 1555.79 7.67 2533.90 6.34 61.401994-95 2228.35 43.23 472.56 37.04 64.171995-96 2547.13 14.31 882.42 11.80 65.611996-97 3001.25 17.83 418.28 13.80 67.93

1997-98 3781.94 26.01 161.20 16.81 73.28

1998-99 4019.98 6.29 5312.86 2.94 75.671999-00 4349.41 8.19 752.20 8.27 75.612000-01 4859.83 11.74 6467.30 12.43 75.142001-02 4583.75 -5.68 986.09 -7.44 76.572002-03 4912.09 7.16 6548.44 9.39 75.01

2003-04 5686.09 15.76 602.99 16.10 74.792004-05 6417.67 12.87 8654.52 13.83 74.152005-06 7900.80 23.11 10526.16 21.63 75.06

2006-07 9211.23 16.59 12177.86 15.69 75.642007-08 10699.80 16.16 14110.80 15.87 75.832008-09 12347.77 15.40 15565.19 10.31 79.33

2009-10 12496.72 1.21 16204.65 4.11 77.122010-11 17914.46 43.35 22924.38 41.47 78.152011-12 19089.69 6.56 24287.66 5.95 78.602012-13 21515.7 12.71 27018.26 11.24 79.632013-2014 24491.88 - 30186.62 - 81.13

Source: BGMEA

Bangladesh's RMG Export to World (FY 11-12, FY12-13 & FY13-14 )Million US$ Woven Knit Total

Major EU 2011-12 2012-13 2013-14 2011-12 2012-13 2013-14 2011-12 2012-13 2013-14

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CountriesAustria 17.50 23.07 25.33 34.49 29.26 31.81 51.99 52.33 57.15

Belgium 238.61 248.61 335.29 320.46 317.19 440.63 559.07 565.80 775.92

Bulgaria 0.54 0.20 0.10 0.68 0.92 0.82 1.23 1.13 0.91

Denmark 86.80 125.91 145.24 318.72 375.62 450.71 405.51 501.52 595.94

Finland 7.85 10.81 10.07 29.25 25.55 26.10 37.10 36.36 36.18

France 416.72 498.00 579.52 855.18 892.45 964.27 1271.90 1390.44 1543.79

Germany 1,358.92 1,509.79 1,803.85 2039.97 2,168.49 2,573.70 3398.89 3678.28 4377.55

Greece 8.14 4.14 5.59 21.17 12.77 14.16 29.31 16.91 19.76

Italy 291.15 358.26 447.23 571.46 554.94 731.91 862.62 913.20 1179.14

Ireland 63.03 67.51 68.36 123.92 133.44 149.87 186.95 200.95 218.24

Netherlands 226.76 252.99 294.52 325.28 331.48 385.48 552.04 584.47 680.00

Portugal 6.68 6.43 9.98 25.57 22.91 32.53 32.25 29.33 42.51

Romania 4.30 3.23 3.39 7.62 5.66 6.07 11.93 8.89 9.47

Spain 410.39 515.33 651.29 660.73 702.90 856.28 1071.12 1218.23 1507.56

Sweden 109.07 125.88 120.39 203.87 220.50 244.07 312.94 346.37 364.46

U.K. 1,026.77 1,189.09 1,262.79 1103.30 1,259.84 1,335.25 2130.07 2448.93 2598.04

Cyprus 0.08 0.05 0.15 1.11 1.12 2.38 1.18 1.17 2.53

Czech Republic 37.99

39.38 66.65

25.77

32.92 43.69

63.75 72.30 110.33

Estonia 0.74 1.08 0.26 2.52 2.14 1.29 3.26 3.21 1.55

Hungary 0.21 0.11 0.71 2.14 3.88 8.71 2.34 3.99 9.41

Latvia 0.29 0.12 0.50 1.22 1.90 2.05 1.51 2.01 2.56

Lithuania 0.18 0.28 0.00 0.98 1.94 0.82 1.16 2.23 0.82

Malta 0.02 0.02 0.79 0.45 0.80 1.70 0.47 0.82 2.49

Poland 112.77 159.73 204.57 209.96 240.79 304.99 322.74 400.52 509.57

Slovakia 20.31 30.25 30.19 36.54 40.54 43.60 56.85 70.79 73.79

Slovenia 1.04 3.60 6.16 6.33 11.05 19.57 7.37 14.65 25.73

Sub-Total (EU) 4446.87 5173.86 6072.91 6928.69 7390.99 8672.47 11375.56 12564.85 14745.39

EU % of World 46.31 46.87 48.81 73.04 70.55 71.97 59.59 58.40 60.21

Growth% 23.18 16.35 17.38 0.27 6.67 17.34 8.13 10.45 17.35

USA 3515.45 3,865.68 3,943.52 1013.95 1,130.90 1,197.85 4529.40 4996.58 5141.38

% of USA 36.61 35.02 31.70 10.69 10.80 9.94 23.73 23.22 20.99

Growth% 0.27 9.96 2.01 -9.39 11.53 5.92 -2.07 10.31 2.90

Canada 473.04 518.29 556.87 401.82 461.97 445.10 874.85 980.26 1001.97

% of Canada 4.93 4.69 4.48 4.24 4.41 3.69 4.58 4.56 4.09

Growth% 2.44 9.57 7.44 -7.18 14.97 -3.65 -2.21 12.05 2.22

Non-Traditional Markets

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Australia 94.83 132.46 142.52 212.72 295.98 288.24 307.54 428.44 430.76

Brazil 50.45 56.50 72.54 77.33 115.33 97.70 127.78 171.84 170.24

Chile 5.57 7.17 10.31 11.36 21.13 22.70 16.93 28.31 33.01

China 57.83 86.55 142.08 46.69 52.59 99.29 104.52 139.14 241.37

India 42.20 60.87 76.44 12.82 14.34 19.81 55.02 75.21 96.25

Japan 239.99 280.17 318.92 163.65 198.31 253.35 403.65 478.48 572.27

Korea Rep. 61.27 73.66 77.63 18.75 40.73 57.96 80.01 114.39 135.60

Mexico 36.74 46.22 51.50 61.91 63.99 73.12 98.65 110.21 124.63

Russia 27.67 51.04 74.92 48.82 88.52 132.82 76.49 139.55 207.74

South Africa 29.31

30.46 26.18

26.45

27.19 22.38

55.76 57.66 48.55

Turkey 231.20 263.39 440.41 124.73 151.92 181.96 355.93 415.31 622.37

Other Countries 290.92 393.51 435.30 336.68 421.99 485.06 627.60 815.5 920.36

Sub-Total (Non-

Trade.) 1167.98 1482.01 1868.77 1141.90 1492.03 1734.38 2309.88 2974.04 3603.15

% of Non-Traditional 12.16 13.42 15.02 12.04 14.24 14.39 12.10 13.82 14.71

% Growth of Non-

Traditional 36.62 26.89 26.10 11.91 30.66 16.24 23.17 28.75 21.15

GRAND TOTAL 9603.34 11039.85 12442.07 9486.35 10475.88 12049.81 19089.69 21515.73 24491.88

% Growth 13.88 14.96 12.70 0.05 10.43 15.02 6.56 12.71 13.83

Source: EPB, Compiled by: RDTI Cell, BGMEA

Export Performance of RMG of Bangladesh for 2012-13, 2013-14 & 2014-15 in Million US ($) Monthly Growth Rate Compared to Last Year (%) Monthly Growth Rate Compared to Last Year (%) Monthly Growth Rate Compared to Last Year (%)

Export Performance of RMG of Bangladesh for 2012-13 in Million US ($)

Export of RMG in FY 12-13 (in Million USD)Monthly Growth Rate Compared to Last Year (%)

Year Month Knit Woven Total Month Knit Woven Total

2012

July 1001.07 993.84 1994.91 July -0.68 +11.92 +5.22

August 792.53 765.85 1558.38 August -24.70 -12.03 -18.96

September 746.32 697.17 1443.40 September +43.72 +46.49 +45.04

October 873.16 761.48 1634.64 October +9.68 +8.05 +8.92

November 653.96 710.04 1364.00 November +5.18 +13.26 +9.24

December 908.93 1042.68 1951.62 December +14.44 +17.06 +15.83

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2013

January 944.96 1147.64 2092.60 January +22.17 +23.29 +22.78

February 811.24 979.71 1790.71 February +10.81 +12.19 +11.56

March 854.68 991.77 1846.45 March +22.24 +17.01 +19.38

April 795.00 835.17 1630.28 April +13.80 +15.72 +14.77

May 1008.37 997.72 2006.09 May +15.11 +15.13 +15.12

June 1085.63 1116.78 2202.41 June +18.59 +23.20 +20.88

Total FY 12-13 10,475.88 11,039.85 21,515.73 Total FY 12-13 +10.43 +14.96 +12.71

Share in National Export 38.77% 40.86% 79.63%


Export of RMG in FY 13-14 (in Million USD)Monthly Growth Rate Compared to Last Year (%)


2013

July 1253.76 1262.38 2516.14 July +25.24 +27.02 +26.12

August 848.15 796.05 1644.2 August +7.01 +3.94 +5.50

September 1058.29 985.26 2043.55 September +41.82 +41.32 +41.57

October 862.01 820.49 1682.50 October -1.28 +7.75 +2.93

November 877.61 889.35 1766.96 November +34.20 +25.25 +29.54

December 1048.87 1229.98 2278.85 December +15.40 +17.96 +16.77

2014

January 1045.83 1195.20 2241.03 January +10.67 +4.14 +7.09

February 915.76 1049.64 1965.40 February +12.88 +7.14 +9.74

March 920.69 993.37 1914.06 March +7.72 +0.16 +3.66

April 972.38 944.95 1917.33 April +22.30 +13.14 +17.61

May 1115.73 1092.26 2207.99 May +10.65 +9.48 +10.06

June 1130.74 1183.14 2313.88 June +4.16 +5.94 +5.06

Total FY 2013-2014 12,049.81 12,442.07 24,491.88Total FY 2013-2014

+15.02 +12.70 +13.83



Export of RMG in FY 14-15 (Jul-Oct) (in Million USD)Monthly Growth Rate Compared to Last Year (%) (Jul-Oct)


2014 July 1307.90 1210.08 2517.98 July +4.32 -4.14 +0.07

August 898.44 815.34 1713.78 August +5.93 +2.42 +4.23

September 1064.12 937.29 2001.41 September +0.55 -4.87 -2.06

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October 787.96 731.53 1519.49 October -8.59 -10.84 -9.69

November November

December December

2015

Total FY 2013-2014 (Jul-Oct)

4,058.42 3,694.24 7,752.66Total FY 2013-2014 (Jul-Oct)

+0.90 -4.40 -1.70


Source: Export Promotion Bureau, BangladeshExport Performance of RMG over Government's Strategic Target for 2013-14

Product Target (million USD) 2014-15Performance Over Target 2014-15 (Jul-

Oct)

Knitwear 13,215.61 4,058.42

Woven 13,681.77 3,694.24

Region wise Export Performance FY 2011-12 & 2012-13

Region 2012-13 2013-14

EU 7306.28 8682.25

USA & Canada 1592.87 1642.96

European Free Trade Association 125.98 133.89

Latin American Integration Association 216.81 216.22

Emerging Markets 937.81 1134.54

Others 296.13 239.95

2.4 Export Facilities for RMG Industry

Steps will be taken to shorten the ‘lead time’ for export of readymade garments by means

of development of port management, simplification, of goods unloading, resolving the

electricity problem and similar activities.

Initiatives will be taken to establish ‘textile village’ in more than one place with adequate

infrastructural and utility-related facilities.

Steps will be taken to establish waste water treatment plants in textile villages.

Establishment of backward and forward linkage industries will be encouraged.

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Emphasis will be given on product diversification by improving the skills of workers and

staff and by providing information and technology of the product markets to the

entrepreneurs.

In order to increase the productivity of the worker and staff of the textile industry, and to

diversify products, initiatives will be taken to provide trainings of different tenures to the

workers and staff.

2.5 History of RMG Industry in Bangladesh

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In the 1950s, labors in the Western World became highly organized; forming trade unions. This

and other changes provided workers greater rights including higher pay; which resulted in higher

cost of production. Retailers started searching for places where the cost of production was

cheaper. Developing economies like Hong Kong, Taiwan and South Korea presented themselves

as good destinations for relocations because they had open economic policies and had non-

unionized and highly disciplined labor force that could produce high quality products at much

cheaper costs. In order to control the level of imported RMG products from developing countries

into developed countries, Multi Fiber Agreement (MFA) was made in 1974. The MFA

agreement imposed an export rate 6 percent increase every year from a developing country to a

developed country.It also allowed developed countries to impose quotas on countries that

exported at a higher rate than the bilateral agreements. In the face of such restrictions, producers

started searching for countries that were outside the umbrella of quotas and had cheap labor. This

is when Bangladesh started receiving investment in the RMG sector. In the early 1980s, some

Bangladeshis received free training from Korean Daewoo Company. After these workers came

back to Bangladesh, many of them broke ties with the factory they were working for and started

their own factories. The hundred percent export-oriented RMG industry experienced phenomenal

growth during the last 15 or so years. In 1978, there were only 9 export-oriented garment

manufacturing units, which generated export earnings of hardly one million dollar. Some of

these units were very small and produced garments for both domestic and export markets. Four

such small and old units were Reaz Garments, Paris Garments, Jewel Garments and Baishakhi

Garments. Reaz Garments, the pioneer, was established in 1960 as a small tailoring outfit, named

Reaz Store in Dhaka. It served only domestic markets for about 15 years. In 1973 it changed its

name to M/s Reaz Garments Ltd. and expanded its operations into export market by selling

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http://2.bp.blogspot.com/-thPtjBk1SFU/TyDtEDSxciI/AAAAAAAAAGo/ysR8VFZTais/s1600/20110404-bgmeabuilding-400.jpg

10,000 pieces of men's shirts worth French Franc 13 million to a Paris-based firm in 1978. It was

the first direct exporter of garments from Bangladesh. Desh Garments Ltd, the first non-equity

joint-venture in the garment industry was established in 1979. Desh had technical and marketing

collaboration with Daewoo Corporation of South Korea. It was also the first hundred percent

export-oriented company. It had about 120 operators including 3 women trained in South Korea,

and with these trained workers it started its production in early 1980. Another South Korean

Firm, Youngones Corporation formed the first equity joint- venture garment factory with a

Bangladeshi firm, Trexim Ltd. in 1980. Bangladeshi partners contributed 51% of the equity of

the new firm, named Youngones Bangladesh. It exported its first consignment of padded and

non-padded jackets to Sweden in December 1980. Within a short period, Bangladeshi

entrepreneurs got familiar with the world apparel markets and marketing.

They acquired the expertise of mobilizing resources to export-oriented RMG

industries. Foreign buyers found Bangladesh an increasingly attractive

sourcing place. To take advantage of this cheap source, foreign buyers

extended, in many cases, suppliers' credit under special arrangements. In

some cases, local banks provided part of the equity capital. The problem of

working capital was greatly solved with the introduction of back-to-back

letter of credit, which also facilitated import of quality fabric, the basic raw

material of the industry. The government assigned high priority to the

development of RMG industry. Till the end of 1982, there were only 47

garment manufacturing units. The breakthrough occurred in 1984-85, when

the number of garment factories increased to 587. The number of RMG

factories shot up to around 2,900 in 1999. Bangladesh is now one of the 12

largest apparel exporters of the world, the sixth largest supplier in the US

market and the fifth largest supplier of T-shirts in the EU market. The

industry has grown during the 1990s roughly at the rate of 22%. In the past,

until 1980,jute and jute goods topped the list of merchandises exported from

Bangladesh and contributed more than 50% of the total export earnings. By

late 1980s, RMG exports replaced jute and jute goods and became the

number one in terms of exports. The history of the Readymade Garments

Sector in Bangladesh is a fairly recent one. Nonetheless it is a rich and varied

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tale. The recent struggle to realize Workers' Rights adds an important

episode to the story.

2.6 Export activities of different Garments associations

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 4.0 million people are employed in the garment sector. The growth rate of RMG export

was over 20% per over the last two decades.

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 5700 in

2011-12 fiscal years. Out of 4.0 million manpower employed in BGMEA member factories,

3.20 million are women (80%), 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.

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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 2000. 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.

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Participate actively in all trade negotiations for the sector in order to get easier market

access and GSP benefits.

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 99.99% of all

factories.

BMGEA has set up a Crisis Management Committee for emergencies.

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 15,000 people till the date.

BGMEA regularly conducts fire drills and fire safety program at the member factories.

Although 9 fire incidents took place in 2010, there were no casualties.

BGMEA is going to develop a central database system for the garment workers, which

will cover all workers' information of the readymade garment sector.

BTMA: Bangladesh Textile Mills association (BTMA) is the national trade organization of

Primary Textile Industry i.e. Yarn Manufacturing, Fabric Manufacturing and Dyeing-Printing-

Finishing mills of the country under private sector. BTMA is registered in 1983.

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Organ gram of BTMA:

Function and Activities of BTMA:

Objectives

1. To promote and protect the trade, commerce and manufacturers of Bangladesh in general

and of the textile related trade in particular.

2. To collect and circulate statistics and to collect, classify and circulate information relating

to the trade, commerce and manufactures of its members.

3. To take all steps which may be necessary for promoting, supporting or opposing

legislative and other measures affecting the trade, commerce or manufactures of its

members.

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4. To make representations to the appropriate authorities on any matter connected with the

trade, commerce and manufactures of its members.

5. To advance and promote commercial and technical education connected with the trade

and commerce of its members

Regional Activities

SAARC Chamber of Commerce and Industry organized the 3rd SBLC regional cooperation. A

catalyst for socio-economic growth in South Asia was held in Sri-Lanka between SBLC is a

prestigious event of SAARC CCI. Head of the government of the Socialist Republic of Sri-

Lanka, leading politician

1. Prominent speakers, scholars and elite corporate leaders from SAARC region addressed

on trade, investment, social security, HRM, Environment protection etc.. The third SBLC

focused mainly on the following issues:

2. Global financial crisis and its impact on South Asia.

3. Addressing food crisis through enhanced investment in agriculture.

4. Interactive dialogue between business leaders and triumphant entrepreneurs.

5. Trade facilitation: A fosterer of regional integration.

6. Trade in services: Prospects and challenges for regional integration.

7. Climate change & depleting water resources: emerging priority concerns for South Asia.

8. Culture and Tourism: A fosterer of socio-cultural interactions.

9. Creating synergies in the area of enhanced regional cooperation.

BKMEA:

BKMEA established in 1996 as a national trade body to represent solely the knitwear sector of

Bangladesh. BKMEA’ mission is to promote & enhance knitwear sector’s competitiveness,

productivity & profitability in the global market through support services to members, capacity

building of the sector & networking with all stakeholders. Starting with a minimum membership

base, now it is an association of more than 1600 knitwear manufacturers that represents the

largest export earning sector of the country.

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Chapter Three

Process of Operation

3.1Yarn Manufacturing Process

3.2 Fabrics Manufacturers

3.3 Fabric Dyeing and Finishing Unit:

3.4 Production flowchart

3.5 Garments Quality control flow chart

3.6 Garments Planning:

3.7 Benefit of team in garments:

3.8 Control

3.9 Prepare a garments budget:

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3.1 Yarn Manufacturing Process

Textile mills purchase cotton and receive the bales from gin yards or cotton warehouses. These

mills start with raw bales of cotton and process them in stage until they produce yarn (fibers

twisted into threads used in weaving or knitting) or cloth (fabric or material constructed from

weaving or knitting).

The first stage is in the opening room. Here, bales are opened and laid in a line on the floor, side

by side, near a cotton opening machine. This machine travels along the line of opened bales,

puling fibers to be sent to a mixing machine and them on to the carding system.

Carding is the process of pulling the fibers into parallel alignment to form a thin web. High speed

electronic equipment with wire toothed rollers performs this task. The web of fibers is eventually

condensed into a continues, untwisted, rope-like strand called a silver. These silvers then

continue to a combing machine. Here, the fibers shorter than half-inch and impurities are

removed from the cotton.

This process makes the silver smoother so more uniform yarns can be produced. The drawing or

pulling of this sliver is next. Cotton trivia khaki is derived from a Hindu word that means “dust

color”. Originally, khaki referred to a dull yellow-brown cotton or wool uniform fabric used for

its camouflage effect.

The sliver is drawn out to a thinner strand and given a slight twist to improve strength, and then

wound on bobbins (spools wound with the thread like product for storage). Having completed

this process. It is now called roving. The roving bobbins are now ready for the spinning process.

Spinning is the last process in yarn manufacturing. Today’s mills draw and twist the roving into

yearn and place it on bobbins. They do this quite efficiently. A large, modern mill can produce

enough yarn of thread in 30 days to wrap around the earth 23000 times or go to and return from

the moon 235 times. With the use of automatic winding, the yarn bobbins are transferred to large

bobbins called cheese cones can be stored until they are needed in the weaving process.

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The weaving process uses yarn that, depending on how it lies in the woven goods. This yarn may

now be either a warp or a weft yam. Warp refers to yarns that run lengthwise in woven goods. In

preparation of warp yarns for weaving, hundreds of yarn strands are wound from cheese cones

onto a large warp beam. Yearns on this beam are then coated with a sizing compound (a starch

mixture) to add strength for weaving. The sized yarns are then wound onto a loom beam that will

be placed on the loom (a machine used to interlace yarns to from cloth). Weft is the yarn that

runs crosswise in woven goods and may be referred to as filling yarn. Sizing is not placed on

weft because flexibility is needed in the weaving process. In today’s most modern mills, the weft

is fed into the loom from cheese cones with air-jets at such a high speed that its movement

cannot be seen.

The woven cloth from the loom, called greign or grey, is whitish but has a natural yellow tint.

This cloth is further treated by various means to improve its appearance and feel, and then either

bleached, dyed or printed to produce the fabrics used in various products seen on store shelves.

There are three basic weaves that are used. The plain weave, the most common, is produced by

passing the weft yarn over and under each warp yarn, alternating each row. This is used for

cotton print cloth, sheeting, muslin and more. The twill weave is produced by interlacing yarns in

an angle to form straight, diagonal ridges across the fabric. The satin weave, has a surface that

consists mostly or warp yarn which is passed over and under all but one weft yarn that intersects

in a regular or irregular formatting, not a straight line.

This weave produces a fabric with a smooth surface. It is used for upholstery, home decorating

and fashionable apparel.

Knitting is another method of turning yarn into fabric. Knit fabric is constructed of yarns made

into loops (stitches) which are linked together by the use of needles. There are two basic types of

knitted fabric. The weft knit fabrics are made with yarns forming loops the width of the fabric on

a circular machine, producing jersey knit used in T-shirts and underwear. The warp knit fabrics

are produced by feeding yarns to form loops in a lengthwise direction and are used for tricot

fabrics and cotton lace. Knitted fabrics are softer and more flexible than woven fabrics. Making

them ideal for sweaters, active sportswear and hosiery.

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3.2 Fabrics Manufacturers

Knitted Fabric

Knitting is one of the ways of turning thread or yarn into clothes. Knitted fabric completely

consists of horizontal parallel courses (crosswise) or yarn. These courses are joined to each other

by interlocking loops where a short loop of one course of the yarn is wrapped over the bight of

another course.

Knitted fabric is obtained either by hand knitting process or then by machine. In hand knitting

process, a base series of twisted loops of yarn are made on a knitting needle before starting the

process. A second needle is then used to reach through each loop in succession to snag a bight of

yarn and pull a length back through the loop. Knitting by machine use a different mechanical

system producing nearly identical results.

Knitted fabric composites show higher impact tolerance compared to the traditional composites

or even to woven fabric composites. It is believed that the hand knitting originated among the

nomads of the Arabian Peninsula about 1000 BC.

Type’s o knitted fabrics:

Weft knitted fabric-It is either made by hand or machine by looping together the lengths of the

year. This supports the fabric to become stretchy and comfortable. Weft-knitted fabrics are used

in socks. T-shirts and jumpers.

Warp knitted fabric- It is made by machine only. The loops, in this kind of fabrics interlock

along the length of the fabric. It is only slightly stretchy and it do not ladders. These are used as

swimwear, underwear etc.

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Advantages of Knit Wears:

Because of casual and soft in nature as well as inherent good properties such as hygienic

properties, fashionable design and color, knit wears have become the popular wear all over

the world. Knit wears are informal but fashionable usually with short sleeves. Knit wears are

commonly made of knitted fabrics of single jersey, Ribs, Interlock, etc due to the

specifications in raw materials by using lower count of yam, construction of fabrics and

stitching. Knit wears possess certain properties which are essential for good apparels; some

special advantages of knitted-wears are given below:

1) Knit garment products are softer and more comfortable;

2) Knit wears/garments are usually used as underwear

Garments i.e. used for soft skin abrasion.

3) Usually lower count of yam is used for knitting fabrics.

So, knitwear has more socking capability.

4) More profitable production can be made due to lower

project cost and cheaper management cost.

5) Knitting wears can be handled more easily while using

and washing. ,

6) Its market price is comparatively cheaper.

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Manufacturing process:

For setting up Composite Industries consists of Knitting unit, Fabric Dyeing Finishing unit and Garments

unit. The product of one unit will be the raw material of other unit:The sequential process from yam

manufacture to Garments product may be described as follows!

For Knitting Unit:

Knitting machine is various types where various design produces. Fabrics will also be produce in the

circular -Knitting machines by altering some attachments mainly changing of camas. Rib Knitting and

Interlock (double Knitting) fabrics will be produces in the Rib circular and Interlock Knitting machine.

Flat Knitting fabrics for collar and cuff will be 'produced in the flat Knitting machine. After the Knit

fabrics are produced, it is inspected in running condition while passing over a table of the inspection

machine. The technology involved in Knitted fabrics is fairly simple which may be seen in the following

flow process chart:

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1 Process Flow Chart

2 Yarn storing in cone form

3 Rib Knitting

4 Circular Knitting

5 Face side inside turning of the knitted fabrics

3.3 Fabric Dyeing and Finishing Unit:

The technology involved in dyeing finishing of Knitted fabrics may be seen as below:

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Face side inside

Turing of the Knitted Fabrics

Scouring /Bleaching

Washing

Bleached fabric (white)

DyingBallooning & Squeezing/Hy

dro

Extractor

Drying and heat

setting stutteri

ngCalendarin

g/Softening

Compacting &

Shrinkag

e Controlling

InspectionFolding & baling

Washing

Garments Making;

The operation process with two outputs i.e. T-shirts and Polo shirts are pre-sewing and

finishing. A typical process flow-chart for Garments making is shown below: Process Flow

Chart for Garments Making

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3.4 Production flowchart

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3.5 Garments Quality control flow chart

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3.6 Garments Planning

To establish a garments factory the location choice is an important factor for correct

manufacturing, worker management and proper transport system.

The following are some of the factors which will influence the choice of location:

Availability of worker.

Availability of housing facility (In Bangladeshi system it is not provided by any

garments authority)

Availability of staff amenities.

Availability of transport.

Availability of materials.

Availability of cover-van parking space.

Adequacy of circulation.

Availability of services.

Gas

Electricity

Water

Drainage

Disposal of waste

Suitability of land and climate.

Local building and planning regulation.

Safety requirements.

Site cost.

Political situation.

Special grants.

According to the place and types of manufacturers goods the building shape has been Chosen.

Here I mentioned both the advantages of single and multi-story building. It depends on the size

of the garments factory, which prefers most.

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3.7 Benefit of team in garments

Increase the group activities in production.

Makes a competition among the team worker.

Workers get satisfaction to work.

Instrumental benefits.

3.8 Controlling system

Control is a regulation of organizational activities so that some targeted elements of

performance remains within acceptable limits.

Purposes of control:

Adapting to environmental changes.

Limiting the accumulation of errors.

Coping with organizational completes.

Minimizing cost.

Keeping the organizational work on track (according to plan)

In garments sector the control is divided in three sections:

Production control.

Overall/Operational control.

Financial control

Overall/Operational control:

Preliminary control

Screening control

Post action control

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Preliminary control:

Preliminary control concentrates on the resources-financial, material, and human and

information-that the organization brings in form the environment. Preliminary control attempts

to monitor the quality or quantity of these resources before they enter the organization.

Screening control:

Screening control focus on meeting standards for products or service quality or quantity during

the actual transformation itself. Screening control relies heavily on feedback process.

Post action control:

Post action control focus on the outputs of the garments after the transformation process is

complete. Coming's old system of Post action control-final inspection after the product is

completed. Although corning abandoned its Post action control system, this still may be an

effective method of control, primarily if a product can be manufactured in only one or two

steps or if the service is fairly simple and routine. Although Post action control alone. may not

be as effective as preliminary or screening control, it can provide management with

information for future planning.

Financial control:

Financial Control is the control of financial resources as they flow into the garments (i.e.,

revenues, investments), are held by the garments (i.e., working capital, retained earning), and

flow out of the garments (i.e., pay expenses). Business must manage their finances so that

revenues are sufficient to cover costs and still return a profit to the firm's owners.

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3.9 Prepare a garments budget

Budget is a numerical expression. A good budget can provide a good exported or productive

garment. Without budget a garments can't run correctly. Only by the help of a good budget the

goals can come out. Budget helps to take correct decision and divers the organization properly

in right way. Budget also, shows the capacity of garments in productive market. Only a

suitable and acceptable budget can run the garments correctly. For this reason budget is

essential for the garments.

The processes of preparing budget in garments are as follows:

o Submission of budget request by the units to division head.

o Integration of unit budget and consolidated into division budget.

o Forwarding of division budget to budget committee.

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Chapter Four

Problems and Prospects

4.1 Problems of readymade garments sector

4.2 Prospects of the RMG Industry

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4.1 Problems of readymade garments sector:

The garment industry of Bangladesh has been the key export division and a main source of

foreign exchange for the last 25 years. National labor laws do not apply in the EPZs, leaving

BEPZA in full control over work conditions, wages and benefits. Garment factories in

Bangladesh provide employment to 40 percent of industrial workers. But without the proper laws

the worker are demanding their various wants and as a result conflict is began with the industry

1. Raw materials:

Bangladesh imports raw materials for garments like cotton, thread color etc. This dependence on

raw materials hampers the development of garments industry. Moreover, foreign suppliers often

supply low quality materials, which result in low quality products.

2. Unskilled workers:

Most of the illiterate women workers employed in garments are unskilled and so their products

often become lower in quality.

3. Improper working environment:

Taking the advantages of workers' poverty and ignorance the owners forced them to work in

unsafe and unhealthy work place overcrowded with workers beyond capacity of the factory floor

and improper ventilation.

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4. Gendered division of labor:

In the garment industry in Bangladesh, tasks are allocated largely on the basis of gender. This

determines many of the working conditions of women workers. All the workers in the sewing

section are women, while almost all those in the cutting, ironing and finishing sections are men.

Women workers are absorbed in a variety of occupations from cutting, sewing, inserting buttons,

making button holes, checking, cleaning the threads, ironing, folding, packing and training to

supervising. Women work mainly as helpers, machinists and less frequently, as line supervisors

and quality controllers. There are no female cutting masters. Men dominate the administrative

and management level jobs. Women are discriminated against in terms of access to higher-paid

white collar and management positions. When asked why they prefer to employ women foe

sewing, the owner and managers gave several reasons. Most felt that sewing is traditionally done

by women and that women are more patient and more controllable than men.

5. Wages:

The government of Bangladesh sets minimum wages for various categories of workers.

According of Minimum Wage Ordinance 1994, apprentices’ helpers are to receive Tk500 and

Tk930 per month respectively. Apprentices are helpers who have been working in the garment

industry for less than three months. After three months, Apprentices are appointed as helpers.

Often female helpers are discriminated against in terms of wages levels, and these wages are also

often fixed far below the minimum wage rate. A survey conducted in 1998 showed that 73% of

female helpers, as opposed to 15% of their male counterparts, did not receive even the minimum

wage.

6. Insufficient of loan:

Insufficiency of loan in time, uncertainly of electricity, delay in getting materials, lack of

communication, problem in taxes etc. Often obstruct the industry. In the world market 115 to 120

items of dress are in demand where as Bangladesh supplies only ten to twelve items of garments.

India, South Korea, Hong Kong, Singapore, Thailand, Taiwan etc, have made remarkable

progress in garments industries. Bangladesh is going to challenge the garments of those countries

in the world market.

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7. Unit labor cost:

Bangladesh has the cheapest unit labor cost in South Asia. It costs only 11 cents to produce a

shirt in Bangladesh, whereas it costs 79 cents in Sri Lanka and 26 cents in India. Clearly,

Bangladesh’s comparative advantage lies in having the cheapest unit labor cost.

8. Working hours:

Though the wages are low, the working hours are very long. The RMG factories claim to operate

one eight-hour shift six days a week. The 1965 factory Act allows women to work delivery

deadlines; however, women are virtually compelled to work after 8 o’clock. Sometimes they

work until 3 o’clock in the morning and report back to start work again five hours later are 8

o’clock. They are asked to work whole months at a time the Factory Act, which stipulates that no

employee should work more than ten days consecutively without a break.

9. Poor accommodation facilities:

As most of the garment workers come from the poor family and comes from the remote areas

and they have to attend to the duties on time, these workers have to hire a room near the factory

where four to five huddle in a room and spend life in sub human condition. For four to five

workers there is one common latrine and a kitchen for which they have to pay from Tk=2000 to

Tk=2500/-.They share this amount among themselves to minimize the accommodation expense.

One cannot believe their eyes in what horrible condition they have to pass out their time after

almost whole day of hard work in the factory. After laborious job they come into their roost,

cook their food and have their dinner or lunch in unhygienic floor or bed and sleep where they

take their food. They share the single bed or sleep on the floor. The owners of these factories

must not treat the workers as animals. The owners of these factories who drive the most

luxurious car and live in most luxurious house do ever think that these are the workers who have

made their living so juicy. Will these selfish owners ever think of these workers of their better

living for the sake of humanity by providing better accommodation for these workers in addition

to providing with the job?

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10. Safety Problems:

Because of the carelessness of the factory management and for their arrogance factory doors

used to be kept locked for security reason defying act Safety need for the worker is mandatory to

maintain in all the organization. But without the facility of this necessary product a lot of

accident is occur incurred every year in most of the company. Some important cause of the

accident are given below- Routes are blocked by storage materials

Machine layout is often staggered

Lack of signage for escape route

No provision for emergency lighting

Doors, opening along escape routes, are not fire resistant

Doors are not self-closing and often do not open along the direction of escape

Adequate doors as well as adequate staircases are not provided to aid quick exit

Fire exit or emergency staircase lacks proper maintenance

Lack of proper exit route to reach the place of safety

Parked vehicles, goods and rubbish on the outside of the building obstruct exits to the

open air

Fire in a Bangladesh factory is likely to spread quickly because the principle of

compartmentalization is practiced

11. Political crisis:

Garments industries often pay dearly for political unrest, hartal and terrorism etc. The

international market has withdrawn quota advantage over garments export form Bangladesh

since December 2005. Bangladesh has to advance cautiously for getting better position of her

garments in the world market. Finally destruction of twin tower in 11 September 2001. invasion

of Afghanistan and Iraq and depression in world Economy have seriously affected the export

trade of Bangladesh.

12. Price competitiveness:

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China and some other competitors of Bangladesh have implemented sharp price-cutting policies

in exporting garment products over the last few years, but Bangladesh has failed to respond

effectively to such policies. China was able to drop the export price of 29 garment categories by

46 per cent on average in the United States within a year, from $6.23 per sq meter in December

2001 to $3.37 per sq meter in December 2002. Bangladesh needs to respond to such price-cutting

policies of its rivals in order to remain competitive in the quota-free global market.

13. Lead time:

Lead time refers to the time required for supplying the ordered garment products after the export

order has been received.

14. Lack of managerial knowledge:

There are some other problems which are associated with this sector. Those are- lack of

marketing tactics, absence of easily on-hand middle management, a small number of

manufacturing methods, 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, time-consuming custom clearance etc.

4.2 Prospects of readymade garments sector the:

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Despite many difficulties faced by the RMG industry over the past years, it continued to show its

robust performance and competitive strength. The resilience and bold trend in this MFA phase-

out period partly reflects the imposition of ‘safeguard quotas’ by US and similar restrictions by

EU administration on China up to 2008, which has been the largest supplier of textiles and

apparel to USA. Other factors like price competitiveness, enhanced GSP facility, market and

product diversification, cheap labor, increased backward integration, high level of investment,

and government support are among the key factors that helped the country to continue the

momentum in export earnings in the apparel sector. Some of these elements are reviewed below.

1. Market Diversification:

Bangladeshi RMG products are mainly destined to the US and EU. Back in 1996-97, Bangladesh

was the 7th and 5th largest apparel exporter to the USA and European Union respectively. The

industry was successful in exploring the opportunities in markets away from EU and US. In

FY07, a successful turnaround was observed in exports to third countries, which having a

negative growth in FY06 rose three-fold in FY07, which helped to record 23.1 percent overall

export growth in the RMG sector. It is anticipated that the trend of market diversification will

continue and this will help to maintain the growth momentum of export earnings. At the same

time a recent WTO review points out that Bangladesh has not been able to exploit fully the duty

free access to EU that it enjoys. While this is pointed out to be due to stringent rules of origin

(ROO) criteria, the relative stagnation in exports to EU requires further analysis.

2. Product Diversification:

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The growth pattern of RMG exports can be categorized into two distinct phases. During the

initial phase it was the woven category, which contributed the most. Second phase is the

emergence of knitwear products that powered the recent double digit (year-on-year) growth

starting in FY04. In the globalized economy and ever-changing fashion world, product

diversification is the key to continuous business success. Starting with a few items, the

entrepreneurs of the RMG sector have also been able to diversify the product base ranging from

ordinary shirts, T-shirts, trousers, shorts, pajamas, ladies and children’s wear to sophisticated

high value items like quality suits, branded jeans, jackets, sweaters, embroidered wear etc. It is

clear that value addition accrues mostly in the designer items, and the sooner local entrepreneurs

can catch on to this trend the brighter be the RMG future.

3. Backward Integration:

RMG industry in Bangladesh has already proved itself to be a resilient industry and can be a

catalyst for further industrialization in the country. However, this vital industry still depends

heavily on imported fabrics. After the liberalization of the quota regime some of the major textile

suppliers Thailand, India, China, Hong Kong, Indonesia and Taiwan increased their own RMG

exports. If Bangladesh wants to enjoy increased market access created by the global open market

economy it has no alternative but to produce textile items competitively at home through the

establishment of backward linkage with the RMG industry. To some extent the industry has

foreseen the need and has embarked on its own capacity building.

4. Flow of Investment:

It is plausible that domestic entrepreneurs alone may not be able to develop the textile industry

by establishing modern mills with adequate capacity to meet the growing RMG demand. It is

important to have significant flow of investment both in terms of finance and technology. The

investment outlook in this RMG sector is encouraging, although the uncertainties before the

MFA phase-out period caused a sluggish investment scenario. In part the momentum in the post-

MFA phase-out period is indicative of the efforts underway towards capacity building through

backward integration.

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This is evident in the pace of lending to the RMG sector and in the rising import share of RMG

related machinery. However further progress would be necessary to improve and sustain

competitiveness on a global scale.

5. Policy Regime of Government

Government of Bangladesh has played an active role in designing policy support to the RMG

sector that includes back-to-back L/C, bonded warehouse, cash incentives, export credit

guarantee scheme, tax holiday and related facilities. At present government operates a cash

compensation scheme through which domestic suppliers to export-oriented RMG units receive a

cash payment equivalent to 5 percent of the net FOB value of exported garments. At the same

time, income tax rate for textile manufacturers were reduced to 15 percent from its earlier level

for the period up to June 30, 2008. The reduced tax rates and other facilities are likely to have a

positive impact on the RMG sector.

6. Infrastructural Impediments

The existence of sound infrastructural facilities is a prerequisite for economic development. In

Bangladesh, continuing growth of the RMG sector is dependent on the development of a strong

backward linkage in order to reduce the lead time. However, other factors constraining

competitiveness of Bangladesh’s RMG exports included the absence of adequate physical

infrastructure and utilities.

7. Labor Productivity

The productive efficiency of labor is more important determinant for gaining comparative

advantage than the physical abundance of labor. In Bangladesh, the garment workers are mostly

women with little education and training. The employment of an uneven number of unskilled

labors by the garment factories results in low productivity and comparatively more expensive

apparels. Bangladesh labor productivity is known to be lower when it compared with of Sri

Lanka, South Korea and Hong Kong. Bangladesh must look for ways to improve the productivity

of its labor force if it wants to compete regionally if not globally. Because of cheap labor if our

country makes the labor productivity in the apex position, then we think the future of this sector

is highly optimistic.

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8. Research and Training

The country has no dedicated research institute related to the apparel sector. RMG is highly

fashion oriented and constant market research is necessary to become successful in the business.

BGMEA has already established an institute which offers bachelor’s degree in fashion designing

and BKMEA is planning on setting up a research and training institute. These and related

initiatives need encouragement possibly intermediated by donor-assisted technology and

knowledge transfer. A facilitating public sector role can be very relevant here.

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Chapter Five

SWOT analysis, Findings, Recommendations

5.1 SWOT analysis of RMG industry in Bangladesh

5.2 Findings

5.3 Recommendations

Conclusion

References

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5.1 SWOT analysis of RMG industry in Bangladesh

Strength:

Adequate supply of labor force of both sexes, attributed with less attitudes problem (less

absenteeism and, aptitude for learning, and loyal) and high morale

Cheaper labor cost

Low cost of captive power generation using gas as fuel

GSP facility up to 2015 (renewed recently)

Weakness:

Bangladesh produce mostly basic products- which are low cost items; the share of

fashion products i.e., high value added product is very low.

Bangladesh does not produce the basic raw materials (only a negligible quantity of cotton

but no manufactured fiber) and as such has to depend totally on sensitive global market.

Because of inadequate backward linkage, lead-time happens to be long, nearly 3 months.

Public power supply is erratic.

Bank interest rate is still high enough, particularly of private sector bank, for investment

of export oriented high value project.

HRD facility, productivity and quality support, testing and accreditation support, design

support and compliances are yet to be enhanced.

Cost of doing business is high because of under table money

Opportunity:

Bangladesh has now a scope to go for more fashion oriented products deserving high

price in the global market.

With the help of further increase of productivity & quality and design support,

Bangladesh can minimize cost and maximize profit and export value.

Bangladesh, as a proven experienced RMG manufacturer, can expand share in the

existing market (USA, EU, Australia, Canada, etc.) and can also explore opportunity in

Japan & CIS countries.

In the long run, Bangladesh has a scope to target huge populated country like China and

India- where demand as well as cost of manufacturing will be wider.

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Threat:

Unless new strong market is explored in home or abroad, any non-cooperation from

USA & EU may jeopardize the whole Bangladesh RMG export business and

consequently the textile manufacturing.

Sudden price hike of cotton and yarn in the global market may push Bangladesh to a very

awkward situation to devastate the business.

The type of labor and political anarchies of the recent days if prevails in the future,

Bangladesh may lose the business in the way Sri Lanka has lost.

Growing terrorism, or its false/amplified propaganda, is also a big threat.

The poor political culture and violence is one of the most important threats.

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Findings

The garment industry of Bangladesh has been the key export division and a main source of

foreign exchange for the last 25 years. National labor laws do not apply in the EPZs, leaving

BEPZA in full control over work conditions, wage and benefits. Garment factories in

Bangladesh provide employment to 40 percent of industrial workers. But without the proper laws

the worker are demanding their various wants and as a result conflict is began with the industry.

Low working salary is another vital fact which makes the labor conflict. Worker made strike,

layout to capture their demand. Some time bonus and the overtime salary are the important cause

of crisis. Insufficient government policy about this sector is a great problem in Garments

Company. There are some other problems which are associated with this sector. Those are:-

Credit problem

Lack of marketing tactics

Absence of easily on- hand middle management

Lack of training organizational for industrial workers, supervisor and manager

Autocratic approach of nearly all the investors

Sluggish backward or forward blending procedure, incompetent ports, entry

Time-consuming custom clearance

Raw materials

Quota problem

Communication gap

Poor government policy

Problem with Letter of Credit:

Most problems result from the seller's inability to fulfill obligations stated in the letter of credit.

The seller may find these terms difficult or impossible to fulfill and, either tries to fulfill them

and fails, or asks the buyer to amend to the letter of credit. As most letters of credit are

irrevocable, amendments may at times be difficult since both the buyer and the seller must agree.

Sellers may have one or more of the following problems:

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The shipment schedule cannot be met;

The stipulations concerning freight costs are unacceptable;

The price becomes too low due to exchange rates fluctuations;

The quantity of product ordered is not the expected amount;

The description of product is either insufficient or too detailed; and,

The stipulated documents are difficult or impossible to obtain.

Safety Problems

Safety need for the worker is mandatory to maintain in all the organization. But without the

facility of this necessary product a lot of accident is occur incurred every year in most of

the company. Some important cause of the accident are given below-

Routes are blocked by storage materials

Machine layout is often staggered

Lack of signage for escape route

No provision for emergency lighting

Doors, opening along escape routes, are not fire resistant

Doors are not self-closing and often do not open along the direction of escape.

Adequate doors as well as adequate staircases are not provided to aid quick exit

Fire exit or emergency staircase lacks proper maintenance

Lack of proper exit route to reach the place of safety

There must have some training institutions in where workers and supervisor can take their proper

training. As garments sector has become a golden economy sector, privately or publicly some

institution should establish in order to training the workers and supervisors.

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Recommendation

The exporter should maintain all the rules and regulations and the quality of

Bangladeshi RMG should be increase to survive in the global market.

Duty on garment spares should be reduced and the production cost should be

minimized,

The new wages-structure for the garments workers must be fully implemented as

soon as possible.

To improve working skill of the workers more training programmed should be

arranged.

In the garments rehearsal of taking preventive step against fire should be held

regularly so that no workers die being fire burnt in future.

To give health service to the workers the owners have to ensure conducive working

environment by facilitating strong lift, sufficient light, proper ventilation system,

sanitation system etc.

The workers should be allowed to enjoy weekly holiday and other govt. holidays.

Each & every workers must be provided appointment letter and given relief from

the fear of being retrenched any time. Thus their job security should be ensured.

The workers must be given opportunity to participate in constructive Trade Union.

Transporting facilities should be developed.

Product quality should be maintained.

Need to develop the technical sector.

Manufacturing process should be developed

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Conclusion

The Ready-Made Garments (RMG) industry occupies a unique position in the Bangladesh

economy. It is the largest exporting industry in Bangladesh, which experienced phenomenal

growth during the last 25 years.RMG industry, is the driving force of Bangladesh economy

accounting for 80 percent of foreign exchange earnings by directly employing 35 lakh people in

about 5000 factories. By taking advantage of an insulated market under the provision of Multi

Fabre Agreement (MFA) of GATT, it attained a high profile in terms of foreign exchange

earnings, exports, industrialization and contribution to GDP within a short span of time. The

industry plays a key role in employment generation and in the provision of income to the poor.

To remain competitive in the post-MFA phase, Bangladesh needs to remove all the structural

impediments in the transportation facilities, telecommunication network, and power supply,

management of seaport, utility services and in the law and order situation. The government and

the RMG sector would have to jointly work together to maintain competitiveness in the global

RMG market. Given the remarkable entrepreneurial initiatives and the dedication of its

workforce, Bangladesh can look forward to advancing its share of the global RMG market.

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References

BGMEA (2014), Available at: www.bgmea.com.bd

EPB (2014), Available at: www.epb.gov.bd

BKMEA (2014), Available at: www.bkmea.com.bd

BTMA (2014), Available at: www.btma.com.bd

www.google.com

BGMEA research cell, BGMEA, BTMC, Bhaban, 7-9, Kawranbazar, Dhaka.

Bhattacharya, D., Rahman, M., Raihan, A. (2002), “Contribution of the RMG Sector to the

Bangladesh Economy”, CPD Occasional Paper Series 50.

Zafour, Abu. (2009). Problems and Prospects of Garments Industries in Bangladesh. [Online]

Available.

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http://www.btma.com/

http://www.bkmea.com/

http://www.epb.gov.bd/

http://www.bgmea.com.bd/