Bangladesh textile industry

While agriculture for domestic consumption is Bangladesh’s largest employment sector, the money gained from exporting textiles is the single greatest source of economic growth in Bangladesh. Exports of textiles, clothing, and ready-made garments accounted for 77% of Bangladesh’s total merchandise exports in 2002.^[1] Only 5% of textile factories are owned by foreign investors, with most of the production being controlled by families or Bangladeshi companies.^[2]

History of textile production in Bangladesh

Immediately after the founding of Bangladesh, tea and jute were the most export-oriented sectors. But with the constant threat of flooding, declining jute fiber prices and a significant decrease in world demand, the contribution of the jute sector to the country’s economy has deteriorated.^[3] The garment industry in Bangladesh became the main export sector and a major source of foreign exchange starting in 1980, and exported about $5 billion USD in 2002.^[4]

The industry employs about 3 million workers of whom 90% are women.^[5] Two non-market factors have played a crucial role in ensuring the garment sector’s continual success namely (a) quotas under Multi- Fibre Arrangement1 (MFA) in the North American market and (b) preferential market access to European markets.^[6]

Until the liberation of Bangladesh, the textile sector was primarily an import-substitution industry. It began exporting ready-made garments (RMG) including woven, knitted, and sweater garments in 1978, which grew spectacurlarly during the next two and a half decades-from US$3.5 million in 1981 to US$10.7 billion in FY 2007. Apparel exports grew, but initially, the RMG industry was not adequately supported by the growth up and down the domestic supply chain (e.g., spinning, weaving, knitting, fabric processing, and the accessories industries). Until FY 1994, Bangladesh's RMG industry was mostly dependent on imported fabrics-the Primary Textile Sector (PTS) was not producing the necessary fabrics and yarn.

Bangladesh Textile Mills Corporation (BTMC)

Bangladesh Textile Mills Corporation was brought into existence on March 26, 1972 with the promulgation of the BIE order, 1972 and started its formal function from July 1972. At present,^[when?] 18 textile mills (22 units) are in operation under service charge system and producing different counts of cotton yarn and polyester yarn in the form of 32/1 to 80/1. Another 11 mills are under process in operation.^[7]

Effect of the Agreement on Textiles and Clothing

From 1995-2005 the WTO Agreement on Textiles and Clothing (ATC) was in effect, wherein more industrialized countries consented to export fewer textiles while less industrialized countries enjoyed increased quotas for exporting their textiles.^[1] Throughout the 10 year agreement, Bangladesh’s economy benefited from quota-free access to European markets and desirable quotas for the American markets.^[2]

As the above table shows, the market shares for Bangladeshi textiles in the USA and both textiles and clothing in the European Union have changed during the time period of the ATC.^[8] It is uncertain whether these favorable export markets will remain since the expiration of the ATC in 2005.^[9] Textile exports from Bangladesh to the United States did increase by 10% in 2009.^[10] Currently, the textile mills provide 70% of national exports. This proportion is even higher in Bangladesh. In Bangladesh, the number of employed workers in the textile industry increased by 400 000 in 1990 to 2 million in 2004, and the number of enterprises – from 800 to 4000. Nine out of ten people employed in the industry – are women. In general, the state of the textile industry depends on well-being of 10-12 million people in Bangladesh. By IMF estimates, as a result of the abolition of quota exports of Bangladesh will be reduced by 25%.^{[citation needed]}

Ready-made garments

In the 1980s, the RMG market started its journey. The hurdles of the Multi Fibre Arrangement (MFA) quotas in 1985 and the Harkin Bill in 1994 were great challenges for the industry, as were the phasing out of MFA quotas in 2004. Although there was concern^{[by whom?]} that the MFA phase-out would shut down the industry, the Bangladesh textile sector actually grew tremendously after 2004 and reached an export turnover of US$10.7 billion in FY 2007. Bangladesh's export trade is dominated by the RMG industry. The sector currently employs 2.5 million people—about 40% of total manufacturing (85% of these employees are women)—and accounts for 76% of the country's export earnings and 10% of its GDP.

Major Market

Bangladesh was the sixth largest exporter of apparel in the world after china,the EU,Hong Kong,Turkey and India in 2006.In 2006 Bangladesh's share in the world apparel exports was 2.8%.The US was the largest single market with US$3.23 billion in exports, a 30% share in 2007. Today, the US remains the largest market for Bangladesh's woven garments taking US$2.42 billion, a 47% share of Bangladesh's total woven exports. The European Union remains the largest regional destination - Bangladesh exported US$5.36 billion in apparel; 50% of their total apparel exports. The EU took a 61% share of Bangladeshi knitwear with US$3.36 billion exports.

Employment and Labor

Bangladesh’s garment exports – mainly to the US and Europe – make up nearly 80% of the country’s export income. The country has more than 4,000 factories employing between two and three million workers. The industry currently employs 1.5 million workers, approximately 80 % of whom are women, many working in hazardous social conditions. It has been a major source of employment for rural migrant women in a country that has increasingly limited rural livelihood options, and where women migrants have been largely excluded from formal work in the cities.

See also

• Bangladeshi RMG Sector

Notes

External links

• Bangladesh Garment Manufacturers and Exporters Association