Abstract
The success of readymade garment exports from Bangladesh over the past two
decades has surpassed the most optimistic expectations. The paper reviews the
literature on this industry, presents recent data on the sector's performance, and
evaluates future trends in the international and domestic clothing industry.
Acknowledgement
First thing first it has to be said that completion of this Term Paper was not a very
easy task for me. It‟s a very special thank from me to my instructor Mr. „X‟ for his
ever kind and intimate assistance and provided freedom for working on it.
The effort for this term paper will definitely strengthen my knowledge and sense
about the related field of International Business. I strongly believe that I will be able
to utilize my knowledge and senses in the practical field.
Such type of term paper, I may make some conceptual mistakes. I offer apology for
any such unexpected mistake if done.
Finally, I wish to mention that here I tried to follow the formal guidelines and it has
been casually written all through like usual term papers. It has been done willingly
for its uniqueness subject with its field of creative construction.
Index
PART 1: Introduction --------------------------------------------
#04
1.1 Introduction
1.2 Objective
1.3 Methodology
1.4 Limitations
# 04
# 04
# 05
PART 2: Current scenario ---------------------------------------
# 06
2.1. An overview of ready made garments of Bangladesh
# 06
2.2. Market Access Issues
# 07
2.3. Exporters of ready made Garment products; World perspective
# 07
2.4. Foreign Demand
# 08
Part Three: Prospective Analysis ------------------------------------
# 12
3.1. Prospect of ready made garment industry in Bangladesh
# 12
3.2 Current scenario of garment industry in Bangladesh
# 16
Part Four: Analysis ------------------------------------------------------
# 19
4.1. SWOT Analysis
# 19
4.2. The Future of Garment Exports and the Economy of Bangladesh
# 22
Part Five: Conclusion-------------------------------------------------------
# 24
Part One: Introduction
1.1 Introduction
The tremendous success of readymade garment exports from Bangladesh over the
last two decades has surpassed the most optimistic expectations. Today the apparel
export sector is a multi-billion-dollar manufacturing and export industry in the
country. The overall impact of the readymade garment exports is certainly one of the
most significant social and economic developments in contemporary Bangladesh.
With over one and a half million women workers employed in semi-skilled and
skilled jobs producing clothing for exports, the development of the apparel export
industry has had far-reaching implications for the society and economy of
Bangladesh.
1.2 Objective:
I have tried to show that how much the garments sectors contributed for the
betterment of Bangladesh. We earn more than half of the total revenue by exporting
RMG products to different countries all over the world. It can be said that the
Garments sectors have brought about the revolutionary change for Bangladesh
1.3 Methodology:
In order to supplement my theoretical knowledge regarding ready made garments
with the field practical exposure, I contacted different buying houses and collected
data regarding real life scenario. I make an over view with their income and the
necessary conceptual application.
I also tried to follow my concern course contents and necessary related materials to
utilize for an effective term paper.
1.4 Limitations
First of all, the time duration I had for this particular term paper was not appropriate.
In fact I faced little bit difficulties to collect the information regarding this particular
term paper. There were limited surveys and analysis for the development might have
been the other drawback of this report.
Part Two: Current Scenario
2.1. An overview of ready made garments of Bangladesh
For Bangladesh, the readymade garment export industry has been the proverbial
goose that lays the golden eggs for over fifteen years now.
The sector now
dominates the modern economy in export earnings, secondary impact and
employment generated. The events in 1998 serve to highlight the vulnerability of
this industry to both internal and external shocks on the demand and supply side.
Given the dominance of the sector in the overall modern economy of Bangladesh,
this vulnerability should be a matter of some concern to the policymakers in
Bangladesh. Although in gross terms the sector‟s contributions to the country‟s
export earnings is around 74 percent, in net terms the share would be much less
partially because the backward linkages in textile have been slow to develop. The
dependence on a single sector, no matter how resilient or sturdy that sector is, is a
matter of policy concern. We believe the policymakers in Bangladesh should work
to reduce this dependence by moving quickly to develop the other export industries
using the lessons learned from the success of apparel exports. Support for the
apparel sector should not be reduced. In fact, another way to reduce the vulnerability
is to diversify the product and the market mix. It is heartening to observe that the
knit products are rapidly gaining share in overall garment exports as these products
are sold in quota-free markets and reflect the strength of Bangladeshi producers in
the fully competitive global apparel markets.
Preliminary data and informal evidence indicate that this sector seems to have
weathered the devastating floods relatively well. The floods did create a crisis for
the tightly scheduled export industry, but to its credit the firms responded swiftly and
creatively to the unexpected dislocation and transportation disruptions. The industry
is one hundred percent export-oriented and therefore insulated from domestic
demand shocks; however, it remains vulnerable to domestic supply shocks and the
smooth functioning of the banking, transportation and other forward and backward
linkage sectors of the economy.
The Dhaka-Chittagong road remains the main
transportation link connecting the production units, mostly situated in and around
Dhaka and the port in Chittagong, where the raw material and the finished products
are shipped in and out. Despite increased dependence on air transportation, trucks
remain the main vehicles for transporting raw materials and finished products for
Bangladesh garment exports.
2.2. Market Access Issues:
a. Cheap labor cost: Compared to other countries Bangladesh got the advantage of
cheap labor that facilitated this particular industry to access in the global market. As
it is cheaper to purchase raw materials needed to procure the finished goods that
results in the ultimate products to be less costly.
b. Infrastructure: as this particular industry has been successfully running for two
decades, the related industries have grown quite strongly to make a supportive
environment. As a result Bangladesh has a favorable infrastructure for the garment
industry to grow.
C. Government restriction: government plays an important role to grow this
industry by relaxing government taxes and other restrictions to encourage the
business to invest and get an access in the garment industry.
d. Labor insensitivity: as a labor intensive country Bangladesh naturally gets
advantage in manufacturing labor oriented products.
2.3. Exporters of ready made Garment products; World perspective:
Along side Bangladesh, there are quite a few countries exporting ready made
garments currently to meet up the world demand. Bangladesh is enjoying a healthy
position as the market leader in this sector with its comparative advantage of low
cost labor resource. But china and India are coming up creating threat for the
Bangladesh. Since 2001 with the context of open market and trade system this field
has opened up with a challenge for the exporters to grab more and more market
share. Hong Kong, Vietnam and Srilanka are the other Asian countries seek to get a
chance of export.
Recently, news had emanated of the Bangladesh garment industry overtaking India,
in exports of apparels to the biggest market in the world; USA. More and more
worldwide clothing buyers are heading towards the shores of Bangladesh, since it is
able to manufacture apparels, competitive in pricing, than most other countries in
Asia.
From August 2008 onwards, the exports from the RMG sector from Bangladesh have
grown by a remarkable 10 percent, while that of India fell by 3 percent. The biggest
advantage Bangladesh clothing manufacturers have vis-à-vis Indian manufacturers
are the disparity in wages given to workers, due to which the sector in Bangladesh
holds an edge.
2.4. Foreign Demand:
Demand for Bangladeshi garments in Sweden is growing gradually as the
consumers, facing hardship following the financial downturn in Europe; prefer
cheaper goods, businessmen said.
“Now-a-days consumers look for cheap garments. Since the Bangladeshi products
are cheaper than that of other countries like China, they prefer that,” Ms. Halen
Agervi, a manager of the H&M‟s showroom in Stockholm told the FE.
Though the flow of customers has recently shrunk due to the financial dip, those who
come to the shops usually prefer cheap garments, she said.
The Swedish H&M (Hennes & Mauritz AB), Europe‟s second largest buyer of
Bangladeshi garments, imports apparel from different countries including China,
Mauritius and Turkey for selling those to more than 1000 H&M retail shops in 34
countries across the globe.
Bangladesh has so far this year supplied some 120 million pieces of knit products
worth about $300 million and 50 million pieces of woven worth about $250 million
to the H&M, said Iqbal Khan, a senior executive of the H&M Dhaka office.
“Due to financial meltdown our headquarters has asked us to offer fewer prices to
the suppliers. But the volume of orders to Bangladesh will not lessen,” Mr. Khan
who was visiting their Stockholm headquarters told the FE.
H&M pays US$2.5 per unit to the Bangladeshi knitwear products and $4.5 per unit
for the woven goods on an average.
“The orders from the H&M are increasing day by day even during this global
recession,” Amal Poddar, Managing Director of Metro Knitting and Dying Ltd, a
major knitwear supplier to the Swedish company told the FE Friday.
As the developed world is facing the financial meltdown, they prefer Bangladeshi
products for its competitive price than products from China and Turkey, he added.
Mr. Poddar said Bangladesh is slowly nudging China as the preferred choice for
medium-to-low priced ready-made garments in European markets.
“And recession in the wealthiest countries would hasten that process, as the top
retailers would desperately hunt for factories, which can offer bargain prices,” he
said.
The H&M have been giving a lot of orders of knit garments especially sweater for
acute cold weather in the Scandinavian countries, Mr. Poddar who supplies about 2
million pieces of garments per month to H&M said.
“I don‟t think that our supply volume to the European market will shrink. The H&M
has recently shown us that it had a target of 150 per cent business growth during
2008-2013. The projection has made us more bullish,” he said.
“Chinese apparels were occupying the H&M retail shops in Stockholm before the
global recession. But after the plunge, the consumers now prefer low-valued apparel.
It has made a room for the Bangladeshi products again,” said Nahid Hossain, a
Bangladeshi born Swedish citizen.
H&M Dhaka office‟s Iqbal Khan said they are bullish about Bangladesh as they see
the country‟s shipments gain on cheap labor and declining Chinese competitiveness
despite its major markets are on the brink of recession.
Amal Poddar said: “Bangladesh is the third largest supplier of H&M at this moment.
I think it will be able to occupy first position within 2-3 years as our supply volume
to the company is growing every month.” He said some 32 per cent of Bangladeshi
exportable knit products are imported by the Swedish company — H&M.
The US and the EU are the major destinations of Bangladeshi garment exports,
accounting for some 90 per cent of the country‟s US$10.7 billion garment shipments
last year.
Table 2.1. Apparel Exports to Major Markets (1997 - 1998)
TOTAL APPAREL EXPORT IN MILLION US$
WOVEN
KNIT
TOTAL
% OF TOTAL
1,443.21
66.89
12.13
228.69
27.88
5.84
1,671.90
94.77
17.97
44.21%
2.51%
0.48%
COUNTRY
USA
CANADA
AUSTRIA
BELGIUM
DENMARK
FINLAND
FRANCE
GERMANY
GREECE
IRELAND
ITALY
NETHERLANDS
PORTUGAL
SPAIN
SWEDEN
UK
OTHERS
78.91
16.69
9.55
206.78
352.78
2.40
5.17
171.42
127.94
1.97
32.26
31.34
226.33
58.66
60.37
23.81
4.23
137.43
130.09
1.41
3.30
46.11
75.47
0.83
10.75
14.63
144.78
21.89
139.28
40.50
13.78
344.21
482.87
3.81
8.47
217.53
203.41
2.80
43.01
45.97
371.11
80.55
3.68%
1.07%
0.36%
9.10%
12.77%
0.10%
0.22%
5.75%
5.38%
0.07%
1.14%
1.22%
9.81%
2.13%
TOTAL
2,844.43
937.51
3,781.94
100.00%
Source: Export Promotion Bureaus (EPB)
Table 2.2: Top Five European Destinations for Bangladesh Apparel (July 1997- May 1998)
RANK
COUNTRIES
VALUE
(Millions,
$)
1
Germany
434.77
2
United Kingdom
343.89
3
France
305.72
4
Netherlands
183.63
5
Italy
195.82
Source: Export Promotion Bureaus (EPB)
Part Three: Prospective Analysis
3.1. Prospect of ready made garment industry in Bangladesh:
The apparel exporters of two neighboring countries- Bangladesh and India-have
worries of divergent nature.
Bangladesh apparel exporters are worried that their export orders have been on the
decline for a number of domestic and external reasons. Their counterparts in
neighboring India are anguished that Bangladesh is set to beat them in garment
exports in the wake of an appreciating rupee.
Bangladeshi exporters blame internal political disturbances, reduced demand in their
key markets-the USA and the European Union countries-for the decline in export
growth in recent months.
The Indian apparel manufacturers and exporters, it seems, are ashamed of the fact
despite having sufficient backup of raw materials they are lagging behind their
Bangladeshi counterparts, who are largely dependent on imported fabrics and other
raw materials-- in the international market. A recent Indian newspaper report quoted
a number of apparel sector leaders expressing their frustration over the rise of the
Bangladesh apparel sector.
But the fact remains that with its low cost of labor and sufficient back-up support of
raw materials, including fabrics, apparel exporters of India-- a regional economic
superpower-- should have competed with China rather than grumbling about RMG
export performance by a poor neighbor like Bangladesh.
The Indian apparel exporters must have forgotten the issue of value addition while
becoming jealous of the success of the Bangladesh RMG. The average value addition
in case of woven garment exports by Bangladesh still remains as low as 30 per cent
and the same for knitwear exports hovers around 60 to 70 per cent. Since Indian
exporters do not have to depend on imported raw materials, the value addition of
their exports should be nearly 100 per cent.
There is another dark side of such unnecessary moaning by the Indian RMG
exporters: It, rightly or wrongly, lends credence to widespread suspicion that the
neighbors are involved in conspiracy to cause damage to the emerging Bangladesh
garment sector. Such suspicion had become quite strong during a persistent
campaign against Bangladesh RMG in the name of child labor, the recent workers
unrest in the garment sector and the buyers' insistence on so-called compliance
issues.
The socio-economic conditions in many Indian cities are almost similar to that of
Bangladesh cities where most garment units are located. It is highly unlikely that the
working conditions or involvement of child labor in many RMG units have been
very different from that of many Bangladeshi RMG units. But has anyone ever heard
a word or seen a report in the international electronic and print media or deep
concern among US trade union bodies about the situation in apparel units in India?
However, Indian apparel exporters should have reasons to be happy to learn that the
Bangladesh RMG sector, which proved many doomsday preachers wrong following
the total phase-out of the multi-fiber arrangement (MFA) from January 1 2005 and
recorded impressive export growth, has for the first time in many years had a poor
export performance in recent months.
The country's apparel exports recorded a 31.28 per cent growth in the period between
the months of July and September of the just concluded financial year. But the
average growth at the end of May last stood at only 16.45 per cent.
Industry sources have claimed that export orders in recent months have declined by
about 30 per cent. Many buyers had withdrawn from Bangladesh markets during
political troubles in the last months of 2006 and placed their import orders with
apparel manufacturers in China, the world's largest exporter of textile products
having control over 70 per cent of the huge US market, and Vietnam, an emerging
apparel exporter. The Indian business leaders do need to explore the reasons for
buyers not going to India in large numbers. The appreciating rupee may not be the
only reason for that.
The political troubles that started from the month of October last took a heavy tool
on industrial production and exports. The Bangladesh exporters, who have invented
their own way of running their business operations amidst frequent shutdowns or
blockades, also had become helpless in the face of complete halt of operations at the
Chittagong port, enforced by the then opposition political activists led by mayor of
Chittagong City Corporation ABM Mohiuddin Chowdhury.
That disruption was followed by a slower demand from the buyers in the USA and
the EU countries. The intensity of cold being less than previous years during the last
winter in most EU countries, the demand for knitwear dropped this time. And in case
of the USA, the consumers decided to spend less because of the rising oil prices.
The RMG exporters view these developments as temporary and are hopeful about
their exports picking up again in coming months. But the researchers on RMG
markets are seeing some ominous signs on the horizon. They feel that the buyers,
who had withdrawn from the Bangladesh and gone to other markets, may not come
back again.
However, the exporters, it seems, would have to keep their finger crossed for a major
turnaround in demand for apparels in the developed markets.
The political troubles have proved more damaging to exports than any other factor. If
the same returns to the street-nobody, however, want that-the RMG exporters would
find it really hard even to keep their existing buyers satisfied.
3.2 Current scenario of garment industry in Bangladesh
In a recent exclusive interview given to fiber 2fashion, Mr Surinder Anand,
Executive Secretary of Garment Exporter‟s Association, listing out the advantages
the Bangladesh exporters have over India, had said, “First and foremost is the lower
manufacturing cost due to cheap labor and simplified labor laws”.
“Going further, economies of scale because of bigger and larger manufacturing units;
availability of fabric at competitive rates, simplified procedures, labor laws are more
flexible and conducive and last but not the least full support and blessings of their
Government, while Indian conditions are discouraging to entrepreneurs”, he added
by saying.
Even in these recessionary periods, most of the garment companies had been
humming with winter clothing orders and except for may be a slight dip in orders;
the Bangladeshi clothing manufacturers are comfortably placed versus their Asian
counterparts and could be among the few countries that could be looking at a flat or
marginal negative growth rate in 2009.
According to the statistics released by the Bangladesh Export Promotion Bureau,
most of the sub-sectors like woven and knitted garment have crossed their targeted
figures in the period July- December 2009. Knitted and woven garments grew by
2.16 and 2.45 percent respectively, textile fabrics by 8.16 percent and terry towels by
10.96 percent.
Table 3.2.: Apparel Exports from Bangladesh in Value and Volume
YEAR TOTAL APPAREL
EXPORT (Millions of
$)
WOVEN
Total Mont
hly
199
1,240 103.
2-93
.48 37
1993- 1,291 107.
94
.65 64
199495
199596
199697
199798
199899(JUL
YAUGU
ST)
1,835
.09
1,948
.81
2,237
.95
2,844
.43
152.
92
162.
40
186.
50
237.
04
KNIT
TOTAL APPAREL EXPORT
(Thousands of dozens)
TOTAL
Gro
wth WOVEN
in
Mon
thly
Tota
ls
Gro
wth
in
Mont
hly
Total
s
KNIT
TOTAL
Total Mont
hly
204. 17.0 1,445 120.
36,05 3,004
54 5
.02 42
3.88 .49
264. 22.0 1,555 129. 7.67 34,35 2,862
14 1
.79 65 % 1.00 .58
Total Mont
hly
10,66 888.6
3.56 3
10,81 901.2
5.00 5
393.
26
598.
32
763.
30
937.
51
15,30
1.90
23,18
5.45
27,53
6.07
32,60
4.37
Total Mont
hly
46,717 3,893
.44
.12
45,166 3,763 .00
.83 3.32
%
62,511 5,209 38.4
.90
.33 0%
72,005 6,000 15.1
.49
.46 9%
80,986 6,748 12.4
.40
.87 7%
98,194 8,182 21.2
.37
.86 5%
Tot Mont Total Mon
al hly
thly
32.7
7
49.8
6
63.6
1
78.1
3
2,228
.35
2,547
.13
3,001
.25
3,781
.94
185.
70
212.
26
250.
10
315.
16
43.2
3%
14.3
1%
17.8
3%
26.0
1%
47,21
0.00
48,82
0.04
53,45
0.33
65,59
0.00
3,934
.17
4,068
.34
4,454
.19
5,465
.83
1,275
.16
1,932
.12
2,294
.67
2,717
.03
561.5 280. 177. 88.6 738.7 369. 17.2 12,18 6,093 6,464. 3,232 18,650 9,325 13.9
4
77 21 1
5
38 0% 6.00 .00 00
.00 .00
.00 6%
Source: Bangladesh Exports
Promotion Bureau (EPB)
RDTI Cell of Bangladesh Garment
Manufacturers and Exporters Association
(BGMEA)
Our own calculations of
monthly averages and growth
factors
Table 3.3. Major Items of Apparel Exportedfrom Bangladesh
(Millions of $)
YEAR SHIRT
T-SHIRT TROUSER JACKET SWEATER
S
Mont
Mont
Mon
Mont
Mont
Total hly Tot hly Total thly Tota hly
Total hly
Aver al Aver
Aver l
Avera
Avera
age
age
age
ge
ge
1993- 805.3 67.1 225. 18.8 80.56 6.71 126. 10.57 0.00 0.00
94
4
1
90 3
85
1994- 791.2 65.9 232. 19.3 101.2 8.44 146. 12.24 0.00 0.00
95
0
3
24 5
3
83
1995- 807.6 67.3 366. 30.5 112.0 9.34 171. 14.31 70.41 5.87
96
6
1
36 3
2
73
1996- 759.5 63.3 391. 32.6 230.9 19.2 309. 25.77 196.6 16.38
97
7
0
21 0
8
5
21
0
1997- 961.1 80.0 388. 32.3 333.2 27.7 467. 38.93 296.2 24.69
98
3
9
50 8
8
7
19
9
1998- 201.1 100. 49.0 24.5 60.51 30.2 105. 52.63 81.61 40.81
99
2
56 5
3
6
25
(JULAUG)
Source: Bangladesh Exports
Promotion Bureau (EPB)
RDTI Cell of Bangladesh Garment
Manufacturers and Exporters Association
(BGMEA)
Our own calculations of monthly averages and
growth factors
Part Four: Analysis
4.1. SWOT Analysis
SWOT analysis stands for Strength, weakness, opportunities and threats respectively.
Here based on our observation we try to find out some aspects of SWOT analysis for the
ready made garment industry in Bangladesh.
4.1.1 Strength

Considerable Qualified/keen to learn workforce available at low labour charges.
The recommended minimum average wages (which include Travelling
Allowance, House Rent, Medical Allowance, Maternity Benefit, Festival Bonus
and Overtime Benefit) in the units within the Bangladesh Export Processing
Zones (BEPZ) are given as below; on the other hand, outside the BEPZ the wages
are about 40% lower:

Energy at low price

Easily accessible infrastructure like sea road, railroad, river and air
communication

Accessibility of fundamental infrastructure, which is about 3 decade old, mainly
established by the Korean, Taiwanese and Hong Kong Chinese industrialists.

FDI is legally permitted

Moderately open Economy, particularly in the Export Promotion Zones

GSP under EBA (Everything But Arms) for Least Developed Country applicable
(Duty free to EU)

Improved GSP advantages under Regional Cumulative

Looking forward to Duty Free Excess to US, talks are on, and appear to be on
hopeful track

Investment assured under Foreign Private Investment (Promotion and Protection)
Act, 1980 which secures all foreign investments in Bangladesh

OPIC's (Overseas Private Investment Corporation, USA) insurance and finance
agendas operable

Bangladesh is a member of Multilateral Investment Guarantee Agency (MIGA)
under which protection and safety measures are available

Adjudication service of the International Centre for the Settlement of Investment
Dispute (ICSID) offered

Excellent Tele-communications network of E-mail, Internet, Fax, ISD, NWD &
Cellular services

Weakness of currency against dollar and the condition will persist to help
exporters

Bank interest@ 7% for financing exports

Convenience of duty free custom bonded w/house

Readiness of new units to enhance systems and create infrastructure accordant
with product growth and fast reactions to circumstances
4.1.2. Weakness

Lack of marketing tactics

The country is deficient in creativity

Absence of easily on-hand middle management

A small number of manufacturing methods

Low acquiescence: there is an international pressure group to compel the local
producers and the government to implement social acquiescence. The US GSP
may be cancelled and purchasing from US & EU may decrease significantly

M/c advancement is necessary. The machinery required to assess add on a
garment or increase competence are missing in most industries.

Lack of training organizations for industrial workers, supervisors and managers.

Autocratic approach of nearly all the investors

Fewer process units for textiles and garments

Sluggish backward or forward blending procedure

Incompetent ports, entry/exit complicated and loading/unloading takes much time

Speed money culture

Time-consuming custom clearance

Unreliable dependability regarding Delivery/QA/Product knowledge

Communication gap created by incomplete knowledge of English

Subject to natural calamities
4.1.3. Opportunity

EU is willing to establish industry in a big way as an option to china particularly
for knits, including sweaters

Bangladesh is included in the Least Developed Countries with which US is
committed to enhance export trade

Sweaters are very economical even with china and is the prospect for Bangladesh

If skilled technicians are available to instruct, prearranged garment is an option
because labor and energy cost are inexpensive.

Foundation garments for Ladies for the FDI promise is significant because both,
the technicians and highly developed machinery are essential for better
competence and output

Japan to be observed, as conventionally they purchase handloom textiles, home
furniture and garments. This section can be encouraged and expanded with
continued progress in quality
4.1.4. Threat
The exporters have to prepare themselves to harvest the advantages offered by the
opportunities.
4.2. The Future of Garment Exports and the Economy of Bangladesh
Growth in overall exports from Bangladesh peaked in 1994-1995 at 40 percent a year, but
growth has remained strong.
In the July 1997-February 1998 period, total export
earnings equaled $3.3 billion or 16.4% above the exports over the same period in the
previous year.i
The garment and knitwear exports accounted for the bulk of these
exports. The knitwear sector especially has been highly dynamic in recent years. Given
the fact that this market is outside the purview of MFA and not protected by quotas, this
bodes well for the post MFA future of the industry. Bangladesh apparel exports can now
point to a proven track record of successfully competing in a non-protected global
competitive environment.
Unfortunately, other potentially promising exports from
Bangladesh such as leather, jute goods, and frozen foods have not fared as well over this
period. This has accentuated the already narrow export base of the country and is
certainly a matter of concern. The excess dependence on foreign exchange earnings and
export growth on garments and knitwear calls for policy attempts to diversify the export
base of Bangladesh.
What can be said about the future performance of the apparel export industry in
Bangladesh? What are the downside risks for apparel exports from Bangladesh?
Focusing on the most recent disaster, the debilitating floods of 1998 that shaved off
several percentage points from the expected GDP growth this year, we have ignored
another major crisis the industry seems to have weathered very well. We refer to the East
Asian economic debacle of 1997-1998. The financial panic and the following economic
meltdown that afflicted scores of dynamic economies neighboring Bangladesh Malaysia, Indonesia, Thailand, Philippine and South Korea- certainly have been a
restraining element in the economic performance of this sector.
What are the links between the East Asian economies and garment exports from
Bangladesh? There are several avenues by which negative economic shocks from these
emerging economies have impacted Bangladesh. First, several of these nations are also
big apparel exporters to the same markets where Bangladesh sells its apparels. The steep
depreciation in their currency has made them more competitive, especially in the quotafree apparel markets.
Even in the markets protected by quotas, this would be a
deflationary force pulling down the unit prices and the profit margins for Bangladesh
exporters. Second, using the time-tested formula, most of these economies are trying to
export themselves out of their severe recessions. This has greatly increased competition
for Bangladesh exports. Third, to assist them in their time of need, the U.S. and other
developed nations have already relaxed quota restrictions on exports from the worst
affected economies, making the playing field less level for Bangladeshi exporters.
Fourth, prior to this crisis some of these nations were potentially big investors in
Bangladesh in the textile and infrastructure projects. Their economic troubles have
meant a dramatic scaling back in their direct investments in Bangladesh.
Part Five: Conclusion
Conclusion:
At the starting verge of the twenty first century it is not possible for a country to move
ahead grabbing the agriculture based economy. Garment industry in Bangladesh has
helped Bangladesh to take it through and has been contributing significantly for the
sustainable development. It has created employment for the young women in Bangladesh
with the world of hope to be independent. Bangladesh can secure even a far better
situation utilizing its advantage of low labor cost to capture more markets across wide
world keeping its compotators behind. For that, government has to come forward to build
up a stronger infrastructure and communication.
References :
www.alibaba.com
www.tradeindia.com
www.countryinformation.org
http://www.unescap.org/tid/publication/aptir2456_haider.pdf