Rmg Sector in Bangladesh

Topics: Ethics, Knitting, Business ethics Pages: 23 (7511 words) Published: July 9, 2012
Industry Background
The industry of RMG is one of the most potential and revenue earning sector of Bangladesh. The standing of the RMG market is known worldwide. It was started in the late 1970s. Soon it became one of the major economical strength for Bangladesh. The RMG sector has added very much in earning foreign exchange, balancing export and import, huge unemployment problem for the country and empowerment of women along with giving them financial support. The main markets of the Bangladeshi RMG products are North America and countries of Western Europe. The prices of the products are reasonable. Some 85 percent of Bangladeshi production was sold to North American customers, and virtually overnight Bangladesh became the sixth largest supplier to the North American market. Business prospered right from the start; many owners made back their entire capital investment within a year or two and after that continued to realize great profits.

The Primary stage of RMG sector in Bangladesh
The early stage was not so good for this industry. Pre independence and for a while after independence, the backbone of this country was totally depended on agriculture and a very little industry which is also related to agriculture. As the policymakers of that time were trying hard to progress the agriculture sector to make it a source of revenue, Industrialization was coming up rapidly. In the year of 1970, the East-Pakistan government saw the opportunity that they can have a future in the textile and garment industry and that was the start of it. On that particular year, a new law came has been announced so that the new opportunity can be grabbed and the process can be governed. Entrepreneurs of this country took the opportunity and made the best out of it. After that the growth continued with new industries, investments, exports and revenue earnings. After the liberation war, the progress started in a new level. Some places in big cities were selected as industrial area and people started to invest in this sector. Bangladesh entered the export market of apparels in 1978 with only 9 units and earned only $0.069 million. With virtually no government regulation, the number of firms proliferated; no definitive count was available, but there were probably more than 400 firms by 1985, when the boom was peaking. From the early 1990s, the knit section of the industry has started to expand. Shirts, T-shirts, trousers, sweaters and jackets are the main products manufactured and exported by the industry.

Contemporary conditions
The RMG sector of Bangladesh consists of more than 4000 Garments and Garments accessories manufacturers. It includes knit garments manufacturer, woven garments manufacturers and their backward linkages. More than 95% of those firms are locally owned with some foreign owned firms located in EPZ. The backward linkage is composed of spinning, weaving and knitting, dyeing and painting and finishing sectors and accessories. Bangladesh is far from being self-contained in cotton. Almost 99% of the cotton is imported from outside. But the backward linkage in knitwear sector is quite good. This case is not the same for woven garments. And also the relaxed rules of origin by EU effective since January 1, 2011 will slow down the growth of the backward linkages. Bangladesh imports cotton, yarn, and fabrics mainly from China, India, Uzbekistan and Pakistan. During the July-December period of 2010 Bangladesh imported cotton and yarns from China (23%), India (33%), and Uzbekistan (17%). Bangladesh could not import from Pakistan during this period as production of the latter was decreased due to flood. The phenomenal growth of clothing sector can largely be attributed to the simple level of technology needed by the industry, supply of cheaper work force, supply of cheaper energy, and policy support by the government. Most significantly the benefits of reserved markets by MFA (multi-fiber agreement) quota helped the rapid growth...
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