T
he name “Bangladesh,” meaning “Country of Bengal,” is derived from a Hindu word
signifying “wetland.” Located north of the Bay of Bengal, this low-lying delta in South Asia is the
largest wetland in the world, having a total area of 144,000 square kilometers. With an estimated
population of more than 153 million as of July 2008, Bangladesh is among the world’s poorest and
most densely populated countries.
The textile industry in Bangladesh has been an important contributor to the economy for
centuries, and today is one of the country’s most crucial economic sectors. According to the
country’s Ministry of Textiles and Jute, its textile and apparel industry encompasses textile
processes from spinning; weaving; knitting including hosiery and knit dyeing; dyeing and finishing;
yarn dyeing; and sewing thread; up to the final outputs, including ready-made garments and
nonwovens such as technical textiles.
Ready-Made Garments Sector
Taken as a whole, the textile industry is Bangladesh’s number-one export earner, accounting
for approximately 80 percent of the country’s exports and foreign exchange earnings. Although jute,
cotton and other textiles constitute some of the country’s principal industries, the ready-made
garments (RMG) sector is by far the largest export-oriented manufacturing industry in the country.
The sector employs roughly 2.5 million workers, 80 percent of whom are women.
Bangladesh’s RMG sector, which is composed of the knitwear and woven garments sub-sectors,
had its beginnings in the 1970s and has been growing at an increasing rate ever since, with a
27-percent cumulative average growth rate. According to recent figures from the government’s Export
Promotion Bureau, the sector had exports of US$10.7 billion in fiscal year (FY) 2007-08
(July-June), constituting nearly 76 percent of Bangladesh’s total exports. In July 2008 alone, RMG
exports of woven apparel rose by 58.6 percent, and of knitwear, by 84.7 percent over July 2007.
Woven garments and knitwear mainly are exported to the European Union (EU) – which takes in
approximately 60 percent of Bangladesh’s total RMG exports – followed by the United States, which
accounts for more than 32 percent of the total.
For the first time in the RMG sector’s history, knitwear exports exceeded woven apparel
exports in 2007. Knitwear has become the dominant sub-sector in terms of quantity exported – with a
national export share of 37.39 percent in FY 2006-07 – and it is steadily gaining share. Over time,
the knitwear sector has become almost self-sufficient in terms of fabric and yarn supply, as a
result of spinning factories growing at the same rate as the country’s stitching capacity,
therefore increasing fabric and yarn needs. Furthermore, as knitwear exports have increased,
upstream supplier capacity has gradually increased correspondingly. As a result, domestic suppliers
can provide 90 percent of the sector’s total fabric requirement. In addition, the number of
spinning mills has grown as knitwear exports have increased.
According to the most recent Bangladesh Garment Manufacturers and Exporters Association
(BGMEA) Statistical Report, Bangladesh’s woven apparel exports increased by 1.8 percent in 2007 for
a value of US$4.61 billion, while knitwear exports increased by 8.05 percent in the same year, for
a value of US$4.74 billion. Data from the report suggest that in 2007, the sector overall
experienced growth of 4.67 percent – a rate not quite as good as rates achieved in previous years,
but reasonable compared to growth by regional competitors.
Though exports of both woven garments and knitwear have increased substantially, helping the
RMG sector maintain its role as a main contributor to Bangladesh’s economy, a few other textile
products show potential, as they recently have experienced considerable growth. According to the
country’s Export Promotion Bureau, in July 2008 over July 2007, home textiles exports increased by
55.19 percent, and terry towel exports increased by 34.4 percent. However, the biggest growth was
in exports of textile fabric – though representing a very small part of total exports, it showed a
massive 697.9-percent increase in exports in July 2008 over July 2007.
Imports
According to the German Engineering Federation (VDMA) Textile Machinery Association, textile
technology imported by Bangladesh comes predominantly from Chinese suppliers, which in 2006
delivered technology worth around 230 million euros. However, Germany also has exported a large
volume of textile machinery to Bangladesh over the last five years. In 2003, German exports were
worth approximately 31 million euros; and in 2007, more than 40 million euros. Though Germany’s
exports to major markets such as China, Turkey and India decreased considerably during the first
half of 2008, deliveries to Bangladesh actually increased by 6 percent during that period to more
than 28 million euros.
From 2005 through 2007, spinning machinery comprised the majority of Germany’s textile
machinery exports to Bangladesh, totaling 75.4 million euros. In 2007, spinning machinery exports
totaled 25.2 million euros. Finishing machinery totaled 8.3 million euros; knitting and hosiery,
7.3 million euros; and weaving, 1.3 million euros in 2007.
Textile Associations
After Bangladesh became independent from Pakistan, the new government nationalized the
textile industry and in 1972 organized all of its factories under the Bangladesh Textile Mills
Corp. (BTMC). Over the past 15 years, a large number of public-sector textile mills have been
denationalized, significantly changing BTMC’s role within Bangladesh’s textile industry. Before
denationalization, BTMC had a near-monopoly within the country’s yarn and fabric market, with no
competitive yarn sources. The organization continues its goal of developing the textile sector to
increase fabric production so it can meet the country’s increasing domestic and export needs.
Bangladesh has many textile associations supporting the country’s industry. The Bangladesh
Knitwear Manufacturers and Exporters Association (BKMEA), formed in 1996 and comprising about 1,500
knitwear manufacturers and exporters, represents the country’s largest export-earning sector. The
organization works to protect sector interests, promoting and developing the sector’s capacity as
well as the market. BKMEA also works to improve social compliance status, and provides education
and spreads awareness of basic rights.
BGMEA represents 4,490 Bangladeshi export-oriented apparel manufacturers. BGMEA helps
promote the RMG sector by establishing a profitable business environment and cultivating
relationships among the manufacturers, exporters and importers, with the goal of increasing
Bangladesh’s foreign exchange earnings.
Government Support
The Bangladeshi government actively supports the country’s textile industry. Operating under
the Ministry of Commerce, the Export Promotion Bureau administers several Export Processing Zones
(EPZs), including one in the capital city of Dhaka and one in Chittagong – the country’s
second-largest city and its commercial and industrial hub. The EPZs offer numerous incentives to
potential investors in the export-oriented apparel industries, such as customs- and tax-free
importing of capital-intensive machinery, equipment and raw materials; duty-free export of goods
produced in the zones; 10-year tax holidays; exemptions on income tax on salaries paid to foreign
nationals for three years; and dividend tax exemptions for the tax holiday period; among other
incentives.
Bangladesh enjoys trade advantages with the United States and several other countries
through various instruments, including the Generalized System of Preferences, and bilateral trade
and investment treaties. In addition, the government has budgeted many ongoing projects under the
Annual Development Program in support of the textile sector.
Post-MFA Effects And The Future
With regard to the effects of the January 2005 expiration of the Multi Fibre Arrangement
(MFA), which imposed quotas on developing countries’ exports to developed countries, Bangladesh was
expected to suffer greatly, as many expected it to face more competition from textile giants like
China. However, Bangladesh has benefited from the removal of quotas, as its labor is some of the
cheapest in the world, whereas China’s labor costs are rising.
However, in the past couple of years, there has been an ongoing unrest as textile workers,
among some of the lowest-paid in the world, have been staging demonstrations in an effort to
achieve a higher minimum wage, regular days off and safer working conditions.
Addressing these issues, Mohammed Anwarul Iqbal, an advisor for the Ministry of Labour and
Employment and the Ministry of Textiles and Jute, stated: “We have developed a Decent Work Country
Programme 2006-2009 in collaboration with the ILO [International Labor Organization]. The programme
addresses post-MFA challenges, promotion of decent and productive employment, elimination of worst
forms of child labour, and fulfillment of workers’ rights in the Export Processing Zones.” Iqbal
also stated that “Bangladesh is addressing the challenges it faces to improve the condition of its
working population and remains committed to implement applicable international labour standards.”
Though the political instability in Bangladesh has slowed down some investment in the
textile sector, the industry certainly has high hopes for the future. Just recently, the BGMEA
vowed to “increase the country’s exports to $25 billion by 2013, provided the coming elected
government and all concerned could maintain political stability and ensure right economic
policies.” According to BGMEA President Anwar Ul Alam Chowdhury Parvez, only 5 percent of the
country’s 4,000 factories do not regularly pay workers’ wages and other benefits, and these
failures are informing the somewhat negative perception of the whole industry. Parvez did
acknowledge that several areas must improve in order for Bangladesh’s textile industry to remain
successful.
November/December 2008