History of apparel industry in Bangladesh

BANGLADESH: OVERVIEW OF TEXTILE INDUSTRY 

 

History of apparel industry in Bangladesh

 The history of Bangladesh garment sector is fairly recent one.

 Bangladesh – the country of famous muslin fabric and the great Royal Bengal Tiger has now emerged as an apparel giant in the world textile and apparel market by exporting 3% of world apparel export[1]. At present, Bangladesh is the 6^th largest apparel supplier to the USA and 4^th to the EU countries.

 Economic Liberalization in Bangladesh has led to the emergence of a number of export oriented industries, of which the manufacture of ready made garments is the most prominent.

 In search of the fastest path to economic growth, Bangladesh accepts the need for greater industrialization especially that requires comparatively low invest, low technical know how and labor intensive. Developed countries were getting rid of labor intensive industries, such as textile and that trend create a chance to develop textile and apparel industry in Bangladesh, one of the archetypal LDCs.

 New rules had come to govern the international trade in textiles and apparel in 70s, allowing low-cost suppliers to foothold in American and European markets. Assisted by the foreign partners, multi fiber agreement and aided by the government, Bangladeshi entrepreneurs seized the opportunity and exploited it to the fullest. Over a period of 30 years, the garments export sector has grown into a US $ 13 billion industry that employs around 3.1 million people. In the process, it has boosted up the overall economic growth of the country and raised the viability of other export-oriented sectors.

The hundred percent export-oriented RMG industry experienced phenomenal growth during the last 20 or so years. In 1978, there were only 9 export-oriented garment manufacturing units, which generated export earnings of hardly one million dollar. Some of these units were very small and produced garments for both domestic and export markets. Four such small and old units were Reaz Garments, Paris Garments, Jewel Garments and Baishakhi Garments. Reaz Garments, the pioneer, was established in 1960 as a small tailoring outfit, named Reaz Store in Dhaka. It served only domestic markets for about 15 years. In 1973 it changed its name to M/s Reaz Garments Ltd. and expanded its operations into export market by selling 10,000 pieces of men's shirts worth French Franc 13 million to a Paris-based firm in 1978. It was the first direct exporter of garments from Bangladesh. Desh Garments Ltd, the first non-equity joint-venture in the garment industry was established in 1979. Desh had technical and marketing collaboration with Daewoo Corporation of South Korea. It was also the first hundred percent export-oriented company. It had about 120 operators including 3 women trained in South Korea, and with these trained workers it started its production in early 1980. Another South Korean Firm, Youngones Corporation formed the first equity joint-venture garment factory with a Bangladeshi firm, Trexim Ltd. in 1980. Bangladeshi partners contributed 51% of the equity of the new firm, named Youngones Bangladesh. It exported its first consignment of padded and non-padded jackets to Sweden in December 1980.

Within a short span of time, Bangladeshi entrepreneurs got familiar with the world apparel markets and marketing. They acquired the expertise of mobilizing resources to export-oriented RMG industries. Foreign buyers found Bangladesh an increasingly attractive sourcing place. To take advantage of this cheap source, foreign buyers extended, in many cases, suppliers' credit under special arrangements. In some cases, local banks provided part of the equity capital. The problem of working capital was greatly solved with the introduction of back-to-back letter of credit, which also facilitated import of quality fabric, the basic raw material of the industry. The government assigned high priority to the development of RMG industry.

Till the end of 1982, there were only 47 garment manufacturing units. The breakthrough occurred in 1984-85, when the number of garment factories increased to 587. The number of RMG factories shot up to around 2,900 in 1999. Bangladesh is now one of the 12 largest apparel exporters of the world, the sixth largest supplier in the US market and the fifth largest supplier of T-shirts in the EU market. The industry has grown during the 1990s roughly at the rate of 22%. In the past, until 1980, jute and jute goods topped the list of merchandises exported from Bangladesh and contributed more than 50% of the total export earnings. By late 1980s, RMG exports replaced jute and jute goods and became the number one in terms of exports.

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[1] BGMEA and EPB