Ready–made Garments (rmg) Sector

The ready-made garments industry is one among the globalized industries of the world. However the Ready–Made Garments (RMG) sector has emerged as the biggest earner of foreign currency.

The RMG sector has experienced an exponential growth since the 1980s. Worldwide, this sector contributes significantly to the GDP. 1950 was the beginning of RMG in the Western world. The MFA (multi fiber agreement) which was made in 1974 imposed an export rate 6 percent increase every year from a developing country to a developed country. China is one of the leading ready-made garment exporting country. In the early 1980s Bangladesh started receiving investment in the RMG sector. Some Bangladeshis received free training from the Korean Company Daewoo. In the 1980s, there were only 50 factories employing only a few thousand people. Currently, there are 4490 manufacturing units. The RMG sector contributes around 76 percent to the total export earnings. This sector also contributes around 13 percent to the GDP, which was only around 3 percent in 1991. RMG products are exported mainly to the United States of America and the European Union. Of the estimated 4.2 million people employed in this sector, about 50 percent of them are women from rural areas. In 2000, the industry consisting of some 3000 factories employed directly more than 1.5 million workers of whom almost 80% were female. USA is the largest importer of Bangladeshi RMG products, followed by Germany, UK, France and other EU countries.

Recent movement shows that India and Pakistan are two biggest threats for Bangladesh RMG and textile industry. Because, the readymade garments industry has played a substantial role in the Indian and Pakistani economy.

For Bangladesh the readymade garment sector is the golden goose. The country has emerged as the second largest exporter of readymade garment products trailing just behind China. Bangladesh entered the apparel export market in 1978 with only nine units and earned US$ 0.069 million. During the last three decades, this sector has achieved a phenomenal growth due to policy support of the government and more importantly, dynamism of the private sector entrepreneurs along with extremely hardworking workers.

Now the number of RMG units is around 6,000 and the export earnings have exceeded US$ 20 billion. Knit garments are exported to 148 countries and woven products to 132 countries. Export earning can be more than double by the year 2020. But all these expansion and global demands started after the failure of Jute export (which was the big item in export in the past). Bangladesh’s garment industry provides employment to about than 3.6 million workers which 2.8 million are women. Workers in these garment factories are almost always illiterate. They have very limited knowledge of human rights, working conditions and labor standards.

Moreover, a survey found that European and US companies that focus on the apparel market’s value segment plan to expand the share of their sourcing from Bangladesh to 25 to 32 per cent by 2020, from an average of 20 per cent now. Bangladesh is now trying to diversify its markets to include Japan, Australia and other important international markets.