Security & Safety Concern: a Study on Rmg Sector of Bangladesh

Topics: Economics, Labor, Economy of Bangladesh Pages: 8 (2725 words) Published: February 10, 2013

The readymade garment (RMG) sector has been playing an important role in the overall economic development of Bangladesh. For a long time developing countries have strived for a development paradigm that would achieve high economic growth leading to employment generation and poverty alleviation. The RMG industry of Bangladesh started its modest journey in late 1970s and within three decades, it has been a flourishing sector.

In the 1950s, developing economies like Hong Kong, Taiwan and South Korea presented themselves as good destinations for relocations. . 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 impose quotas on countries that exported at a higher rate than the bilateral agreements. in that restricted situation,producers began to search those countries were not included in quotas and had cheap labor. AT that time Bangladesh began to receive investment in RMG sector. In the beginng a number of bangladeshis received free training from Korean Daewoo Company in 1980s. After that the workers broke ties with the factory they were working for and came back to Bangladesh. they started their own factories. The export-oriented RMG industries experienced momentum evolution throughout last 20 or so years. 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 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, had technical and marketing collaboration with Daewoo Corporation of South Korea. It was also the first hundred percent export-oriented company. 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.

The RMG sector has developed here rapidly because it is a labor intensive industry that requires ordinary technology, cheap labor and little capital. Within a short period, Bangladeshi entrepreneurs got familiar with the world garments markets and marketing. They acquired the skill of leving resources to export-oriented RMG industries.Bangladesh was found improving attractive sourcing place by foreign buyers. In many cases, foreign buyers extended suppliers' credit under special arrangements to take advantage of this cheap source. The proposition of working capital was exceedingly solved with the formation of back-to-back letter of credit, which also aided import of quality fabric and the basic raw material of the industry. The government allocated high priority to the growth of RMG industry.

Contribution of the RMG sector in national economy is great. It is the highest foreign exchange earning sector. The RMG sector has been capable to relieve the country from the burden of unemployment by creating employment opportunities. Bangladesh is known as a poor and over-populated country suffering with a lot of problems. It has been able to create employment opportunities for about 3.5 million of people, most of whom are poor, uneducated and unskilled women from the rural area. Besides, it has been able to attract foreign direct investment, accelerate industrialization process, alleviate poverty to a certain extent and create a good image of Bangladesh in the world. In recent years, labor unrest in RMG sector of Bangladesh has been a matter of serious concern.

But this sector is fighting with a...
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