The Booming RMG Sector in Bangladesh.
Ready Made Garments (RMG) is the largest export oriented sector of Bangladesh and one of the major drivers of country’s economy. It has seen tremendous growth over the last three decades and dominated the industrial sector of the country since the early 1980s. In the FY 2009-10 RMG export was 13% of the GDP and total export was 17% of the GDP while in 1991-92 RMG export was 4% of GDP and total export was 6% of GDP. In this report we try to explain the structure of the export-oriented garments sector of Bangladesh. Since the late 1970s, the RMG industry started developing in Bangladesh primarily as an export-oriented industry although, the domestic market for RMG has been increasing fast due to increase in personal disposable income and change in life style. The sector rapidly attained high importance in terms of employment, foreign exchange earnings and its contribution to GDP. In 1999, the industry employed directly more than 1.4 million workers, about 80% of whom were female. With the growth of RMG industry, linkage industries supplying fabrics, yarns, accessories, packaging materials, etc. have also expanded. The RMG industry is highly dependent on imported raw materials and accessories because Bangladesh does not have enough capacity to produce export quality fabrics and accessories. About 90% of woven fabrics and 60% of knit fabrics are imported to make garments for export. The industry is based primarily on sub-contracting, under which Bangladeshi entrepreneurs work as sub-contractors of foreign buyers. It has grown by responding to orders placed by foreign buyers on C-M (Cut and Make) basis. During its early years, the buyers supplied all the fabrics and accessories or recommended the sources of supply from which Bangladeshi sub-contractors were required to import the fabrics. However, situation has improved. At present, there are many large firms, which do their own sourcing. Within a short...
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