History of garments industry in Bangladesh

In 1972, the World Bank estimated Bangladesh's gross domestic product (GDP) at US$6.29 billion, and it grew to $353 billion by 2021, of which $46 billion was generated by exports, 82% of which were readymade garments. As of 2016, Bangladesh is second only to China in garment manufacturing. Bangladesh is the world's second-largest exporter of Western fast fashion brands. Sixty percent of Western brand export deals are with European buyers and about thirty percent with American buyers and ten percent with others. Only 5% of textile factories are owned by foreign investors, and most of the production is controlled by local investors. The RMG industry generated US$28.14 billion in FY 2016-2017, accounting for 80.7% of total export earnings and 12.36% of GDP; The industry also adopted green manufacturing practices.

History of the garments industry in Bangladesh

The textile and garment industry provides a single source of growth in Bangladesh's fast-growing economy. Textile and garment exports are the main sources of foreign exchange earnings. By 2002, textile, apparel, and readymade garments (RMG) exports accounted for 77% of Bangladesh's total exports.

The garment industry in Bangladesh started its journey in the 1980s and has reached its present position. The late Nurul Quader Khan was a pioneer of the garment industry in Bangladesh. He had a vision of how to transform the country. In 1978, he sent 130 trainees to South Korea where they learned how to make ready-made garments.

With those trainees, he set up the first garment factory, named Desh Garments, for export. At the same time, the late Akter Mohammad Musa of Bond Garments, the late Mohammad Reyazuddin of Riaz Garments, Mohammad Humayun of Paris Garments, Mohammad Fazlul Azim Engineer of Azim Group, Major (Retd.) Abdul Mannan of Sunman Group, M Shamsur Rahman of Stylecraft Ltd., and AM Subid Ali also came forward and established several garment factories in Bangladesh.

Following in their footsteps, other prudent and hardworking entrepreneurs started RMG factories in the country. From then on, the Bangladeshi garment industry did not have to look back. Despite the fact that the sector has faced many problems in the past years, it has created a special place in the world market and continues to show strong performance.

From the earliest days, different sources of inspiration have contributed to the development and maturation of the industry at different stages. We learned about child labor in 1994 and successfully freed the industry from child labor in 1995.

By 1981, 300 textile companies, many small companies, were often returned to their original owners. In 1982, shortly after coming to power after a bloodless coup, President Hussein Muhammad Ershad introduced the New Industrial Policy (NPI), the most significant step in the privatization process, distorting much of the textile industry, creating export processing zones (EPZs), and attracting foreign direct investment. Under the new industrial policy (NPI), 33 jute mills and 27 textile mills were returned to their original owners.

In 1985, the United States and Canada actually imposed their own import quotas on Bangladeshi textiles without any international agreement. However, Bangladesh was able to meet the demand for each quota each year and was able to successfully negotiate higher quotas in subsequent years.

Readymade Garments exports increased from US$3.5 million in 1981 to $10.7 billion in 2007. Garment exports increased, but initially, the ready-made garment RMG industry was not adequately supported by surplus and internal supply.

Since the early 1990s, the Knit division mainly produces and exports shirts, T-shirts, trousers, sweaters, and jackets. In 2006, 90 percent of Bangladesh's total income from garment exports came from the United States and Europe.

The WTO Agreement on Textiles and Clothing (ATC) was effective from 1995 to 2005, when more industrialized countries agreed to export fewer textiles and less industrialized countries enjoyed increased quotas for their textile exports. Within the 10-year agreement, Bangladesh's economy benefited from quota-free access to European markets and preferred quotas for the American and Canadian markets.

The MFA quota was a blessing for our industry to be rooted, slowly developing, and maturing. As the quota drew to a close in 2004, many predicted that the phase-out would wreak havoc on our exports.

However, the post-MFA era is another success story. By proving all predictions wrong, we have overcome the post-MFA challenges. Now the garment industry is the largest export earner of Bangladesh which has exported more than $27.9 billion in FY 2019-20.

As of 2011, Bangladesh was the second-largest manufacturer of readymade garments after China, Bangladesh will become the largest manufacturer of readymade garments in the next five years. In 2006 Bangladesh was the sixth-largest exporter in the world after China, the EU, Hong Kong, Turkey, and India. In 2006, Bangladesh accounted for 2.8% of the world's garment exports. The United States was the largest single market with exports of US$3.23 billion in 2007. Today, the United States remains Bangladesh's largest market for woven garments, valued at US$2.42 billion. the European Union remains the largest regional destination - Bangladesh exported US$5.36 billion; 50% of their total garment exports. Bangladeshi knitwear accounted for 61% of the EU's export of US$3.36 billion US dollars.

Conclusion

Throughout the 1980s and continuing into modern times, the growth in total exports has coincided with the growth in garment exports, indicating that the sector is responsible for a significant part of Bangladesh's economic growth. The European Union and the United States are the largest importers of garments in Bangladesh, accounting for 88.6% of the export destination. The garment industry has been praised by many as a major contributor to poverty alleviation in Bangladesh. Proponents of this view argue that entry-level wages were sufficient to keep workers above the local poverty line. Even if they are paid much less than the workers of other textile and garment factories.