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History of Bangladeshi Clothing Industry

History of Bangladeshi Clothing Industry

Garment Industry Large-scale production of readymade garments (RMG) in organized factories is a relatively new phenomenon in Bangladesh. Until early sixties, individual tailors made garments as per specifications provided by individual customers who supplied the fabrics. The domestic market for readymade garment, excepting children wears and men’s knit underwear (genji) was virtually non-existent in Bangladesh until the sixties.
Since the late 1970s, the RMG industry started developing in Bangladesh primarily as an export-oriented industry although, the domestic market for RMG has been increasing fast due to increase in personal disposable income and change in life style. The sector rapidly attained high importance in terms of employment, foreign exchange earnings and its contribution to GDP. In 1999, the industry employed directly more than 1.4 million workers, about 80% of whom were female. With the growth of RMG industry, linkage industries supplying fabrics, yarns, accessories, packaging materials, etc. have also expanded. In addition, demand for services like transportation, banking, shipping and insurance has increased. All these have created additional employment. The total indirect employment created by the RMG industry in Bangladesh is estimated to be some 200,000 workers.
In addition to its economic contribution, the expansion of the RMG industry has caused noticeable social changes by bringing more than 1.12 million women into labor force. The economic empowerment of these working girls/women has changed their status in the family. The attractive opportunity of employment has changed the traditional patriarchal hegemony of the fathers, brothers and husbands. Most working women/girls can now chose when to get married or become mothers. The number of early marriages is decreasing; so is the birth rate; and the working girls tend to send their little bothers and sisters to school, as a result, the literacy rate is increasing. They can participate in family decision-making. Most importantly, the growth of RMG sector produced a group of entrepreneurs who have created a strong private sector. Of these entrepreneurs, a sizeable number is female. A woman entrepreneur established one of the oldest export-oriented garment factories, the Baishakhi Garment in 1977. Many women hold top executive positions in RMG industry.
The RMG industry is highly dependent on imported raw materials and accessories because Bangladesh does not have enough capacity to produce export quality fabrics and accessories. About 90% of woven fabrics and 60% of knit fabrics are imported to make garments for export. The industry is based primarily on sub-contracting, under which Bangladeshi entrepreneurs work as sub-contractors of foreign buyers. It has grown by responding to orders placed by foreign buyers on C-M (Cut and Make) basis. During its early years, the buyers supplied all the fabrics and accessories or recommended the sources of supply from which Bangladeshi sub-contractors were required to import the fabrics. However, situation has improved. At present, there are many large firms, which do their own sourcing.
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 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 thee 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.
In 1983-84, RMG exports earned only $0.9 billion, which was 3.89% of the total export earnings of Bangladesh. In 1998-99, the export earnings of the RMG sector were $5.51 billion, which was 75.67% of the total export earnings of the country. The net foreign exchange earnings were, however, only about 30% of the figures quoted above because approximately 70% of foreign exchanges earned were spent in importing the raw materials and accessories to produce the garments exported.
Both external and internal factors contributed to the phenomenal growth of RMG sector. One external factor was the application of the GATT-approved Multi-fiber Arrangement (MFA) which accelerated international relocation of garment production. Under MFA, large importers of RMG like USA and Canada imposed quota restrictions, which limited export of apparels from countries like Hong Kong, South Korea, Singapore, Taiwan, Thailand, Malaysia, Indonesia, Sri Lanka and India to USA and Canada. On the other hand, application of MFA worked as a blessing for Bangladesh. As a least developed country, Bangladesh received preferential treatment from the USA and European Union (EU). Initially Bangladesh was granted quota-free status. To maintain competitive edge in the world markets, the traditionally large suppliers/producers of apparels followed a strategy of relocating RMG factories in countries, which were free from quota
restrictions and at the same time had enough trainable cheap labor. They found Bangladesh as a promising country. So RMG industry grew in Bangladesh.
By 1985, Bangladesh emerged as a strong apparel supplier and became a powerful competitor for traditional suppliers in the US, Canadian and European markets. Since 1986, Bangladesh has been increasingly subjected to quota restrictions by USA and Canada. RMG industry suffered setback in a number of countries in the 1980s. Some countries had internal problems, for example, Sri Lanka; and some other countries of Southeast Asia experienced rapid increase in labor cost. Buyers looked for alternative sources. Bangladesh was an ideal one as it had both cheap labor and large export quotas. The EU continued to grant Bangladesh quota-free status and GSP privileges. In addition, USA and Canada allocated substantially large quotas to Bangladesh. These privileges guaranteed Bangladesh assured markets for its garments in USA, Canada and EU. The domestic factor that contributed to the growth of RMG industry was the comparative advantage Bangladesh enjoyed in garment production because of low labor cost and availability of almost unlimited number of trainable cheap labor. The domestic policies of the government contributed to the rapid growth of this sector. The government provided various kinds of incentives such as duty-free import of fabrics under back-to-back L/C, bonded warehouse facilities, concessionary rates of interest, cash export incentive, Export Processing Zone facilities, etc. The government also took a number of pragmatic steps to streamline export-import formalities.
There are several weaknesses of the RMG industry of Bangladesh. Labor productivity in the RMG sector of Bangladesh is lower than many of its competitors. Bangladeshi workers are not as efficient as those of Hong Kong, South Korea and some other countries and in most factories, technologies used are not the latest.
In addition to the fact that the industry is vulnerable because it is highly dependent on the imported raw materials, the infrastructure in the country is deplorably underdeveloped. Problems in power supply, transportation and communication create serious bottlenecks. Inadequate port facilities result in frequent port congestion, which delays shipment. All these increase the lead-time to process an order, i.e. the time from the date of receiving an order to the date of shipment.
The application of MFA had negative impact on many garments exporting countries. The countries, which were adversely affected by quotas under MFA, created pressure to discontinue MFA by integrating textile and clothing industries into GATT system. As a result, the Uruguay Round negotiations envisaged the phasing out of MFA by the end of 2004. With the phasing out of MFA, the position of Bangladesh in the world market will change as all countries including those under quota restrictions, will enjoy quota free status. Bangladesh will have to compete with a larger number of established and powerful suppliers of readymade garments. Bangladesh has taken some steps to face the new challenges. Such steps include removing infrastructural bottlenecks, building additional supply capacity, use of cost reduction strategy, and increase in value-addition through backward integration.
For RMG sector, the backward linkages are weaving the fabric, spinning the yarn, and dyeing, printing and finishing operations. These operations can be combined into one composite mill or they can be established as separate units. Currently, Bangladeshi apparel exporters import fabrics at international prices using back-to-back letter of credit. While procuring through back-to-back L/C, the importers (Bangladeshi exporters of apparels) pay high interest and other charges, commissions, fees for the services of the middlemen involved. The establishment of composite

mills or individual units of weaving, spinning and processing will reduce lead time and increase value addition and employment, in addition to improving the cost advantages.
In the Fifth Five-Year Plan (1997-2002), the government of Bangladesh envisages the attainment of self-sufficiency in yarn production by establishing new spinning capacities. The production capacity of this sector increased substantially though not as much as was required. There are 1,126 weaving and spinning mills including 142 ring spinning mills and 15 open-end spinning units in Bangladesh. These units produce mostly for the domestic markets. Of the total production of fabric, only 25% are supplied by the modern mills, the rest of the domestically produced fabrics are supplied by the specialized units, power looms and handloom sub-sectors. The RMG industry uses a small quantity of fabric woven in the handloom sub-sector. The domestic capacity meets less than 8% of the demand for woven fabrics of the export-oriented RMG industry. The domestic production can meet about 40% of the demand for export quality knit fabrics.
The current requirement of yarn for both domestic and export-oriented RMG industry is about 590 million kg and this will increase to about 818 million kg by the year 2005. The current requirement for fabrics is 4,400 million meters and by 2005 it will increase to 6,000 million meters. It is estimated that by 2005 Bangladesh will need 156 spinning mills each with 25,000 spindles, 371 weaving mills each with 125 looms, and 371 dyeing and finishing units each with capacity of processing 10 million meters of fabrics per annum.
The government of Bangladesh has specified some goals in the latest national development plan for backward linkage industries. To achieve the goals set in the Fifth Five-Year Plan, Bangladesh offers attractive incentives to attract both local and foreign direct investment in RMG sector. The Export Promotion Bureau, in collaboration with the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), undertakes various activities to promote Bangladeshi garments in foreign markets. They also organize annual Exhibition in Dhaka in which hundreds of foreign buyers participate.
Bangladesh exports a very limited categories of products. The factories in Bangladesh produce shirts, jackets, trousers, and other garments, with high concentration (about 60% of the total apparel exports) in the export of shirts of low price. Bangladesh is the largest exporter of men’s and boys’ cotton shirts in the US market. In this market, it competes with India, Sri Lanka, Mexico and other Central American countries in the lower price segment. The average price of Bangladesh-made shirts was $62.74 per dozen in 1998. This price was the second lowest. The Dominican Republic sold the lowest priced shirts of the same category at $54.79 per dozen. Prices of Indian, Mexican and Sri Lankan shirts were $81.04, $76.26 and $74.77 respectively. Against this, the prices of Hong Kong and Malaysia shirts were $107.34 and $134.08 respectively. Exporters from Bangladesh produce mostly those items on which quotas are available. However, there are a few exceptions. Some South Korean firms operating from Export Processing Zones of Dhaka and Chittagong export padded jacket and trousers of higher value. Many firms now export some non-quota items as well. The share of such items in the total quantity, however, is very small. Recently, export of knitwear and sweaters has increased faster than that of woven wears. These indicate that Bangladesh is actively engaged in the process of product diversification.
Although Bangladesh exports garments to some 30 countries, its exports are highly concentrated in two major markets, the USA and EU. The USA as the largest importer country imported

43.24% of total garments exported from Bangladesh in 1998-99. Bangladesh was the sixth largest supplier of apparels in the US markets in the same year. However, if European Union is considered as a single market, the US market becomes the second largest. Bangladesh exported 52.38% of its apparel exports to the EU in 1998-99. The EU is the single most important destination of knitwear export from Bangladesh. Of the individual members of the EU, Germany is the largest importer of both woven RMG (15.6%) and knitwear (14.8%) from Bangladesh and it is followed by the UK and France. The EU as a bloc has been importing from Bangladesh an increasing quantity of apparels. In the last five years Bangladesh’s exports to the EU have grown by 174%. The main reason for this phenomenal growth is the almost duty free (due to GSP privileges) and quota-free access to this market. Other export markets are small. Japan and ASEAN countries are potentially large markets. Bangladesh has not yet been able to export sizeable quantity of apparels to Japan, although it imports about 90% of the machinery from Japan to run the apparel industry. Similarly, Bangladesh has not been able to have market access to ASEAN, or Indian markets although it imports a huge quantity of fabrics and yarn from these countries. The main reasons for this are the tariff and non-tariff barriers Bangladesh faces in these markets. Recently, Bangladesh has started exporting to India, South Korea and other new markets. As a member of South Asian Association of Regional Cooperation (SAARC), Bangladesh has undertaken an elaborate program to increase apparel exports to India and other member countries of SAARC.
Bangladesh responded positively to the international requirement of elimination of child labor from the garments sector. Under the Memorandum of Understanding jointly signed by BGMEA, ILO, UNICEF and US Embassy, Dhaka on 4 July 1994, Bangladesh pledged to eliminate child labor by November 1996. Accordingly, it took necessary measures to do so. The laid-off children were provided financial support so that they could attend schools until they attain the age of 15. BGMEA and some NGOs jointly operate a number of schools for these children. The factory owners are required to abide by the laws that regulate minimum wages, working conditions, eco-labeling, etc of the garment factory workers. The workers are allowed to form and/or join trade unions. There are many active trade unions with CBAs in the garment industry. But factories located in the Export Processing Zones do not have trade unions. However, the workers of those factories receive higher remuneration and better benefit packages. To meet the international standard, the industry with the help of BGMEA makes sure that the factories do not use any dyes including Azu dye that are hazardous to health. Bangladesh recognizes the fact that its economic security depends on the future of its RMG industry. Therefore, it has undertaken an elaborate program to meet the challenges it is likely to face in the post-MFA world market.

Classification and Applications of Technical Textiles

  Technical Textiles:
  Technical textiles are reported to be the fastest growing sector of the textile industrial sector. A technical   textile is a textile that has been developed to meet the exacting specified high-performance requirements of a particular end-use other than conventional clothing and furnishings. In many cases, specially developed technical yarns are employed to support and reinforce the fabric properties.

It is considered that technical textiles account for approximately 21 per cent of all textiles. The main markets are: traditional industrial fabrics, for example,

• Canvas, tents, etc. (43%);
• Transportation and automotive (23%);
• Leisure (12%);
• Geotextiles (10%);
• Medical textiles (10%); and
• Protective apparel (2%).

Classification and Applications of Technical Textiles:

Agriculture, Horticulture and Fishing:
Textiles have always been used extensively in the course of food production, most notably by the fishing industry in the form of nets, ropes and lines but also by agriculture and horticulture for a variety of covering, protection and containment applications. Although future volume growth rates appear to be relatively modest, this is partly due to the replacement of heavier weight traditional textiles, including jute and sisal sacking and twine, by lighter, longer lasting synthetic substitutes, especially polypropylene. Lightweight spun bonded fleeces are now used for shading, thermal insulation and weed suppression. Heavier nonwoven, knitted and woven constructions are employed for wind and hail protection. Fibrillated and extruded nets are replacing traditional baler twine for wrapping modern circular bales. Capillary nonwoven matting is used in horticulture to distribute moisture to growing plants. The bulk storage and transport of fertilizer and agricultural products is increasingly undertaken using woven polypropylene FIBCs (flexible intermediate bulk containers – big bags) in place of jute, paper or plastic sacks. At sea, fish farming is a growing industry which uses specialized netting and other textile products. High performance fibres such as HMPE (e.g. Dyneema and Spectra) are finding their way into the fishing industry for the manufacture of lightweight, ultra-strong lines and nets.

Construction-Building and Roofing:
Textiles are employed in many ways in the construction of buildings, both permanent and temporary, dams, bridges, tunnels and roads. A closely related but distinct area of use is in geotextiles by the civil engineering sector. Temporary structures such as tents, marquees and awnings are some of the most obvious and visible applications of textiles where these used to be exclusively made from proofed heavy cotton, a variety of lighter, stronger, rot-, sunlight- and weatherproof (also often fireproof) synthetic materials are now increasingly required. Nonwoven glass and polyester fabrics are already widely used in roofing applications while other textiles are used as breathable membranes to prevent moisture penetration of walls. Fibres and textiles also have a major role to play in building and equipment insulation. Glass fibres are almost universally used in place of asbestos now. Double wall spacer fabrics can be filled with suitable materials to provide sound and thermal insulation or serve as lightweight cores for composite materials. Composites generally have a bright future in building and construction. Existing applications of glass-reinforced materials include wall panels, septic tanks and sanitary fittings. Glass, polypropylene and acrylic fibres and textiles are all used to prevent cracking of concrete, plaster and other building materials. More innovative use is now being made of glass in bridge construction.   

Home Textiles:
By far the largest area of use for other textiles as defined above, that is other than fabrics, nonwovens and composite reinforcements, over 35% of the total weight of fibres and textiles in that category, lies in the field of household textiles and furnishing and especially in the use of loose fibres in wadding and fiberfill applications. Hollow fibres with excellent insulating properties are widely used in bedding and sleeping bags. Other types of fibre are increasingly being used to replace foams in furniture because of concern over the fire and health hazards posed by such materials.

Woven fabrics are still used to a significant extent as carpet and furniture backings and in some smaller, more specialized areas such as curtain header tapes. However, nonwovens such as spun bonded have made significant inroads into these larger markets while various dry laid and hydro-entangled products are now widely used in household cleaning applications in place of traditional mops and dusters.   

Medical and Hygiene Textiles:
The largest use of textiles is for hygiene applications such as wipes, babies’ diapers (nappies) and adult sanitary and incontinence products. Nonwovens dominate these applications which account for over 23% of all nonwoven use, the largest proportion of any of the 12 major markets for technical textiles. The other side of the medical and hygiene market is a rather smaller but higher value market for medical and surgical products such as operating gowns and drapes, sterilization packs, dressings, sutures and orthopaedic pads. At the highest value end of this segment are relatively tiny volumes of extremely sophisticated textiles for uses such as artificial ligaments, veins and arteries, skin replacement, hollow fibres for dialysis machines and so on. 

Geotextiles in Civil Engineering:
The economic and environmental advantages of using textiles to reinforce, stabilise, separate, drain and filter are already well proven. Geotextiles allow the building of railway and road cuttings and embankments with steeper sides, reducing the land required and disturbance to the local environment. Revegetation of these embankments or of the banks of rivers and waterways can also be promoted using appropriate materials.

Transportation Textiles:
Transport applications (cars, Lorries, buses, trains, ships and aerospace) represent the largest single end-use area for technical textiles, accounting for some 20% of the total. Products range from carpeting and seating (regarded as technical rather than furnishing textiles because of the very stringent performance characteristics which they must fulfil), through tyre, belt and hose reinforcement, safety belts and airbags, to composite reinforcements for automotive bodies, civil and military aircraft bodies, wings and engine components, and many other uses.   

Packaging and Containment:
Important uses of textiles include the manufacturing of bags and sacks, traditionally. An even faster growing segment of the packaging market uses lighter weight nonwovens and knitted structures for a variety of wrapping and protection applications, especially in the food industry. Tea and coffee bags use wet-laid nonwovens. Meats, vegetables and fruits are now frequently packed with a nonwovens insert to absorb liquids. Other fruits and vegetable products are supplied in knitted net packaging from cotton, flax and jute but increasingly from polypropylene. Strong, lightweight spun bonded and equivalent nonwoven paper-like materials are particularly useful for courier envelopes while adhesive tapes, often reinforced with fibres, yarns and fabrics, are increasingly used in place of traditional twine. Woven strapping are less dangerous to cut than the metal bands and wires traditionally used with densely packed bales.   

Protective and Safety Clothing and Textiles:
Textiles for protective clothing and other related applications are another important growth area which has attracted attention and interest somewhat out of proportion to the size and value of the existing market. The variety of protective functions that needs to be provided by different textile products is considerable and diverse. It includes protection against cuts, abrasion, ballistic and other types of severe impact including stab wounds and explosions, fire and extreme heat, hazardous dust and particles, nuclear, biological and chemical hazards, high voltages and static electricity, foul weather, extreme cold and poor visibility.   

Sports Textiles :
Applications of sports textile are diverse and range from artificial turf used in sports surfaces through to advanced carbon fibre composites for racquet frames, fishing rods, golf clubs and cycle frames. Other highly visible uses are balloon fabrics, parachute and paraglider fabrics and sailcloth.   

Ecological Protection Textiles:
The final category of technical textile markets, as defined by Techtextile, is technical textiles for protection of the environment and ecology. This is not a well defined segment yet, although it overlaps with several other areas, including industrial textiles (filtration media), geotextiles (erosion protection and sealing of toxic waste) and agricultural textiles (e.g. minimizing water loss from the land and reducing the need for use of herbicides by providing mulch to plants).

Historical Background of Readymade Garments Industry

Historical Background of Readymade Garments Industry ( RMG ) and its Growth

of technology required in the industry. The machinery is relatively inexpensive and easily available. In addition, garment producers can operate in smaller premises than those required by most of the processes in the textile industry. On top of this, Bangladesh has an abundant supply of cheap labor consisting mostly of women for whom this is one of the most suitable forms of employment.

These factors, as well as incentives such as liberal trade policies, low tariffs on imported machinery, and bonded warehouse facilities, which allow the importation of raw materials to be processed for export have done much to facilitate the growth of the garment industry. However, probably the most important factor in this growth is the benefit of reserved markets that Bangladesh enjoys under the Multi Fiber Arrangements, or MFA.
The Textile exporting nations in the world fall under the trading conditions determined by the MFA, which is included in the General Agreement for Tariff and Taxation, or GATT.

According to the MFA, developed nations are required to guarantee the import of a certain amount of their textile needs from developing nations. For example, the United States may have assigned the production of a certain amount of textiles to Bangladesh. This would mean that countries such as Bangladesh are assured a market for a specified number of yards of textiles each year. This agreement served to limit the dominance of the textile industries in the more developed world by limiting their share of the global market.

In addition, Bangladesh's garment exporters enjoy the privilege of quota-free entry into the European Union, or EU, whereas their major competitors, such as China, India, Indonesia, Pakistan, Sri Lanka, and Thailand, are subjected to the restrictions of an assigned quota. As a result Bangladesh is able to export everything that it produces, while its more developed competitors are limited to specific amounts assigned through quotas.

Bangladesh: A Growing Textile Economy

Bangladesh’s textile industry is comprised of a mix of small- to large-scale privately and publicly owned companies.

T he textile industry has played an important role in Bangladesh’s economy for a long time. Currently, the textile industry in Bangladesh accounts for 45 percent of all industrial employment and contributes 5 percent to the total national income. The industry employs nearly 4 million people, mostly women.

A huge 78 percent of the country’s export earnings come from textiles and apparel, according to the latest figures available. Bangladesh exports its apparel products worth nearly $5 billion per year to the United States, European Union (EU), Canada and other countries of the world. It is the sixth largest apparel supplier to the United States and EU countries.

Major products exported from Bangladesh include polyester filament fabrics, man-made filament mixed fabrics, PV fabrics, viscose filament fabrics and man-made spun yarns. Major garments exported include knitted and woven shirts and blouses, trousers, skirts, shorts, jackets, sweaters and sportswear, among other fashion apparel.

Bangladesh: A Growing Textile Economy

Bangladesh’s textile industry is comprised of a mix of small- to large-scale privately and publicly owned companies.

By T.C. Malhotra

T he textile industry has played an important role in Bangladesh’s economy for a long time. Currently, the textile industry in Bangladesh accounts for 45 percent of all industrial employment and contributes 5 percent to the total national income. The industry employs nearly 4 million people, mostly women.

A huge 78 percent of the country’s export earnings come from textiles and apparel, according to the latest figures available. Bangladesh exports its apparel products worth nearly $5 billion per year to the United States, European Union (EU), Canada and other countries of the world. It is the sixth largest apparel supplier to the United States and EU countries.

Major products exported from Bangladesh include polyester filament fabrics, man-made filament mixed fabrics, PV fabrics, viscose filament fabrics and man-made spun yarns. Major garments exported include knitted and woven shirts and blouses, trousers, skirts, shorts, jackets, sweaters and sportswear, among other fashion apparel.

Bangladesh: A Growing Textile Economy

Bangladesh’s textile industry is comprised of a mix of small- to large-scale privately and publicly owned companies.

By T.C. Malhotra

T he textile industry has played an important role in Bangladesh’s economy for a long time. Currently, the textile industry in Bangladesh accounts for 45 percent of all industrial employment and contributes 5 percent to the total national income. The industry employs nearly 4 million people, mostly women.

A huge 78 percent of the country’s export earnings come from textiles and apparel, according to the latest figures available. Bangladesh exports its apparel products worth nearly $5 billion per year to the United States, European Union (EU), Canada and other countries of the world. It is the sixth largest apparel supplier to the United States and EU countries.

Major products exported from Bangladesh include polyester filament fabrics, man-made filament mixed fabrics, PV fabrics, viscose filament fabrics and man-made spun yarns. Major garments exported include knitted and woven shirts and blouses, trousers, skirts, shorts, jackets, sweaters and sportswear, among other fashion apparel.

Textile and apparel firms in Bangladesh are mostly concentrated around the capital city of Dhaka.
A Picture Of Bangladesh's Textile Industry

Bangladesh’s textile industry can be divided into three main categories: public sector; handloom sector; and the organized private sector. The private sector is the fastest growing sector in the country.

The handloom industry provides employment for a large segment of the population of Bangladesh and supplies a large portion of the fabric required by the local market.

Mahmud E. Alam, managing director, Famano Textile Mills Ltd., said about 20 percent of existing mills in Bangladesh are large-scale mills, roughly 30 percent are medium-scale mills, and the remaining 50 percent are small-scale mills. Alam said the number of spinning mills in the country is increasing day-by-day.

The textile quotas under the Multi-Fiber Arrangement of January 2005 have been moderate in Bangladesh and the industry is divided on their impact. While industry analysts say Bangladesh’s garment and textile manufacturers will have to face steep competition from countries such as India, Pakistan, China and Thailand as a result of new policies, the textile companies see no impact on their business.

Alam feels the lifting of quotas is not going to affect his business. “The future of the textile industry here is very bright,” Alam said. “Even the lifting of quotas is not going to affect the industry as was worried,” he said.

Mostafizur Rahman, managing director, Pawrob, also is of the view that lifting quotas is not going to have very much of an effect, but he fears China will affect the Bangladesh textile industry in the long run.

“The main reason behind this is the leap factor,” Rahman said. “Chinese companies have an edge of 30 days over Bangladeshi textile companies.”

  Top to bottom: Jamuna multipurpose bridge, which connects two detached parts of Bangladesh; National Memorial in Savar, 35 kilometers from Dhaka; Bangladesh's National Parliament (Sangsad Bhaban), designed by American architect Louis Kahn ; and Shaheed Minar, which commemorates the Language Martyrs of 1952
Combined, the textile and apparel sectors consist of 3,600 firms. There is a concentration of manufacturing activity in and around the capital city of Dhaka and a growing garment manufacturing presence in the country’s export processing zones.

Bangladesh Textile Mills Association Secretary General Taufiq Hasan said that because textiles and ready-made garments are the two largest export sectors and employers in Bangladesh, government support will continue and there are no restrictions on repatriation of profits and investment or tax-free imports of machinery and raw materials for export. The government also is liberal toward work permits.

According to the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), the total fabric requirement in the captive market is about 3 billion yards, of which roughly 85 to 90 percent is imported from countries such as China, India, Hong Kong, Singapore, Thailand, Korea, Indonesia and Taiwan. Fabric demand is increasing at the rate of 20 percent per year.

Although the industry is one of the largest in Bangladesh and is still expanding, it faces serious problems, principally because the country does not produce enough of the raw materials necessary for the industry to expand. The primary materials used in the spinning sector are raw cotton and man-made fibers such as viscose and polyester staple fibers. Unfortunately, none of these raw materials are produced in Bangladesh.

Most spinning mills in Bangladesh produce low-grade yarn. Available figures show that current yarn production satisfied only 22-percent of the total yarn demand. In spite of this drawback, as many as 116 new spinning mills, each having the capacity of 25,000 spindles, will be established in the near future.

The weaving sector also is plagued by a lack of organization and coordination. The existing weaving capacity in Bangladesh can meet only about 40 percent of fabric demand; the rest is imported. However, the increasing trend of expansion in the weaving sector is clear from the fact that 223 modern weaving plants, each with an annual capacity of 10 million meters, will be set up in the near future.

The knitting and hosiery sectors look brighter than weaving, and about 80 percent of garment accessories like cartons, threads, buttons, labels, poly bags, gum tapes, shirt boards and neck boards now are being produced within Bangladesh and contribute to the the national gross domestic product. However, the textile industry is just budding.

Bangladesh Textile Mills Corporation

When Bangladesh gained its independence from Pakistan in 1971, the new government nationalized the textile industry. All of the country’s textile factories were then organized under the Bangladesh Textile Mills Corp. (BTMC).

The role of BTMC within Bangladesh’s textile industry has substantially been altered since the denationalization of a large number of public sector textile mills over the last decade and a half. Prior to denationalization, BTMC enjoyed a near-monopoly within the yarn and fabric market in Bangladesh.

At present, there are 21 textile companies under BTMC. They operate 24 spinning facilities with an installed capacity of 490,892 spindles and 1,036 looms. Out of that total, 13 of the companies — which operate 16 plants — utilize 320,228 spindles under the service charge system producing different counts of yarn in the range of 32/1 to 80/1. Another five companies have 128,088 spindles in operation.

Among the 21 mills, Valika Woolen Mills Ltd., Nasirabad, Chittagong, is the only specialized BTMC company, producing knitting wool, woolen suiting, men’s and women’s woolen shawls, and woolen blankets.

 The government-owned Bangladesh Export Processing Zones Authority promotes foreign and local investment in its export processing zones, which were developed to provide potential investors a business environment free of complicated procedures.
Other leading textile associations in the country include the BGMEA, Bangladesh Jute Mills Association, and Bangladesh Knitwear Manufacturers and Exporters Association.

According to Bangladesh’s Textile Minister Shajahan Siraj, the government had initiated various policy measures such as rationalization of tariffs and taxes on imports of capital machinery, raw materials, dyes and chemicals, and reduction of interest on long- and short-term loans.

Mahmudur Rahman, executive chairman of Bangladesh’s Board of Investment, said in a recently published interview that in the next five years, the country needs an investment of US $3 billion in the textile sector. He said the country’s textile market, during the last fiscal year (July 2004-June 2005) totaled $21.5 billion, compared to $3.2 billion 20 years ago. Rahman predicted the market could grow to $23 billion in the next fiscal year.

The Bangladesh government offers great incentives for encouraging the use of local fabrics in the export-oriented garment industries. To encourage textile export, companies can import capital machinery duty-free. Cotton also may be imported duty-free. Moreover, the government recently has implemented several policy reforms to create a more open and competitive climate for foreign investment.

Rising garment export trends from Bangladesh, along with some benefits provided by the government, have created concerns for Pakistan's government. Textile tycoons in Karachi are thinking about shifting their business to Bangladesh.