problems and prospects of readymade garments export in bangladesh

8/10/2019 Problems and Prospects of Readymade Garments Export in Bangladesh

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Problems and Prospects of Readymade Garments Exportin Bangladesh

Organization Overview

AL A !"#$ A%O" L$'(( is a prominent developing knit garments company inBangladesh. It started its journey from 2007 to complete knit garments industry with knitsewing machines, knit circular machines & 2 nos. of computeri ed em!roidery machine at"hafipur, #a ipur, Bangladesh with 2$000 sft. %loor area. Its management is a strong andhighly ualified 'ersonnel. (he target of the company is to develop as a most prestigiousgarments company in Bangladesh. It is trying to carry on all or any of the )*port of manufacturing any fa!rics readymade garments of all si es, grades, kinds and descriptions for the !uyers a!road and inland.

(o !uy, sell, import, e*port, prepare and deal in merchandise, commodities and articles of allkinds and generally to carry on )*port as merchants, importers and e*porters of all goodsincluding te*tiles, garments and allied materials of all sorts. (o carry on )*port of all sorts of garments and te*tile and sell locally and e*port to foreign countries and create local as wellas foreign markets and appoint agents, commission agents and esta!lish sales office,showrooms !oth at home and a!road for the e*pansion of markets of the products of thecompany.

)ORE E*POR$ O $&E )O+PA",

+. +00 )-' /( /I) ()1 I( #3/4) (" 5 I((I #, 16)I #,

8((I #, ")9I #, %I I":I #;4) "


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Board of 'irectors-

(he names of the !oard of the directors of the company are given followsH

#ntrod.ction to the Report

Bac/gro.nd of the Pro0ect-

"tudents of 3mericanInternational8niversity Bangladesh 53I8B; have to e*perience anInternship session which is an essential part of 4B3 program. "tudents are assigned and


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B#B3 firmly !elieve its mem!er are the principal sponsors of B#B3 accomplishments andour valued mem!er>s can rely on B#B3 distinguished services and professional e*pertisefrom all levels of personnel. (he organi ational mission of B#B3 is to ensure 4em!er>s and(rade Body>s satisfaction through committed endeavors of its 3ssociation =eaders. B#B3has planned to conduct individual International %air for its mem!er and to focus latest fashion

clothing with the contri!utions of International ham!er of ommerce and International(rade Body. (he associations are committed to !oost professional activities ena!le to !ringhighest growth of economic as well as to act its identities into the #lo!al market.

Rationale of the %t.dy

/4# sector is one of the most progressing sectors in Bangladesh. ow?a?days the )*port of /4# sector grows rapidly in our country. 4ost of the )*port people of our country are verymuch interested in this new )*port sector. 9e know that our garments products are very goodin uality and for this reason the international market demand our products. (he other reasonthat>s why our products are very much appreciated in the world market that is its low cost.9e know that the la!ors cost of our country is very cheaper than the other neigh!orscountries, so the )*port people of our country can delivery a product at a lower price than thecompetitors other countries. 3lso this is a very profita!le )*port for the )*port people and allof these reasons the future of the /4# sector in our country is very !right.

But there are some pro!lems also stand in this profita!le sector. If our country want do !etter in this sector its might has to solve those pro!lems immediately. It is necessary that if our government and also the people who are involve in /4# sector make together and protectthe pro!lems as soon as possi!le if we want to alive this profita!le sectors. Because today>smarket is very competitive market. If we are late then you are sure that the other can takeyour position very uickly.

%cope of the %t.dy-

(he field of study has !een for the first portion the #arments division activities. %or the /4#sector analysis and make sure the #arments sector development with achieve )*port froma!road.

Limitations of the st.dy-

"ince our study is !ased on !oth primary and secondary data, there is a possi!ility of getting

fake information. If the surveyed personnel provide me with any fa!ricated information a!outtheir opinion of their organi ation, then the report findings may !e erroneous. 3!ove all, thisstudy is weak in some points. (he nota!le ones are as underH

3ll the department of corporate office was not physically visited. /elevant papers and documents were not availa!le sufficiently.

(he time of this study was very inade uate to o!tain depth knowledge in everydepartment.

"ome of the officials of can>t help me to provide sufficient information.

(he !ooks and journal of garments sector )*port are not availa!le in the market.


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=ack of e*perience in this field.

Ob0ective of the Report-

Broad Ob0ectives-

(he study was conducted to make an analysis of the /4# sector of Bangladesh. (his reportshows the today>s /4# situation in our country. :ow much it doing in present day and in therecent future and also the pro!lems it faces in regular !asis.

%pecific Ob0ectives-

(he specific o!jective of the report is to know in details a!out the delin uent pro!lems and prospects of the Bangladesh /4# sector. (he 'roject has !een directed !y the followingspecific !jectiveH

1evelop the relation with ultimate Buyer. (he focus will !e long term relation. 3ssessment the competitive the #lo!al 4arket.

3dministrative and 'roduction 'rocedure how to develop.

'ositive and negative atmosphere in /4# sector and what is the real solution.

Duality assurance as per Buyer re uirement. 3 good uality makes a good )*port.

=astly, Influence the Buyer to our /4# )*port.

+ethodology

Area of #nvestigation-

I would use !oth primary and secondary data. In case of primary data I will refer to directinterviewing of the managements of the %K %3"I =(1 =td. But in generally I use mostlythe secondary data.

%o.rce of #nformation-

Primary-

(he primary data are collected from the e*perts who are involving with the /4# sector in along period help me a lot.

%econdary-

(he secondary data of the study are !ased on some of the important we!sites which arerelated with /4# sector. I am also using some journals and some !ooks which are relatedmostly the /4# sector.

%ignificance of the Pro0ect-


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(he significance of the study is to gain in sight knowledge a!out the overall /4# )*port of Bangladesh. (his study will also give me a vague idea a!out the economical condition andthe pro!lems that they face in different situations, their international competitors, the main

products of our /4# companies etc. I also !elieve that, these things will help me a lot if Iwant to start a /4# )*port in future. (his report contains a descriptive study on J'ro!lems

& 'rospects of /4# )*port in BangladeshL. In this report I have tried my !est to gather allthe necessary and relevant information for preparing a complete paper on this topic.

Analysis and #nterpretation of the 'ata

In Bangladesh, agriculture has !een the !ack!one of economy and chief source of income for the people. #overnment wants to decrease poverty !y getting highest productivity fromagriculture and achieve self?reliance in food production. 3part from agriculture, the countryis much concerned a!out the growth of e*port division. Bangladesh have accelerated andchanged her e*ports su!stantially from time to time. 3fter Bangladesh came into !eing, juteand tea were the most e*port?oriented industries. But with the continual perils of flood,

failing jute fi!er prices and a considera!le decline in world demand, the role of the jute sector to the country>s economy has deteriorated. 3fter that, focus has !een shifted to the function of production sector, especially in garment industry.

(he shift from a rural, agrarian economy to an ur!an, industrial economy is integral to the process of economic development. 3lthough policymakers in the least developed countries5=1 s; have, at various times, attempted to make agriculture the primary engine of economicgrowth and employment generation, this approach has not worked, not least !ecause of thecontri!utions of the #reen /evolution, which has had the dual effect of increasingagricultural productivity in the =1 s and displacing the rural la!or force at the same time.=ed !y the e*ample of the )ast 3sian economies, most =1 s now accept the need for greater

industriali ation as the fastest path to economic growth. In particular, countries such as @apan,(aiwan and "outh orea have demonstrated that an e*port?oriented industrial strategy cannot only raise per capita income and living standards in a relatively short timeM it can also

play a vital role in moderni ing the economy and integrating it with the glo!aleconomic system.

Bangladesh, one of the archetypal =1 s, has also !een following the same route for the lastG0 years. nce derided as a J!asket?caseL !y :enry issinger 5(he )conomist, +FFE;, thecountry stum!led across an economic opportunity in the late +F70s. ew rules had come togovern the international trade in te*tiles and apparel, allowing low?cost suppliers to gain afoothold in 3merican and )uropean markets. 3ssisted !y foreign partners, and largelyunaided !y the government, entrepreneurs sei ed the opportunity and e*ploited it to thefullest. ver a period of G0 years, the garments e*port sector has grown into a NE !illionindustry that employs over a million people. In the process, it has !oosted the overalleconomic growth of the country and raised the via!ility of other e*port?oriented sectors.(his essay analy es the processes !y which glo!al trading rules came to help out a poor country like Bangladesh. It demonstrates the impact of the rule changes on the garmentssector, and the response of the sector to multiple challenges and o!stacles. It also discusseswhat steps Bangladesh should take in order to deal with the full li!erali ation of theinternational garments trade, which occurred in @anuary 200$ and which could potentiallythreaten the country>s growth prospects. %inally, it details some of the recent developmentsthat have occurred since li!erali ation took effect.


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(he tremendous success of readymade garment e*ports from Bangladesh over the last twodecades has surpassed the most optimistic e*pectations. (oday the apparel e*port sector is amulti?!illion?dollar manufacturing and e*port industry in the country. (he overall impact of the readymade garment e*ports is certainly one of the most significant social and economicdevelopments in contemporary Bangladesh. 9ith over one and a half million women

workers employed in semi?skilled and skilled jo!s producing clothing for e*ports, thedevelopment of the apparel e*port industry has had far?reaching implications for the societyand economy of Bangladesh.

Garment #nd.stry of Bangladesh

(he /4# industry of Bangladesh has e*panded dramatically over the last three decades.(raditionally, the jute industry dominated the industrial sector of the country until the +F70s."ince the early +FK0s, the /4# industry has emerged as an important player in the economyof the country and has gradually replaced the jute industry. In Bangladesh the /4# sector isone of the most profita!le sectors in recent years.

%or this reason most of the people of our country are very much interested a!out this sector.3s a result in now days in our country there are some successful /4# are introduce whichcan compute the foreign !uying house in international market. (hey already !it some of thesuccessful /4# in another country. It is a good sign for Bangladesh that (he %ashion1esigning profession has recently emerged as one of the most demanda!le careers among theyouth. (hese young folks have their own creative style of dressing and !elief in setting atrend rather than following a trend set !y others. 3 career in fashion design not only involvesmeeting glamorous people and interacting with rich and famous !ut also gives an impetus tothe creative flair of the people who possess a sense of style. But still Bangladesh is strugglingto esta!lish a standard in fashion design for international market.

(he future of the Bangladeshi te*tile production lies in the development of high?value?added products, suita!le for long?term e*port markets and for the local market in short?term. Inorder to develop such products, Bangladesh needs strengthening of its design potential. (hisshould mainly !e done through training Bangladeshi designers with the help of the foreigndesigners. (his way, product development and training in the workplace will !e com!ined,giving !oth short term and longer?term effects. (his is a large sector supporting the newlyesta!lished schools through training the designers for this industry should !e considered asimportant investment for market sustaina!ility.

%or Bangladesh, the readymade garment e*port industry has !een the prover!ial goose thatlays the golden eggs for over fifteen years now. (he sector now dominates the moderneconomy in e*port earnings, secondary impact and employment generated. (he events in+FFK serve to highlight the vulnera!ility of this industry to !oth internal and e*ternal shockson the demand and supply side. #iven the dominance of the sector in the overall moderneconomy of Bangladesh, this vulnera!ility should !e a matter of some concern to the

policymakers in Bangladesh. 3lthough in gross terms the sector>s contri!utions to thecountry>s e*port earnings is around 7 percent, in net terms the share would !e much less

partially !ecause the !ackward linkages in te*tile have !een slow to develop. (hedependence on a single sector, no matter how resilient or sturdy that sector is, is a matter of

policy concern. 9e !elieve the policymakers in Bangladesh should work to reduce this

dependence !y moving uickly to develop the other e*port industries using the lessonslearned from the success of apparel e*ports. "upport for the apparel sector should not !e


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reduced. In fact, another way to reduce the vulnera!ility is to diversify the product and themarket mi*. It is heartening to o!serve that the knit products are rapidly gaining share inoverall garment e*ports as these products are sold in uota?free markets and reflect thestrength of Bangladeshi producers in the fully competitive glo!al apparel markets.

'reliminary data and informal evidence indicate that this sector seems to have weathered thedevastating floods relatively well. (he industry is one hundred percent e*port?oriented andtherefore insulated from domestic demand shocksM however, it remains vulnera!le todomestic supply shocks and the smooth functioning of the !anking, transportation and otherforward and !ackward linkage sectors of the economy. (he 1haka? hittagong road remainsthe main transportation link connecting the production units, mostly situated in and around1haka and the port in hittagong, where the raw material and the finished products areshipped in and out. 1espite increased dependence on air transportation, trucks remain themain vehicles for transporting raw materials and finished products for Bangladesh garmente*ports. (he floods disrupted the normal flow of traffic on this road.

)ventually, this road link was completely severed for several days when large sections of theroad went under water for a few weeks during the latter phase of the floods. (his delinkingof the road connection !etween 1haka and the port in hittagong was as serious a threat asone can imagine for the garment e*porters. (he industry responded !y calling upon theBangladesh navy to help with trawlers and renting a plane from (hai 3ir that was used todirectly fly garment consignments from the 1haka airport to the hittagong airport severaltimes a day.

#mportant iss.es related to the Bangladesh ready7made garment ind.stry

Year(s) Issue

+F77?+FK0 )arly period of growth+FK2?+FK$ Boom days+FK$ Imposition of uota restrictions

+FF0s nitwear sector developed significantly

+FFG?+FF$hild la!or issue and its

solution200G 9ithdrawal of anadian uota restriction

200$

'hase?out of e*port? uota

system

"ourceH ompiled !y the author from Duddus and /ashid 52000;, 4ainuddin 52000; anddata!ases of the Bangladesh #arment 4anufacturers and )*porters 3ssociation, and the)*port 'romotion Bureau, Bangladesh.

(a!le?+H #rowth of #arments factories in Bangladesh

,ear "o( of actory )ompo.nd Growth Rate in 8

+F7+ $


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+F77 7 $.77

+FK+ 7K K2.70

+FKG + + G . $

+FK ?K$ GK E$.0G

+FKF?F0 7$F + .E0

+FF ?F$ 2+K2 2G.$2

+FFF?00 G200 7.FE

200 ?0$ +07 $.+2

200$?0E 2$0 G. K

"ourceH Carious articles and 3nnual /eport of B#4)3

(he (a!le?0+ shows that the growth was very slow till +F77 and got momentum from +F77 to200$?0E in terms of num!er of industry. But the compound growth rate was highest till +FK+and the rate was very good during +FKF?F0 to +FF ?F$ and thereafter i.e. +FF ?F$ to 200 ?0$,the industrial growth has !een declined though the num!ers of industries have !eenincreased. (he capacity as well as num!er of e uipments is very good indicator to e*aminethe actual position of the garment industry as well as si e of the industry. In such a conte*t,

the following (a!le deals in this regard.(a!le?2H #arments Industries with num!er of 4achine

,ear Garment #nd.stry having "o( of +achine $otal

8p to +00 +0+ 200 20+ and over

200 22$G 5E ; 72E 52+; $G+ 5+$; G$+0 5+00;

200$ 227$ 5E2; 77G 52+; E20 5+7; GEEK 5+00;

"ourceH 3nnual /eport of B#4)3. %igures in parentheses indicate percentage

%rom the (a!le 02 it is found that more than half of the total garment industries inBangladesh have the num!er of machines upto +00 or less than +00 and very few industrieshave the machine more than 200. It indicates that the small scale industries have !eendominated in the garment sector.

urrently, there are more than ,000 /4# firms in Bangladesh. 4ore than F$ per cent of those firms are locally owned with the e*ception of a few foreign firms located in e*port

processing ones 5#on ales, 2002;. (he /4# firms are located mainly in three main citiesHthe capital city 1haka, the port city hittagong and the industrial city arayangonj.Bangladesh /4# firms vary in si e. Based on Bangladesh #arment 4anufacturers and


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decades. By taking advantage of an insulated market under the provision of 4ulti %i!re3greement 54%3; of #3((, it attained a high profile in terms of foreign e*change earnings,e*ports, industriali ation and contri!ution to #1' within a short span of time. (he industry

plays a key role in employment generation and in the provision of income to the poor. earlytwo million workers one directly and more than ten million inha!itants are indirectly

associated with the industry. (he sector has also played a significant role in the socio?economic development of the country. In such a conte*t, the trend and growth of garmentse*port and its contri!ution to total e*ports and #1' has !een e*amined the following ta!leshows the position.

(a!le?GH #rowth and (rend of #arments )*ports, and contri!ution to #1' 53mounts in4illion 8"1;

,ear Garment Export $otal Export %hare to $otal Export %hare toG'P in 8 in 8

+FK ?K$ ++E FG +2. 2 O

+FKF?F0 E2 5 0; +F2 5+E; G2. G 52+; O

+FF ?F$ 222K 52F; G 7G 5+G; E .+$ 5+$; $.K7

+FFF?00 G F 5+ ; $7$2 5++; 7$.E+ 5G; F.2G 5F;

200 ?0$ E +K 5K; KE$$ 5F; 7 .+$ 5?+; +0.EG 5G;

200$?0E 7F0+ 52G; +0$2E 522; 7$.0E 5+; +2.E 52;%o.rce- )conomic /eview of Bangladesh, B#4)3 and omputation made !y author.%igures in parentheses indicate compound growth rates 5 #/; for the respective periods.

It is revealed from the (a!le 0G that the value of garment e*ports, share of garments e*port tototal e*ports and contri!ution to #1' have !een increased significantly during the periodfrom +FK ?K$ to 200$?0E. (he total garments e*port in 200$?0E is more than EK timescompared to garments e*ports in +FK ?K$ whereas total country>s e*port for the same periodhas increased !y ++ times. In terms of #1', contri!ution of garments e*port is significantM itreaches +2.E percent of #1' in 200$?0E which was only $.K7 percent in +FKF?F0. It is a

clear indication of the contri!ution to the overall economy. It also plays a pivotal role to promote the development of linkage small scale industries. %or instance, manufacturing of intermediate product such as dyeing, printing, ippers, la!els has !egan to take a foothold onlimited scale and is e*pected to grow significantly. 4oreover it has helped the )*port of

!asling, insurance, shipping, hotel, tourism and transportation. (he sector also has created jo!s for a!out two million people of which 70 percent are women who mostly come fromrural areas. (he sector opened up employment opportunities for many more individualsthrough direct and indirect economic activities, which eventually helps the country>s socialdevelopment, woman empowerment and poverty alleviation. In such a way the economy of Bangladesh is getting favora!ly contri!ution from this industry.

ne of the key advantages of the /4# industry is its cheap la!or force, which provides acompetitive edge over its competitors. (he sector has created jo!s for a!out two million


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people of which 70 percent are women who mostly come from rural areas. (he sector openedup employment opportunities for many more individuals through direct and indirecteconomic activities, which eventually helps the country>s social development, womanempowerment and poverty alleviation.

Garments Prod.ct Portfolio and its 'iversification

(he specific character of products and level of industrial development indeed determines itsvariance of product diversification. In such a conte*t, the product mi*, product line as well as

product diversification are very important strategies for any industry to develop its market !ymeeting the present market re uirements. %or the garments industry it is also very important

!ecause product diversification will call for developing capa!ility for product developmentand product design especially in response to fast changes in fashion. (he growth pattern of garments e*port can !e categori ed into two distinct phases. 1uring the initial phase it wasthe woven category. "econd phase is the emergence of knitwear products. n the other hand,an analysis of the product mi* of the garments industry revealed that so far Bangladesh has

!een a!le to e*port very limited categories of products. In such a conte*t, an attempt has !eenmade to e*amine the growth and trend of product portfolio or categories of products e*portedfrom Bangladesh. (he following (a!le deal with the value and uantity of different garment

products e*port including their growth pattern from +FF2?FG to 200$?0E

(a!le? H 'attern of 9oven and nitwear #arments )*port 5%igures in 4illion;

,ear Export in +illion 9%' Export in +illion 'ozen

9oven nit (otal 9oven nit (otal

+FF2?FG +2 0 5KE; 20$ 5+ ; + $ GE 577; ++ 52G; 7

+FF ?F$ +KG$ 5K2; GFG 5+K; 222K 7 57$; +E 52$; EG

+FFF?00 G0K+ 57+; +2EK 52F; G F E7 5E0; $ 5 0; ++2

200 ?0$ G$FK 5$E; 2K20 5 ; E +K F2 5 G; +20 5$7; 2+2

200$?0E 0K 5$2; GK+7 5 K; 7F0+ +0F 5 0; +E$ 5E0; 27

#/ 5 ; F.E0 2$.22 +G.FE K.F0 2G.+E + .$2

%o.rce- #arments )*port 1ata, B#4)3 and )*port 'romotion Bureau?)'B.

%igures in parentheses indicate the share in percentage. #/ stands for ompound #rowth/ate.

%rom the (a!le 0 it is evident that the compound growth rate of knit garment e*port is morethan woven garment e*port !oth in terms of value and uantity for the period of +FF2?FG to200$?0E. (he share of knit garments in total e*port has !een increased significantly !oth interms of value and uantity. (he share of woven garment in total garments e*port has !eendecreased from KE percent in +FF2?FG to $2 percent in 200$?0E. It is o!served that thedemand for knit garment is increasing in the e*port market. It is also o!served that the e*port


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uantity of knit garments has !een e*ceeded the e*port uantity of woven garments in 200$?0E. (he position can !e !etter e*plained if we look into the more details of the product mi* inthe a!ove categories of garments. (he garment sector has !een a!le to diversify the product

!ase ranging from ordinary shirts, (?shirts, trousers, shorts, pajama, ladies and children>swear to sophisticated high value items like uality shirts, !randed jeans, jackets, sweater,

em!roidered wear etc. In such a conte*t, an attempt has !een made to classify the garmentse*port into different products in order to understand product diversification strategy and itsrelative importance and performance as well. (he following (a!le shows the picture in thisregard.

(a!le?$H 'attern of )*port 'erformance of 1ifferent #arments 'roducts 53mount in 4illion8"1;

,ear %hirts $ro.sers :ac/ets $7%hirts %weaters Others

+FF ?F$ 7F+ 5GE; +0+ 5$; + 7 57; 2G2 5+0;


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internationally. (his is even more the case if the products are going to !e developed into high?value niche products.

(here are very few designers in the garment industry or in crafts with a degree in design. (heones that do have a design education are educated a!road many in India and some in the

9est. "ome of the designers working in the craft )*portes have an education from Institute of %ine 3rts, 8niversity of 1haka. 3lthough this educational !ackground in com!ination withe*perience from the craft )*portes, in many cases seem to work well, some say that a lot of

people in the trade do not understand the difference !etween an artist and a designer, J1esignis planning step !y step and the artists do not know how to do that.L thers say that thecreativity e*ists, !ut the understanding of the market is lacking. 1esigners, of whatever levelof training, who can work for a domestic market, are undou!tedly in advantageous position.

(he practice of trial and error is certainly of value and a lot less costly. (he e*posure toshifting trends allows a designer to develop a sense of the market and, in time, the a!ility to

predict market trends and design with confidence to meet the demands. If a designer isre uired to design for a foreign rather than local market, then certain skills are not a!le todevelop in a full and relevant way.

(he pro!lem is the same for designers either in industry or crafts. In many respects, they are !eing asked to design for Pvirtual> situations only. 3fter all, very few of the designers in these)*portes will ever get the chance to visit the markets they design for, let alone !e a!le tospend time enough in them to really develop an understanding of the nuances of a situation.3ccordingly, western designers can !est help with the designs for the e*port markets of Bangladesh. :owever, as the local market is changing rapidly due to increased !uying power of internationally?oriented middle class, the products designed for the e*port market mayvery well have a future in the local market.

(he garment industry of Bangladesh has !een the key e*port division and a main source of foreign e*change for the last 2$ years. ational la!or laws do not apply in the )'As, leavingB)'A3 in full control over work conditions, wages and !enefits. #arment factories inBangladesh provide employment to 0 percent of industrial workers. But without the proper laws the worker are demanding their various wants and as a result conflict is !egan with theindustry.

=ow working salary is another vital fact which makes the la!or conflict. 9orker made strike,layout to capture their demand. "ome time !onus and the overtime salary are the important

cause of crisis. Insufficient government policy a!out this sector is a great pro!lem in#arments ompany.

(here are some other pro!lems which are associated with this sector. (hose are? lack of marketing tactics, a!sence of easily on?hand middle management, a small num!er of manufacturing methods, lack of training organi ations for industrial workers, supervisors andmanagers, autocratic approach of nearly all the investors, fewer process units for te*tiles andgarments, sluggish !ackward or forward !lending procedure, incompetent ports, entry


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%carcity of Raw +aterials-

(here is no alternative of ample supply of raw materials in order to !ecome self ?sufficient in any industry. (he raw materials of the garment industry of Bangladesh is foreigndependent. Bangladesh has to import raw materials of garments from a!road in order to

process it in Bangladesh. 3!out 70 of garment e*port income has to !e spent for the rawmaterials. 4oreover, the e*port and import policy of Bangladesh is very weak. "o, thescarcity of raw materials for the garment industry> in Bangladesh is a great threat.

ail to delivery the prod.ct on the date-

(his is one of the most common pro!lems for almost all the /4# in the world to delivery the products on the date and in our country its percent is high. 1elivery the products on the dateis very important for the /4# )*port the !uyer who give the order have their own )*portstrategy and when miss the delivery on the specific date their work schedule will hamper andit makes very !ad impression for /4# company and also the country. In our country it ishappen mostly !ecause of many unusual factors like ?hortal, la!or strike, vehicle strike etc.and in our country we see those factors a lot. "o these are very !ig pro!lems for the /4#)*port.

Restriction of tariff and cotta system-

"ometimes tariff and cotta system create some pro!lems for our country. Because our countryis a developing country and the /4# sector is a new sector. In the cotta system we candelivery just a certain uantity of garment products. "o if we wish to produce more or wehave the capa!ility to produce more garments products it is not possi!le !ecause we can>t sellour product in the international market !ecause of the cotta system.

#ncrease the price of raw material-

9e know that the prices of raw materials are increasing day !y day in inside the country andalso the international market. Because of the increasing of the price of raw materials the costof production of the garments products are also increases. "o if the production cost increasesthe price of the finish goods also increase and !ecause of that we can>t offer the !uyer at alower price in any garments products and for this reason there is a chance for our #armentscompanies to loose their position in the international market and in this situation any !odycan take the chance to hold their place.

%ec.rity of foreign b.yer-

(his is very important for the #arments )*port to ensure the security for the foreign !uyers !ecause they come here to !uy the garments products with a lot of money. "o if they feelunsecured to come in this country we can>t sell our product in a!road and if fail to sell themwe can not survive the market. %or this reason the seller of our country should ensure anykinds of security they needs and also provide them other facilities what they needs. But in our country sometime the seller doesn>t careful a!out this site. If they find any lack in their security they can move to other country. "o we have to alert in this particular area.

Lac/ of training programs-


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unlimited opportunities for our !etter?organi ed )*port houses. In other words, for those whoare a!le to withstand the demands of open competition already. (he uota regime will endand countries can freely import or e*port with reduced custom duties. (he poor and the weak will certainly face the music. #overnments have given their nod to #3(( agreements,without sufficient analysis of the implications, mainly !ecause it was a law for the future.

3nd our politicians, who always fight for the present, can conveniently give away anything of the future. 3ll the more if it is an issue of the weaker section.

(here is yet another sentiment, which leads the country into the trap of the affluent. It is theinner deception and the !old announcements that we too are rich and advanced. J"econd tonone in the world.L 9hile the judgment is often made !ased on the premier institutions of the#overnment, and the star trading houses of the upper society, the challenges of the lower middle classes are easily forgotten. )ven the new te*tile policy threatens to go along the lineof deregulation and deservation. If the #overnment is a!le to provide every handloom weaver with a power?loom unit with necessary training and infra?structure, well and good. 9e do notdeny that the power looms have an economic edge over the traditional ones.

But the real uestion is, J3re our people prepared to take on the new technologyQL (hat theycan>t compete with the traditional loom is amply clear. or have they made sufficientfortunes to move to the ne*t level on their own. In this conte*t deregulation without ade uatesupport to switch over the technology will only ruin the lives of 20 lakes weavers in thecountry. (he technology up gradation fund could !e used only if the entire machinery ismoderni ed and if machines with a!ove +E000 revolutions per minute 5rpm; are installed inthe place of the old.

(he small spinners have come up vehemently against such tough conditions. (hey haveargued that all the te*tile units are not meant for the e*port materials and that a vast

population of India still needs clothes of ordinary material and not a highly mechani ed andcostly fi!er. (hey demand for reasona!le moderni ation within their e*isting units and the(8% funds should not close the door for them, in the madness after glo!ali ation and instantmoderni ation.

)ompetitiveness of the Bangladesh R+G #nd.stry

(he 8nited "tates was the main e*port destination for Bangladeshi /4# products in theearly +FF0s followed !y the )uropean 8nion, !ut the )uropean 8nion has surpassed the8nited "tates over time. (hese two destinations generate more than F0 per cent of the total

/4# e*port earnings of Bangladesh. (he shares of other importers, such as 3ustralia,anada, hina, @apan and the /ussian %ederation as well as countries in the 4iddle )ast, inthe total /4# e*port earnings of Bangladesh are minimal. (his section of the paper focuseson surface?level competitive performance of the Bangladesh /4# industry in the 8nited"tates and the )uropean 8nion markets only. In addition, the performance of hina and Indiaalong with Bangladesh as /4# suppliers to international markets is also considered for comparative analysis.

4a5 Export competitiveness in the 9nited %tates mar/et

Bangladesh has e*perienced some product diversification in its e*port of garments to the

8nited "tates market in recent years compared with the early +FF0s. :owever, the country>s performance in upgrading its products is not significant with regard to the 8nited "tates


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market. (he country e*perienced a sharp increase in the e*port of garment products to the8nited "tates market in the +FF0s, !ut faced declines in e*port earnings from that country in2002 and 200G, followed !y slow increases since 200 . (he e*ports of India also increasedrapidly in the +FF0s, although that country e*perienced comparatively slow progress in thelast few years. :owever, the /4# e*ports of hina to the 8nited "tates have increased at a

startling rate over the years. %or e*ample, the te*tile and garment e*port earnings of hina,India and Bangladesh from the 8nited "tates were NG.E !illion, N0.K !illion and N0. !illionrespectively in +FF0, and increased to N22. !illion, N .E !illion and N2.$ !illion respectivelyin 200$. "uch rapid e*pansion in the e*ports of hina represents a major challenge to other e*porters.

4b5 Export competitiveness in the E.ropean 9nion mar/et

Bangladesh has e*perienced !oth uantitative and ualitative changes in e*porting garment products to the )uropean 8nion market during the period +FFE?200$. (he te*tile and garmente*port earnings of Bangladesh from the )uropean 8nion increased from +.2 !illion euros in+FFE to G.7 !illion euros in 200$. %or India and hina, the corresponding earnings increasedfrom G !illion and $.G !illion euros in +FFE to $.G !illion and 2+.+ !illion euros in 200$respectively. #arment products generate the major share of Bangladesh>s e*port earningsfrom the )uropean 8nion. :owever, !oth te*tile and garment products in hina and Indiacontri!ute to the e*port earnings from the )uropean 8nion . %or e*ample, garment productson average generated more than a F$ per cent share of the total te*tile and garment e*ports tothe )uropean 8nion from Bangladesh during the period +FFE?200$. (he correspondingshares for India and hina stand at !elow 7$ per cent and K0?F0 per cent respectively.(he topfive product groups contri!uted 7E per cent of the total garment e*port earnings of Bangladesh from the )uropean 8nion in +FFE, and that share increased to K2 per cent in200$. (he corresponding changes for India and hina were from shares of E2 per cent and G

per cent in +FFE to $ per cent and $ per cent in 200$ respectively. (his trend demonstratesthat product diversification in Bangladesh is lower than that of India and hina in e*portinggarments products to the )uropean 8nion market. nit garments from Bangladesh havegained remarka!le access to the )uropean 8nion market during the period +FFE?200$

1uty? and uota?free access of garment products manufactured under Jtwo?stage localtransformationL 5yarn to fa!rics and fa!rics to garment; have accelerated the e*ports of knitgarment products from Bangladesh to the )uropean 8nion. 3s the knit te*tile su!sector isrelatively less capital intensive and re uires relatively simple technologies, it managed toundergo rapid e*pansion, !enefiting from the )uropean 8nion #enerali ed "ystem of

'references. (he woven part of the category has failed to utili e that facility owing to a lack of sufficient !ackward linkages. In contrast to the )uropean 8nion, !oth knit and non?knit products have entered the 8nited "tates market simultaneously.

9nethical Perspective of garment Export in Bangladesh-

:igh thermal pro!lem that cause for many sick :igh dust cause for launch cancer

=ow pay for large work

hild la!or !reak the humanity

verrule the I= concept a!out the worker.


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Bound environment causes for mental sickness to the worker.

'ro!lem relating to uality control for produce uality?full product & unethicalmovement of the organi ation.

4ost of the production cases Bangladeshis industry failure in making alternativeinventory plan for wrong perception.

=ack of accurate and appropriate goods of inventory !ecause of unethical movement.

=ack of low e*perience a!out production and manufacturing system !ecause of thereis no training for it.

)hallenge of Globalization

Bangladesh faces the challenge of achieving accelerated economic growth and alleviating themassive poverty that afflicts nearly two?fifths of its +G$ million people. (o meet thischallenge, market?oriented li!erali ing policy reforms were initiated in the mid?+FK0s andwere pursued much more vigorously in the +FF0s. (hese reforms were particularly aimed atmoving towards an open economic regime and integrating with the glo!al economy.

1uring the +FF0s, nota!le progress was made in economic performance. 3long withmaintaining economic sta!ili ation with a significantly reduced and declining dependence onforeign aid, the economy appeared to !egin a transition from sta!ili ation to growth. (heaverage annual growth in per capita income had steadily accelerated from a!out +.E per cent

per annum in the first half of the +FK0s to G.E percent !y the latter half of the +FF0s. (hisimproved performance owed itself !oth to a slowdown in population growth and a sustainedincrease in the rate of #1' growth, which averaged $.2 percent annually during the secondhalf of the +FF0s. 1uring this time, progress in the human development indicators was evenmore impressive. Bangladesh was in fact among the top performing countries in the +FF0s,when measured !y its improvement in the :uman 1evelopment Inde* 5:1I; as estimated !ythe 8nited ations 1evelopment 'roject 58 1';. In terms of the increase in the value of:1I !etween +FF0 and 200+, Bangladesh is surpassed only !y hina and ape Cerde.

9hile most low?income countries depend largely on the e*port of primary commodities,Bangladesh has made the transition from !eing primarily a jute?e*porting country to agarment?e*porting one. (his transition has !een dictated !y the country>s resourceendowment, characteri ed !y e*treme land scarcity and a very high population density,

making economic growth dependent on the e*port of la!or?intensive manufactures.In the wake of the 200+ glo!al recession, Bangladesh>s reliance on foreign countries as amarket for e*ports and as a source of remittances has !ecome o!vious. If Bangladesh is to

!ecome less vulnera!le to the economic fortunes of others, it will need to strengthen itsdomestic economy, creating jo!s and markets at home. 3 strong domestic sector and animproved overall investment environment will provide a more sta!le source of income likewhat the garment industry has provided so far and will rekindle and sustain Bangladesh>seconomic growth.

Prospects of the R+G #nd.stry

1espite many difficulties faced !y the /4# industry over the past years, it continued toshow its ro!ust performance and competitive strength. (he resilience and !old trend in this


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4%3 phase?out period partly reflects the imposition of Psafeguard uotas> !y 8" and similarrestrictions !y )8 administration on hina up to 200K, which has !een the largest supplier ofte*tiles and apparel to 8"3. ther factors like price competitiveness, enhanced #"' facility,market and product diversification, cheap la!or, increased !ackward integration, high level of investment, and government support are among the key factors that helped the country to

continue the momentum in e*port earnings in the apparel sector. "ome of these elements arereviewed !elow.

+ar/et 'iversification

Bangladeshi /4# products are mainly destined to the 8" and )8. Back in +FFE?F7,Bangladesh was the 7th and $th largest apparel e*porter to the 8"3 and )uropean 8nionrespectively. (he industry was successful in e*ploring the opportunities in markets away from)8 and 8". In %607, a successful turnaround was o!served in e*ports to third countries,which having a negative growth in %60E rose three?fold in %607, which helped to record2G.+ percent overall e*port growth in the /4# sector. It is anticipated that the trend ofmarket diversification will continue and this will help to maintain the growth momentum ofe*port earnings. 3t the same time a recent 9( review points out that Bangladesh has not

!een a!le to e*ploit fully the duty free access to )8 that it enjoys. 9hile this is pointed out to !e due to stringent rules of origin 5/ ; criteria, the relative stagnation in e*ports to )8re uires further analysis.Prod.ct 'iversification

(he growth pattern of /4# e*ports can !e categori ed into two distinct phases. 1uring theinitial phase it was the woven category, which contri!uted the most. "econd phase is theemergence of knitwear products that powered the recent dou!le digit 5year?on?year; growthstarting in %60 . In the glo!ali ed economy and ever?changing fashion world, productdiversification is the key to continuous )*port success. "tarting with a few items, theentrepreneurs of the /4# sector have also !een a!le to diversify the product !ase rangingfrom ordinary shirts, (?shirts, trousers, shorts, pajamas, ladies and children>s wear tosophisticated high value items like uality suits, !randed jeans, jackets, sweaters,em!roidered wear etc. It is clear that value addition accrues mostly in the designer items, andthe sooner local entrepreneurs can catch on to this trend the !righter !e the /4# future.Bac/ward #ntegration/4# industry in Bangladesh has already proved itself to !e a resilient industry and can !e acatalyst for further industriali ation in the country. :owever, this vital industry still dependsheavily on imported fa!rics. 3fter the li!erali ation of the uota regime some of the major

te*tile suppliers (hailand, India, hina, :ong ong, Indonesia and (aiwan increased their own /4# e*ports.

If Bangladesh wants to enjoy increased market access created !y the glo!al open marketeconomy it has no alternative !ut to produce te*tile items competitively at home through theesta!lishment of !ackward linkage with the /4# industry. (o some e*tent the industry hasforeseen the need and has em!arked on its own capacity !uilding.

low of #nvestment

It is plausi!le that domestic entrepreneurs alone may not !e a!le to develop the te*tile

industry !y esta!lishing modern mills with ade uate capacity to meet the growing /4#demand. It is important to have significant flow of investment !oth in terms of finance and


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technology. %igure G indicates that the investment outlook in this sector is encouraging,although the uncertainties !efore the 4%3 phase?out period caused a sluggish investmentscenario. In part the momentum in the post?4%3 phase?out period is indicative of the effortsunderway towards capacity !uilding through !ackward integration. (his is evident in the paceof lending to the /4# sector and in the rising import share of /4# related machinery.

:owever further progress would !e necessary to improve and sustain competitiveness on aglo!al scale.

Policy Regime of Government

#overnment of Bangladesh has played an active role in designing policy support to the /4#sector that includes !ack?to?!ack =< , !onded warehouse, cash incentives, e*port creditguarantee scheme, ta* holiday and related facilities. 3t present government operates a cashcompensation scheme through which domestic suppliers to e*port?oriented /4# unitsreceive a cash payment e uivalent to $ percent of the net % B value of e*ported garments. 3tthe same time, income ta* rate for te*tile manufacturers were reduced to +$ percent from itsearlier level for the period up to @une G0, 200K. (he reduced ta* rates and other facilities arelikely to have a positive impact on the /4# sector.

#nfrastr.ct.ral #mpediments

(he e*istence of sound infrastructural facilities is a prere uisite for economic development.In Bangladesh, continuing growth of the /4# sector is dependent on the development of astrong !ackward linkage in order to reduce the lead time. :owever, other factorsconstraining competitiveness of Bangladesh>s /4# e*ports included the a!sence of ade uate

physical infrastructure and utilities.

Labor Prod.ctivity

(he productive efficiency of la!or is more important determinant for gaining comparativeadvantage than the physical a!undance of la!or. In Bangladesh, the garment workers aremostly women with little education and training. (he employment of an uneven num!er of unskilled la!ors !y the garment factories results in low productivity and comparatively moree*pensive apparels. Bangladesh la!or productivity is known to !e lower when it comparedwith of "ri =anka, "outh orea and :ong ong. Bangladesh must look for ways to improvethe productivity of its la!or force if it wants to compete regionally if not glo!ally. Because of cheap la!or if our country makes the la!or productivity in the ape* position, then we think

the future of this sector is highly optimistic.

Research and $raining

(he country has no dedicated research institute related to the apparel sector. /4# is highlyfashion oriented and constant market research is necessary to !ecome successful in the)*port. B#4)3 has already esta!lished an institute which offers !achelor>s degree infashion designing and B 4)3 is planning on setting up a research and training institute.(hese and related initiatives need encouragement possi!ly intermediated !y donor?assistedtechnology and knowledge transfer. 3 facilitating pu!lic sector role can !e very relevant here.%.pportive Government Policy

In contrast to the pu!lic sector?led import?su!stituting industriali ation strategy pursued


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during the first few years after independence, the industriali ation philosophy of thegovernment changed rather dramatically from the late +F70s when the emphasis was one*port?oriented growth to !e spearheaded !y the private sector. (owards this end, various

policy reforms were implemented in the +FK0s and +FF0s. "ome of these reformed policiescontri!uted considera!ly to the growth of the /4# industry in Bangladesh.

1uring the +FK0s, a num!er of incentives were introduced to encourage e*port activities."ome of them were new like the Bonded 9arehouse %acility 5B9%;, while others like the)*port 'erformance =icense 5-'=; "cheme G7 were already in operation and were improvedupon. 3lso, re!ates were given on import duties and indirect ta*es, there were ta* reductionson e*port income, and e*port financing was arranged. 8nder the -'= scheme, e*porters of non?traditional products received import licenses for specific products over and a!ove their normal percentage allotment !ased on the f.o.!. value of their e*ports.

8nder the 1uty 1raw!ack "ystem, e*porters of manufactured goods were entitled to getrefund of duties and ta*es paid on imported inputs used in e*port production, and also alle*cise duties paid on e*ported finished goods. %or certain fast?moving items such as /4#, anotional system of duty payments was adopted in +FK2?KG. 8nder this system, e*porters weree*empted from paying duties and ta*es on imports used in e*port production at the time of importation, !ut were re uired to keep records of raw and 2+packaging materials imported.(he duties and ta*es paya!le on the imports were kept in a suspense account. =ia!ilities to

pay the amounts in suspense were removed on proof of e*ports.

(he discussion in this section clearly points to the positive contri!ution made !y policyreforms to the growth of the /4# industry in Bangladesh. In particular, two policies the"B9 facility and the !ack?to?!ack =< system? led to significant reduction in cost of

producing garments and enhanced competitiveness of Bangladesh>s garments e*ports. It alsoallowed garment manufacturers to earn more profit which, when necessary, could !e used toovercome difficulties arising from weak governance. %urthermore, poor governance, reflectedin the leakage of duty?free imported fa!rics in the domestic market, parado*ically enoughalso helped the garment manufacturers to earn e*tra Pprofit> and there!y ena!led them toa!sor! the Phigh cost of doing )*portes a fall out of !ad governance.

%.ggestion

In order to sustain the smooth growth and development of the garment industry of Bangladesh, #overnment should play a key role to offer a good e*port policy. therwise the

production, employment, earning of foreign currency and economic development of thecountry will !e affected seriously. "ome recommendations have !een offered to face the pro!lems of the garment industry of Bangladesh. /egarding the pro!lem of /4# sector I>veidentified some recommendation for the !etterment of this sector. (he recommendations areas followsH

(he #overnment of Bangladesh should play a key role for the e*pansion of themarket of garment !y diversified items for manufacture and e*port. It is veryimportant fact that there are many items in the /4# product lines which Bangladeshientrepreneurs have not yet started production. =eather items, life jackets, gloves, !agsetc. are among few such items. 3mong other items are um!rella, nylon school !ags

and jackets, ice sport kits and wears, staffed toys, high competitive market fashion


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garments are e*amples. (here are numerous such items not yet touched !y our entrepreneurs.

#overnment also have some responsi!ility to improve the situation !y providing? proper policy to protect the garments industries, solve the license pro!lem, uickly

loading facility in the port, providing proper environment for the work, keep theindustry free from all kind of political pro!lem and the !iasness. redit must !e

provided when the industry fall in need.

3ll out efforts would !e made and steps taken for production and e*port of high priced readymade garments in the light of the prevailing market demand. Immediatesteps shall !e taken to esta!lish a %ashion Institute pending esta!lishment of the%ashion Institute measures will !e taken, under special arrangements, to e*tend e*pertservices to match the actual demand. =i!eral credit may !e considered for capacity

!uilding and hiring technology for producer of high uality garments.

4ake sure that they can deliver the products !y the due date. Because it increases thegoodwill of the companies. If for any reasons the garments companies fail to deliverythe products on the date it might hamper its goodwill and if the goodwill of acompanies are hamper it is not possi!le for them to survive in the internationalmarket. Because when they fail to delivery the goods on the date the !uyer mightfaces some loss !ecause they already schedule their work with other companies andfor this reasons the !uyer might face some losses. (hey have to pay demurrage for this unusual situation. "o in ne*t time they o!viously try to avoid this situation and asa result the failure company cannot take any order form them.

9e know that !ecause of the increasing of the price of raw materials the cost of production of the garments products are also increases. "o if the production costincreases the price of the finish goods also increase and !ecause of that we can>t offer the !uyer at a lower price in any garments products and for this reason there is achance for our /4# companies to loose their position in the international market andin this situation any !ody can take the chance to hold their place. In this case the/4# companies can produce the raw materials in domestically. 9e know that themain raw material of this sector is cotton. "o if it can produce domestically the cost of

production can !e minimi ing.

It is a !ig pro!lem for our country that there is small num!er of ualified product

designers availa!le in /4# sector !ut it is so important for our /4# )*port.Because we know there is a lot of competition in the international market and in their every country want to introduce new products with new design. 9e know that today>sworld is very much style sensitive and the style changes very rapidly. %or this reasonto solve this pro!lem our government can start some training center where theemployee can improve their skill and also the /4# companies can esta!lish thatkinds of center personally or they can send some persons outside of the country

!ecause of training.

(o ensure any kinds of the security of the foreign !uyers the /4# companies have totake any necessary steps which the !uyer say them. %or this purpose they can rent ahouse of a hotel which is safety for them and ensure all the !asic facilities. "ometimes


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they can rent some vehicles for their easy transportation. (hey can provide themdelicious foods what they like to eat.

ur #arments Industries can improve their position in the world map !y reducing theoverall pro!lems. "uch as management la!or conflict, proper management policy,

efficiency of the manager, maintaina!le time schedule for the product, proper strategic plan etc.

(o !e an upper position holder in the world #arments "ector there is no way e*cept followthe a!ove recommendations. 9e hope !y maintaining proper management and policystrategies our country will take the ape* position in future.

%.ggestions Regarding ire %afety

9e need to remem!er that when there is a fire, the first thing one should do is to run awayfrom it. 3nd this is what everyone does in such a situation. But the situation !ecomedangerous and tragic when the escape doorways and gates are found locked. 'recautionaryshould need to !e adopted are given !elowH

+. Building should !e constructed with fire resisting materials2. 3de uate e*its and proper escape routes should !e designedG. 'rotection against fire and smoke should !e ensured

. )lectrical wiring must !e properly designed, installed and maintained$. )scape routes should !e lighted at all times, kept clear !e indicated !y signsE. /egular fire drills should !e held7. 1oors should !e protected and should open along the direction of escape

K. 1oors should not open on the steps and sufficient space should !e provided.F. "moke


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+. www. #oogle.com2. www. %Kfasion.comG. www. #ood Duality Buying :ouse In Bangladesh.htm

. www. Bangladesh 2020 3n 3nalysis of #rowth 'rospect and )*ternal "ectorBehaviour.htm$. www. Bangladesh #arments Buying :ouse 3ssociation.htmE. www. lothing and Buying sourcing house %rom Bangladesh attire international.htm7. www. otton Bangladesh Bangladesh>s %ashion 1esign in International 4arket.htm

problems and prospects of readymade garments export in bangladesh

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