International Trade Implications and Future of Ready-Made Garments Sector of Bangladesh

INTERNATIONAL TRADE IMPLICATIONS AND FUTURE OF READY-MADE GARMENTS SECTOR OF BANGLADESH

Abu Yousuf Md. Abdullah*

ABSTRACT

The hundred percent export-oriented RMG industry has experienced phenomenal growth during the last 15 years. Within a very short period of time, it has attained great importance in terms of its contribution to GDP, foreign exchange earnings and employment and also as a vehicle of social changes. The export earning data of Bangladesh, shows that in 19884-85, ready-made garment sector earned 12.39%( $116 million) of the total export. This was raised to 36.46%($471 million) in 1989-90. This share rapidly went up to 53.36%($1064 million) in 1991-92. Surprisingly, the share showed no increase for the last three years. Bangladesh garments products are facing various barriers and difficulties in the international market. Garments’ contribution to the total export earning remained constant at around 52% for the last two years (52.84%) in 1994-95 and 52.63% in 1995-96. This stagnant situation demands immediate attention of the international market researcher and the government as well. This research therefore, attempts to assess the present status of the RMG sector and suggests strategies to overcome the present crises.

1. INTRODUCTION

The most youthful export sector in Bangladesh, the RMG industry, has been earning over 60% of the foreign currency for the country during the last few years. In 1995, it contributed 66% to the nations total earning from export. The membership of BGMEA, which started with 19 (Nineteen) in early 1983, has reached 2383, as on August 31, 1996, increasing by 25% each year. The growth of garment exports in dollar terms is in harmony with the growth rate of factories that depicts a healthy steeper growth of the industry. Garment export in value has been increasing on an average by 27% each year. As the rate of increase (20%) per year, is expected to continue through the MFA phasing out transition, growth prospect of Bangladesh’s apparel industry looks brighter (The Daily Sangbad: 1996).

Country’s RMG producers have been steadily moving towards high value sophisticated items like high quality suits, jackets, branded jeans items, embroidered ladies’ wear etc. They are now producing a wide range of garments items and have expanded their market world wide. Increasing at the rate of 27% per year over the last several years, utilising quota and diversifying their products into non-quota items, the country presently holds 6th largest apparel exporter status in the USA while 5th largest in the European Union (EU).

Japan has been a very quality conscious market in the world. Bangladesh very recently has proved itself to be prospective in RMG export to Japan also. In 1994-95, export of RMG to Japan from Bangladesh jumped up to US$ 5.61 million or by 168% of the previous year’s. It shows that the apparel producers are gradually catching up with quality requirement of the buyers in the international market.

The major share of the country’s RMG export market from the very beginning was led by US followed by EU. But during 1995, EU overtook the US. Among countries in EU, Germany has been topping the list over last several years followed by UK, France, Italy and The Netherlands. In 1995, Germany imported apparels worth US$ 317.86 million against US$ 245.39 million in 1994. Only Shirts and T-shirts that Germany imported in 1995 were worth US$ 202.36 million. As single country, however, US has been the highest apparel importing country for Bangladesh. (GOB 1996) Bangladesh Statistical Yearbook, 1995, Dhaka: BBS, BGMEA: 1996.

Objectives of the Study

 To know the existing position 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 realised in the international market.

 To recommend the measurers needed to be taken for increasing the export volume.

Methodology

Since this study is clinical in nature, a number of techniques were used to collect the required information. Both primary and secondary information were collected. Primary technique involved questionnaire survey using purposive sampling,