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ASSIGNMENT ON PRESENT SITUATION AND FUTURE PROSPECTS OF READY-MADE GARMENT SECTOR IN BANGLADESH.

COURSE TITLE : COURSE CODE :

APPAREL MANUFACTURING II WITH LAB TE-308

Submitted To
M A BASET ,
Lecturer, DEPT. OF TE.

Submitted By
Muhammad Shamsul Arefeen Siddiquee , ID: 091-23-1294. SECTION: C (L3T2).
Date of submission: 15-8-2011.
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CONTENTS

PAGE NO.

1. ABSTRACT--------------------------------------------------------------- 3 2. INTRODUCTION--------------------------------------------------------- 4
3. CONTRIBUTION OF THE RMG INDUSTRY------------------------------------ 6

4. PROSPECTS OF THE RMG INDUSTRY---------------------------------- 8 MARKET DIVERSIFICATION----------------------------------------- 8 PRODUCT DIVERSIFICATION--------------------------------------- 10 BACKWARD INTEGRATION------------------------------------------ 11 FLOW OF INVESTMENT----------------------------------------------- 11 POLICY REGIME OF GOVERNMENT---------------------------------- 12 LEAD TIME------------------------------------------------------------- 12 CHEAP LABOUR FORCE----------------------------------------------- 13 5. RMG LOOKS TO GOOD TIME----------------------------------------------14

6. BANGLADESH OUTSHINES INDIA IN RMG EXPORTS--------------------- 18 7. RIDE BANGLADESH-CANADA TRADE WAVE------------------------------- 19 8. EXPORT PERFORMANCEBELATED IMPACT OF RECESSION? ----------21 9. PROBLEMS OF TEXTILE INDUSTRY IN BANGLADESH--------------------23 10. SEVERE GAS SUPPLY SHORTAGE HITS TEXTILE PRODUCTION------- 25 11. RECOMMENDATION------------------------------------------------------- 26 12. SUGGESTIONS REGARDING FIRE SAFETY------------------------------ 27 13. SOME COMPANY PROFILE------------------------------------------------ 28 14. CONCLUSION-------------------------------------------------------------- 29 15. REFERENCES-------------------------------------------------------------- 30

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Abstract

Emergence of the global market has heightened the role of trade in world economy and made industrialization as an integral system of global trade and production. Bangladesh economy at present is more globally integrated than at any time in the past. The MFA phase-out will lead to more efficient global realignments of the textile and clothing industry. After the introduction of Agreement on Textile and Clothing (ATC), the RMG industry of Bangladesh is facing new and unique challenges. The paper attempts to identify the prospects of RMG industry in the post-MFA period by analyzing the current scenario along with different policy measures and the available options in order to be more competitive in the new regime. The phase out was expected to have a negative impact on the economy of Bangladesh. But recent data reveals that Bangladesh absorbed the shock successfully and indeed RMG exports grew significantly. Due to a number of steps taken by the industry (e.g., successful in diversifying products and markets, increased backward integration, high level of investment, and supportive policy regime), Bangladesh still remains competitive in RMG exports even in this post phase-out period. But much more needs to be done (e.g., removal of structural impediments, establishment of training and research institute, sharing of knowledge and technology) in order to maintain the competitiveness in the global RMG market.

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Introduction The RMG business started in Bangladesh in the 70s but it was then merely a casual effort. The first consignment of knitwear export was made in 1973 and the first consignment of woven garments was made in 1977. In 1981-82 the contribution of Woven garments in the total export was 1.10%. Afterwards it is a story of sustained success for the Bangladesh RMG sector. The knitwear sector has grown over the years in geometric progression and become the prime driving force of Bangladeshs export earnings. Within a decade the contribution of Woven to the export basket became 42.83% (1990-91) and the knitwear sectors contribution was 7.64% (1990-91). Now Knitwear has become the largest export earning sector of Bangladesh contributing 40.01% to national export earnings at the end of FY 2009-10 (July-April). The entrepreneurs of the knit sector stepped forward with their expertise in the late 80's. With their earnest efforts they were able to export US$ 14.84 million in 1989-90. Out of this, US$ 12.22 million was exported to EU and US$ 2.02 million was exported to US. The trend continued in the knit sector because of the market access opportunities provided to the LDCs under the Generalized Systems of Preference (GSP) benefit.This is the rejuvenated beginning of the epic story of Bangladeshi knitwear sector that in true sense has been possible due to massive industrialization in a sustainable way with effect on all probable human development aspects which is the encouraging part of the story. The growth of knitwear sector is increasing at an increasing rate. The cumulative average growth rate of the sector is 20%. And it is continuously grabbing more portions in the export pie of Bangladesh. This is mainly attributed to the facilities provided under the EC GSP and ROO. The knitwear sector is heavily driven by the favorable policies and took the opportunity to develop a strong backward linkage for the sector.

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Year Volume

Knitwear (%) change Share(%) in BD Export 0.77 7.64 5.95 8.58 10.42 11.32 15.41 17.28 18.22 19.49 22.08 23.14 24.38 25.26 28.25 32.58 36.26 37.39 34.58 41.30 40.01 Volume

Woven Wear (%) change Share(%) in BD Export 31.67 42.83 53.36 52.06 50.97 52.85 50.20 50.65 55.09 56.18 53.59 52.02 52.20 49.76 46.54 41.58 38.78 38.25 32.30 38.02 37.11

Total Export RMG Bangladesh

89-90 90-91 91-92 92-93 93-94 94-95 95-96 96-97 97-98 98-99 99-00 00-01 01-02 02-03 03-04 04-05 05-06 06-07 07-08 08-09 09-10

14.84 131.20 118.57 204.55 264.14 393.26 598.32 763.30 940.31 1035.36 1269.83 1496.23 1459.24 1653.83 2148.02 2819.47 3816.98 4553.60 5532.52 6429.00 6483.29

0 784.00 -9.62 72.51 29.13 48.88 52.14 27.57 23.19 10.11 22.64 17.83 -2.48 13.34 29.88 31.26 35.38 19.30 21.50 16.20 0.84

609.32 735.62 1064.00 1240.48 1291.64 1835.09 1948.81 2237.95 2843.33 2984.81 3082.56 3364.20 3124.56 3258.27 3538.07 3598.20 4083.82 4657.63 5167.28 5918.51 6013.43

29.34 20.73 44.64 16.59 4.12 42.07 6.20 14.84 27.05 4.98 3.27 9.14 -7.12 4.28 8.59 1.70 13.50 14.05 10.94 14.54 1.60

624.16 866.82 1182.57 1445.03 1555.78 2228.35 2547.13 3001.25 3783.64 4020.17 4352.39 4860.43 4583.80 4912.10 5686.09 6417.67 7900.80 9211.23 10699.80 12347.51 12496.72

1923.70 1717.55 1993.90 2382.89 2533.90 3472.56 3882.42 4418.28 5161.20 5312.86 5752.20 6467.30 5986.09 6548.44 7602.99 8654.52 10526.16 12177.86 14110.79 15565.19 16204.65

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Contribution of the RMG Industry RMG business started in the late 70s as a negligible non-traditional sector with a narrow export base and by the year 1983 it emerged as a promising export earning sector; presently it contributes around 75 percent of the total export earnings. Over the past one and half decade, RMG export earnings have increased by more than 8 times with an exceptional growth rate of 16.5 percent per annum. In FY06, earnings reached about 8 billion USD, which was only less than a billion USD in FY91. Excepting FY02, the industry registered significant positive growth throughout this period.

In the current year, the performance of both the sectors is as follows: Knitwear Export US$ 6,483.29 million FY 2009-10 (July -June) Woven Export US$ 6,013.43 million FY 2009-10 (July -June)

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In terms of GDP, RMGs contribution is highly remarkable; it reaches 13 percent of GDP which was only about 3 percent in FY91. This is a clear indication of the industrys contribution to the overall economy. It also plays a pivotal role to promote the development of other key sectors of the economy like banking, insurance, shipping, hotel, tourism, road transportation, railway container services, etc. A 1999 study found the industry supporting approximately USD 2.0 billion worth of economic activities (Bhattacharya and Rahman), when the value of exports stood at a little over USD 4.0 billion. One of the key advantages of the RMG industry is its cheap labour force, which provides a competitive edge over its competitors. The sector has created jobs for about two million people of which 70 percent are women who mostly come from rural areas. The sector opened up employment opportunities for many more individuals through direct and indirect economic activities, which eventually helps the countrys social development, woman empowerment and poverty alleviation.

Figure : Trend of RMG Export Volume, Export Growth and Contribution to GDP

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Prospects of the RMG Industry Despite many difficulties faced by the RMG industry over the past years, it continued to show its robust performance and competitive strength. The resilience and bold trend in this MFA phase-out period partly reflects the imposition of safeguard quotas by US and similar restrictions by EU administration on China up to 2008, which has been the largest supplier of textiles and apparel to USA. Other factors like price competitiveness, enhanced GSP facility, market and product diversification, cheap labour, increased backward integration, high level of investment, and government support are among the key factors that helped the country to continue the momentum in export earnings in the apparel sector. Some of these elements are reviewed below. Market Diversification Bangladeshi RMG products are mainly destined to the US and EU. Back in 1996-97, Bangladesh was the 7 and 5 largest apparel exporter to the USA and European Union respectively. The industry was successful in exploring the opportunities in markets away from EU and US. In FY06, a successful turnaround was observed in exports to third countries, which having a negative growth in FY05 rose three-fold in FY06, which helped to record 23.1 percent overall export growth in the RMG sector. It is anticipated that the trend of market diversification will continue and this will help to maintain the growth momentum of export earnings. At the same time a recent WTO review points out that Bangladesh has not been able to exploit fully the duty free access to EU that it enjoys. While this is pointed out to be due to stringent rules of origin (ROO) criteria, the relative stagnation in exports to EU requires further analysis. Region-wise Share of RMG Export
th th

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Bangladesh Textile Mills Association Secretary General Taufiq Hasan said that because textiles and ready-made garments are the two largest export sectors and employers in Bangladesh , government support will continue and there are no restrictions on repatriation of profits and investment or tax-free imports of machinery and raw materials for export. The government also is liberal toward work permits.

According to the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), the total fabric requirement in the captive market is about 3 billion yards, of which roughly 85 to 90 percent is imported from countries such as China , India , Hong Kong , Singapore , Thailand , Korea , Indonesia and Taiwan . Fabric demand is increasing at the rate of 20 percent per year.

Although the industry is one of the largest in Bangladesh and is still expanding, it faces serious problems, principally because the country does not produce enough of the raw materials necessary for the industry to expand. The primary materials used in the spinning sector are raw cotton and man-made fibers such as viscose and polyester staple fibers. Unfortunately, none of these raw materials are produced in Bangladesh .

The knitting and hosiery sectors look brighter than weaving, and about 80 percent of garment accessories like cartons, threads, buttons, labels, poly bags, gum tapes, shirt boards and neck boards now are being produced within Bangladesh and contribute to the the national gross domestic product. However, the textile industry is just budding.

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Product Diversification

The growth pattern of RMG exports can be categorized into two distinct phases. During the initial phase it was the woven category, which contributed the most. Second phase is the emergence of knitwear products that powered the recent double digit (year-onyear) growth starting in FY04. In the globalized economy and ever-changing fashion world, product diversification is the key to continuous business success. Starting with a few items, the entrepreneurs of the RMG sector have also been able to diversify the product base ranging from ordinary shirts, T-shirts, trousers, shorts, pajamas, ladies and childrens wear to sophisticated high value items like quality suits, branded jeans, jackets, sweaters, embroidered wear etc. It is clear that value addition accrues mostly in the designer items, and the sooner local entrepreneurs can catch on to this trend the brighter be the RMG future.

Export Performance of Different Apparel Items

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Backward Integration RMG industry in Bangladesh has already proved itself to be a resilient industry and can be a catalyst for further industrialization in the country. However, this vital industry still depends heavily on imported fabrics. After the liberalization of the quota regime some of the major textile suppliers Thailand, India, China, Hong Kong, Indonesia and Taiwan increased their own RMG exports. If Bangladesh wants to enjoy increased market access created by the global open market economy it has no alternative but to produce textile items competitively at home through the establishment of backward linkage with the RMG industry. To some extent the industry has foreseen the need and has embarked on its own capacity building. Trend of Back-to-Back Import

Flow of Investment It is plausible that domestic entrepreneurs alone may not be able to develop the textile industry by establishing modern mills with adequate capacity to meet the growing RMG demand. It is important to have significant flow of investment both in terms of finance and technology. Figure 3 indicates that the investment outlook in this sector is encouraging, although the uncertainties before the MFA phase-out period caused a sluggish investment scenario. In part the momentum in the post-MFA phase-out period is indicative of the efforts underway towards capacity building through backward integration. This is evident in the pace of lending to the RMG sector and in the rising

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import share of RMG related machinery. However further progress would be necessary to improve and sustain competitiveness on a global scale. Trend of Total Lending and Capital Machinery Import in the Apparel Industry

Policy Regime of Government Government of Bangladesh has played an active role in designing policy support to the RMG sector that includes back-to-back L/C, bonded warehouse, cash incentives, export credit guarantee scheme, tax holiday and related facilities. At present government operates a cash compensation scheme through which domestic suppliers to exportoriented RMG units receive a cash payment equivalent to 5 percent of the net FOB value of exported garments. At the same time, income tax rate for textile manufacturers were reduced to 15 percent from its earlier level for the period up to June 30, 2008. The reduced tax rates and other facilities are likely to have a positive impact on the RMG sector. Lead Time Lead time is a crucial factor maintaining export competitiveness. Bangladesh happens to feature the longest lead time in the RMG world. The lead time for Bangladesh is 120 days on an average, while the corresponding period for Sri Lanka is about 19-45 days and for India it is only about 12 days. Various factors like the distance from major markets, importation of raw materials, port congestion, strikes, poor roads, etc. are some of the factors responsible for this. At present the fashion seasons are becoming short with a changing trend, it would not be possible to compete if the lead time extends beyond 30-40 days. Therefore, bringing down the lead time to about 30-40 days is a major challenge for the countrys RMG sector. Clearly more business can be captured only if the lead time could be improved.

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Cheap Labour Force The strength of a firm depends on its specific comparative advantages, which its competitors do not possess. To date the local industry has flourished in spite of the challenges cited above (e.g., lead time, infrastructure, and bureaucratic red tape) on the back of cheap female labour. The wages paid to RMG workers in Bangladesh are the lowest even by the South Asian regional standard. Figure 4 illustrates the comparative average hourly wages in apparel industry of selected developed and developing countries. Figure : Comparative Average Hourly Wage in Apparel Industry

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RMG looks to good time August 10, 2010 The contribution of readymade garment (RMG) to the national export increases with the rebound of orders from international buyers following a recovery in the global economy, according to trade data of the Export Promotion Bureau. The share of RMG products reached 77.17 percent in the July-November period from 77.15 percent in July-October of the current fiscal year. During the July-November period, the country exported woven garments worth $2.13 billion and knitwear items of $2.59 billion totalling $4.72 billion. The share of woven garments in the total exports of the country was 34.84 percent and that of knitwear (including sweater) was 42.34 percent, the data said. During the five-month period, the total national export was worth $6.10 billion. In fiscal 2008-09 the RMG contribution was 79.33 percent, while woven segment added 38.02 percent and knitwear items 41.30 percent. Bangladesh exported woven garments worth $5.92 billion and knitwear worth $6.43 billion in 2008-09, registering growths of 14.54 percent and 16.48 percent respectively compared to the previous year. Shahadat Hossain Kiron, managing director of Dekko Group, said the flow of orders from the international buyers was higher this winter compared to the last season as the global economy is recovering from the recession. The number of orders outpaced the capacity of my factories, Kiron said. Chairman and Managing Director of SQ Group Ghulam Faruque said the situation is improving as the buyers are placing more orders. The trend of order placement indicates that the countrys apparel export will go to its previous high level at the end of the year, he said. But the perennial problem of offering low prices by the buyers remained the same, he added. The sign of recovery in the RMG export is also seen in the increasing trend of consumption of Utilisation Declaration (UD) by the exporters from their respective trade bodies.Bangladesh had been experiencing a negative growth in UD consumption for the last few months because of low orders following the global recession.

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The UD consumption improved in January by 4.0-5.0 percent compared to the same month last year, according to Bangladesh Garment Manufacturers and Exporters Association (BGMEA) data. But the concerns for Bangladesh are the sudden price hike of cotton by 25 percent on international market and yarn price rise on the local market by 30 percent as the Free on Board (FoB) value remained static, said BGMEA President Abdus Salam Murshedy. If a commodity is quoted on an FoB basis it means the cost of the goods and their loading on to a ship are included but not the insurance or freight charges. He said the exporters cost increased as they have to send the goods by air to maintain the lead-time. Recently the exporters are continuously failing to maintain the lead-time due to failure in on-time production caused by low gas pressure in the plants, he said. Borrowers are not taking loans, which means they are unsure about the viability of their investments, says Dr Zaid Bakht. Fear of a double-dip recession may be partly to blame. But the main reasons are internal. Having a good set of macro fundamentals would be key to restoring investor confidence in 2010. This would include achieving reasonable fiscal balances, realistic exchange rate, low interest rates, and social and political stability. There are major infrastructure issues, and the dismal situation in the power sector is probably the most critical. Hossain Khaled, managing director of Anwar Group and former president of Dhaka Chamber of Commerce and Industries (DCCI) argues that a sense of security must prevail if investment is to occur. We have had instances of mobs burning down factories, and extortionists shooting at businessmen because they wouldnt pay. It is the governments job to provide security for entrepreneurs. But apart from physical security, we need guarantees that we will receive enough gas and electricity to run our factories. An improvement in power generation would probably top the New Years wish list of any businessman in Bangladesh . Power shortages are the most serious and immediate of the infrastructure constraints, with damaging impact on productivity and investment. Hossain Khaled believes it is a lack of initiative rather than a lack of resources that is holding back the power sector. We have gas and coal, says Khaled. We must take immediate steps to explore and utilise our resources in the best manner possible. There are also various options we can explore to overhaul or replace aging power stations. But delay in taking decisions is costing us.

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The country has a shortage of 1300MW to 1500MW power, explains Prof Mustafizur Rahman. To ease the problem, the power plants that are near completion, including rental ones, must be brought on-stream at once. Tender process for future plants must be rapid and transparent. A broad swathe of economists and energy experts believe that Bangladesh s long-term energy policy must rely on rapid and efficient extraction of domestic coal reserves. Five good quality coal deposits, with proven reserves of more than 2.5bn MT have been discovered in Bangladesh . National Coal Policy needs to be finalised as soon as possible, says Prof Mustafiz. There is a debate going on about the local environmental and social effects of mining, but we should have an open dialogue about this as soon as possible. Coal can be extracted in a responsible way by ensuring the local inhabitants are taken care of. This is vital for sustainable development of the country. Experts have also called for speeding up gas exploration in offshore blocks while maintaining transparency. If there is a lack of transparency then there is bound to be opposition, says Dr Bakht. The government must also actively resolve maritime boundary disputes with India and Myanmar to facilitate exploration. Following a slew of dismal data, economists are growing increasingly concerned about the sustainability of GDP growth in the years ahead. According to a report by the World Bank, if the energy situation stagnates or deteriorates and global recovery falters then export growth cannot be sustained at FY09 levels and real investment growth could decline further. On this trajectory, GDP growth would be unlikely to reach even 5.5 per cent, let alone the 6+ growth that Bangladesh has seen through much of the decade. Ironically, the economy is turning sluggish at a time when most of the developed countries are exiting recession. Coupled with strong demand in countries like China and India , this recovery could drive up prices of commodities in 2010, warn experts. One challenge for 2010 would be containing inflation, and ensuring food security, says Prof Mustafizur Rahman. The Aman crop has not been that good, and now we must look to the Boro. The government must be vigilant about the risk of spiralling prices. According to data from the Bangladesh Bureau of Statistics, inflation rose by 46% on a point-to-point basis and stood at about 6.71 percent in October. Rising food prices were to blame, say market watchers. The salary of government employees was raised recently, and this could also feed into the inflation scenario. It is vital for the government to stimulate job creation at this stage, says Dr. Bakht. For this the investment climate must be boosted, and the government must also implement the Annual Development Programme (ADP) quickly and transparently.

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One of the few consistently bright spots for the economy has been robust remittance inflow. But Bangladesh cannot take remittance for granted. Not only has the international trade of capital, goods and services slowed down during the recession, but so has the international movement of people. The number of people going abroad for work has almost halved, says Prof Mustafiz, and this is something the government must look at very carefully. There is no scope for complacency here. The CPD executive director believes the government must take a number of urgent steps in 2010 to handle the macroeconomic situation. The economic stimulus package must be spent wisely, and make sure credit is available and affordable. Decisions must be taken quickly regarding the power sector, and in a transparent manner. The health of the RMG sector must be ensured, but we must also diversify our exports. Our exporters are facing challenges because some of our competitors have made exports cheaper by devaluing currency. Provided adequate steps are taken, there is room for cautious optimism going into 2010. The government has spoken of some ambitious infrastructure projects, asserts Hossain Khaled, and these need to be implemented quickly to stimulate the economy the Dhaka Chittagong highway, the Deep Sea Port , new EPZs. Let 2010 2020 be the decade of implementation as we move towards 50 years of our independence. The present government came to power on a platform of affordable food prices, and stable jobs. The honeymoon period is almost over and 2010 will be the time to start delivering. Addressing the weaknesses of the investment climate, complemented by appropriate policy reforms and good governance, should therefore be of top concern to enhance the economys productivity and long-term growth, and contribute to eventual poverty reduction. The road ahead contains challenges that will test the governments resolve. Unfortunately, most of the heartache will be felt by Bangladesh s poor as they continue the perpetual struggle to put two square meals on the table.

Episode one of the global recession may have been a phantom menace as far as Bangladesh is concerned. If there is an episode two, it may not be. The economy, for better or for worse, will take centre stage in 2010.

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Bangladesh outshines India in RMG exports

August 18, 2010 Bangladesh and Vietnam proved stronger resilience in textile exports than India in the face of slowing demand, a study shows.India s textile and apparel exports to the US market shrank by over 10 percent in 2009 calendar year, much more than exports from Bangladesh , China , Vietnam and Indonesia , according to the study by the Federation of Indian Chambers of Commerce and Industry. While this allowed Vietnam to go past India in terms of market share of US imports, others are also catching up, the study finds. India s market share of US imports of textiles and apparels grew from 5.73 percent to 5.9 percent between 2008 and 2009, but during the same period the market share of import from Vietnam increased from 5.53 percent to 6.2 percent. While Bangladesh s annual textile and apparel exports to the US were 11.5 per cent in the last five years, India s exports reached 4.2 per cent in the same period, the FICCI says. Bangladesh s apparel exports to Europe rose 3.6 percent in 2009 over the previous year, while countries like India , China and Turkey recorded lower exports, which increased the market share gap between Bangladesh and India . The US and European Union are the main markets of Indian textile and apparels and account for more than 60 percent of the exports.

Source: thedailystar.net

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Ride Bangladesh-Canada trade wave April 3, 2010 Masud Rahman, president of Canada Bangladesh Chamber of Commerce and Industry, speaks at a ceremony marking the $1.4 billion bilateral trade between Canada and Bangladesh in 2009, at Dhaka Sheraton Hotel yesterday. Dipu Moni, foreign minister, and Robert McDougall, Canadian high commissioner, are also seen. CanCham The foreign minister yesterday asked businessmen to fully utilise the potential of the Canadian export market, as bilateral trade between Canada and Bangladesh is growing faster.We will strengthen negotiations so that our businessmen can expand business with this North American country, Dipu Moni said. The minister was speaking as the chief guest at a ceremony that celebrated an achievement of one billion dollars in annual two-way trade between Canada and Bangladesh in 2009, at Dhaka Sheraton Hotel. The minister asked the Canadian government for further mutual cooperation in ICT, telecom and energy sectors. Canada Bangladesh Chamber of Commerce (CanCham) in Bangladesh organised the function to celebrate bilateral trade that reached C$1.4 billion (C$1=$0.98) in 2009. In his speech, Canadian High Commissioner in Dhaka Robert McDougall said Bangladesh exported goods to Canada worth C$808 million, demonstrating 26 percent growth from the previous year. Canada exported goods to Bangladesh worth C$626 million, 118 percent up from the same period of 2008. Canadian exports to Bangladesh in 2009 featured grains and other foods, telecommunications and energy equipment and services, pulp and metals, while Canadian imports included ready-made garments (RMG), hats, footwear, frozen foods and ceramics. The tremendous growth in business between our countries was possible because of the relentless effort of the twinned business communities of the two nations. Congratulations on the fruitful results of your hard labour, McDougall said. He said diversification of products and markets is an important element to future export growth. Existing global competitiveness in garments and textiles can be replicated in other areas, like leather and pharmaceuticals.

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Despite widespread poverty, frequent natural calamities and the impacts of the global economic crisis, Bangladesh has developed a much improved reputation for economic management and an emerging middle class, McDougall added. CanCham President Masud Rahman said the chamber would shortly organise the Showcase Canada programme to further promote and facilitate inter-trade. He said the mutually beneficial relationship between Canada and Bangladesh has not yet peaked. There is room for growth and it is in the interest of both to make every effort to seize this opportunity, he added.The Export Promotion Bureau (EPB) of Bangladesh , in association with the Bangladesh High Commission in Ottawa , Canada , will shortly organise a solo exhibition of Bangladeshi products in Toronto , Rahman said. Meanwhile, the top five products exported to Canada in 2009 included woven apparel worth C$367.18 million, knitwear apparels worth C$336.93 million, other textile articles worth C$72.86 million, headgear worth C$8.69 million and fish and seafood worth C$6.90 million. On the other hand, the top five products exported to Bangladesh in 2009 included, cereals worth C$246.59 million, vegetables (mainly lentils) worth C$242.50 million, other grains and seeds worth C$54.89 million, iron and steel worth C$53.18 million and wood pulp worth C$7.42 million. In 2008, total export to Canada was worth C$648.82 million against imports worth C$286.99 million; in 2007, export to Canada was worth C$542.45 million against imports worth C$368.89 million; in 2006, export to Canada was worth C$543.32 million against imports worth C$164.73 million, according to Canadian High Commission data.

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Export performancebelated impact of recession? It is good to know that improved export performance in April has helped pull export to a positive zone albeit marginally. Overall export in the first ten months registered a growth of 0.97% over the same period last year. However, it was 8.67% behind the target fixed for the period. It is a matter of greater concern that performance of garment sector, which accounts for more than 75% of our export, still shows a negative growth. Knitwear and woven garment exports are 2.06 and 1.38 percent down over the actual performance of the first ten months of last year. However, improved performance of RMG sector in April and excellent export performance of jute goods, raw jute, petroleum and engineering products have been able to bring the exports figure to the green zone from a negative growth figure of 0.80% at the end of March. Export target for the year has been fixed at $ 17.6 billion against actual export of $ 15.5 billion last year. From the past trend, target for the year appears to be reasonable. However, actual export up to the end of April was only $ 12.8 billion. Therefore, maintaining last years performance has become a challenge and reaching the target appears to be extremely unlikely. Our export performance obviously depends on RMG sector. Therefore , this years downturn needs to be seen in the context of garment sector performance. Defying global recession, RMG export registered a healthy growth during 2008-09 financial year. This was possible due to certain favorable factors like extremely low wage level, concentration on low end products, huge work force, cheaper water and energy, aggressive entrepreneurship, political stability and nearly thirty years of experience. However, the scenario started changing from the beginning of the current year. Stiff global competition forced exporters to allow more discounts which reduced value addition. To keep the factory running, industrial units within the country were competing with each other for securing orders. Buyers naturally took advantage of this vulnerability. There was also increasing trend of expenditure. Shortage of gas and electricity was a major problem. It affected production level and increased production cost. Besides, a nagging gas and power crisis disrupted export schedule forcing the exporters to send consignments by air at a higher cost. A large number of the industrial units are merely manufacturers without much of contract. They lack marketing and negotiating skill. Therefore, for the purpose of finding out possible export market, they are often dependant on intermediaries like buying houses. A large number of buying houses have grown up for the purpose and they have their contribution in bringing more business to the country. But the current competitive environment may have allowed them to dictate terms. Having better knowledge of local condition, they are able to procure at the lowest price from the helpless manufacturers thus fattening their own profit and pleasing the buyers. After all, this is a buyer dominated sector and there is no bottom line of price.

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Garment manufacturers were loud about possible adverse effect of global recession from the beginning. But the government and other experts failed to pay attention to it till the exports actually started showing a downturn from beginning of the current year. In appreciation of the difficulties of the exporters, the government ultimately declared an incentive package. However, there are allegations that the package lack transparency and there are procedural difficulties hindering the process.

RMG sector faced many problems in the past. Many people predicted dooms day in the post MFA period. But the sector proved to be extremely competitive and resilient. This time also they are facing serious problem due to external and internal factors. Externally, they are facing aftermath of the global recession and internally the sector is confronted with serious energy crisis. The industry is also under increasing pressure relating to social compliance issue, which obviously has a cost implication. Interestingly, the importers insist on social compliance and also ask for more discounts. At a time when the industry looks rather vulnerable and beset with problems, the long neglected issue of poor wages to the workers has come to the forefront. There is no denying that the garment sector made immense contribution to the national economy. But it is also true that the industry paid extremely low wages to the laborers and exploited them shamelessly. The issues of safety and welfare of the workers have always been neglected. The minimum wage- which is outrageously low- was fixed in 2006. It appears that there has not been any revision since then although cost of living increased manifolds. Price of rice has gone up by about 50% since then. Simmering discontent of the laborers and periodic violence is now visible. The issue needs to be addressed immediately by the owners, the government and social stakeholders. The importers have also been a willing party to this exploitation and they have their responsibilities in addressing the minimum needs of the workers. It is reported that minimum wage of a worker in RMG units is only taka 1662, which is the lowest in the country. No argument is necessary to justify the need for substantial increase of the minimum wage level. It has been reported in the newspapers that fifth meeting of the wage commission ended recently without much progress.

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PROBLEMS OF TEXTILE INDUSTRY IN BANGLADESH The garment industry of Bangladesh has been the key export division and a main source of foreign exchange for the last 25 years. National labor laws do not apply in the EPZs, leaving BEPZA in full control over work conditions, wages and benefits. Garment factories in Bangladesh provide employment to 40 percent of industrial workers. But without the proper laws the worker are demanding their various wants and as a result conflict is began with the industry. Low working salary is another vital fact which makes the labor conflict. Worker made strike, layout to capture their demand. Some time bonus and the overtime salary are the important cause of crisis. Insufficient government policy about this sector is a great problem in Garments Company. There are some other problems which are associated with this sector. Those are- lack of marketing tactics, absence of easily on-hand middle management, a small number of manufacturing methods, lack of training organizations for industrial workers, supervisors and managers, autocratic approach of nearly all the investors, fewer process units for textiles and garments, sluggish backward or forward blending procedure, incompetent ports, entry/exit complicated and loading/unloading takes much time, time-consuming custom clearance etc. According to our survey in five leading Company we found some problem which are given in a chart with their percentageBangladesh Faces the Challenge of Globalization Bangladesh faces the challenge of achieving accelerated economic growth and alleviating the massive poverty that afflicts nearly two-fifths of its 135 million people. To meet this challenge, market-oriented liberalizing policy reforms were initiated in the mid-1980s and were pursued much more vigorously in the 1990s. These reforms were particularly aimed at moving towards an open economic regime and integrating with the global economy.

During the 1990s, notable progress was made in economic performance. Along with maintaining economic stabilization with a significantly reduced and declining dependence on foreign aid, the economy appeared to begin a transition from stabilization to growth. The average annual growth in per capita income had steadily accelerated from about 1.6 per cent per annum in the first half of the 1980s to 3.6 percent by the latter half of the 1990s. This improved performance owed itself both to a slowdown in population growth and a sustained increase in the rate of GDP growth, which averaged 5.2 percent annually during the second half of the 1990s. During this time, progress in the human development indicators was even more impressive.

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Bangladesh was in fact among the top performing countries in the 1990s, when measured by its improvement in the Human Development Index (HDI) as estimated by the United Nations Development Project (UNDP). In terms of the increase in the value of HDI between 1990 and 2001, Bangladesh is surpassed only by China and Cape Verde . While most low-income countries depend largely on the export of primary commodities, Bangladesh has made the transition from being primarily a jute-exporting country to a garment-exporting one. This transition has been dictated by the country's resource endowment, characterized by extreme land scarcity and a very high population density, making economic growth dependent on the export of labor-intensive manufactures. In the wake of the 2001 global recession, Bangladesh 's reliance on foreign countries as a market for exports and as a source of remittances has become obvious. If Bangladesh is to become less vulnerable to the economic fortunes of others, it will need to strengthen its domestic economy, creating jobs and markets at home. A strong domestic sector and an improved overall investment environment will provide a more stable source of income - like what the garment industry has provided so far - and will rekindle and sustain Bangladesh 's economic growth. BGMEA demands nonstop power, gas supply March 25, 2010 Leaders of the countrys apparel manufacturers Tuesday demanded uninterrupted supply of power and gas to ensure steady production in their units.They said power and gas crises have severely hampered production in factories of Dhaka and Chittagong . The situation in ready-made garments industry is not good because of the prevailing gas and power crises, Abdus Salam Murshedy, president of Bangladesh Garment Manufacturers and Exporters Association (BGMEA) said at a press briefing following his meeting with Prime Ministers Advisor for Power, Energy and Mineral Resources Tawfiqe-Elahi Chowdhury and State Minister for Energy and Power Enamul Huq at the secretariat. There is no alternative to continuous power and gas supply for saving this labouroriented industry and the supply has to be ensured giving it top priority, said Murshedy who led a delegation of the BGMEA.He also demanded subsidy on diesel and furnace fuel prices. If the government fails to provide steady supply of power and gas, it can temporarily stay the raise in their prices. The separate rates of peak and off-peak hours may be dissolved into a steady flat rate. Source: http://www.thefinancialexpress-bd.com

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Severe gas supply shortage hits textile production

January 20, 2010 The countrys textile, knitwear and readymade garment industries leaders urged the government to take immediate steps in restoring gas supply as production in their factories has declined by around 50 per cent due to gas crisis Tuesday. Textile production has nearly halved due to severe interruption in gas supply, Bangladesh Textile Mills Association (BTMA) President Abdul Hai Sarker told the FE. Textile sector consumes 70 per cent of the total gas used by the private sector and if the gas crisis continues for long, then the sector may not be able to sustain, he explained. The BTMA president said: We need 2,000 mw power per day whereas now we are getting only 1,200-1,400 mw power which is 40 per cent less than the demand. According to the BTMA, the country has 1,350 textile mills with cumulative investment of Tk 400 billion (40,000), the highest by any industrial sector. Mr Sarker said: Spinning, dyeing and finishing factories need 24-hour uninterrupted gas supply for full-fledged production. He said, due to interruption in gas supply the production, quality and quantity had fallen which would hamper product delivery consignment. We have been facing gas crisis since March, 2009 and recently it has turned worse in Dhaka , Chittagong , Gazipur, Savar and Narayanganj zones, he added. We are still recovering from the impact of the global recession and at this moment the gas crisis has been the biggest menace for us causing loss of our international market. Fazlul Hoque, president of Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) said. To complete a batch of knit product a dyeing factory needs at least 10-11 hours of uninterrupted electric supply he said adding that the lack of gas supply hampers the quality and quantity too. Abdus Salam Murshedy, president of Bangladesh Garment Manufacturers and Exporters Association (BGMEA) said if the problem is not solved on priority basis, more than hundred factories will have to shut down.

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Recommendation

Bangladesh economy at present is more globally integrated than at any time in the past. The MFA phase-out will lead to more efficient global realignments of the Garments and Clothing industry. The phase out was expected to have negative impact on the economy of Bangladesh . Recent data reveals that Bangladesh absorbed the shock successfully and indeed RMG exports grew significantly both in FY06 and (especially) in FY07. Due to a number of steps taken by the industry, Bangladesh still remains competitive in RMG exports even in this post phase-out period. Our Garments Industries can improve their position in the world map by reducing the overall problems. Such as management labor conflict, proper management policy, efficiency of the manager, maintainable time schedule for the product, proper strategic plan etc. Government also have some responsibility to improve the situation by providing- proper policy to protect the garments industries, solve the license problem, quickly loading facility in the port, providing proper environment for the work, keep the industry free from all kind of political problem and the biasness. Credit must be provided when the industry fall in need. To be an upper position holder in the world Garments Sector there is no way except follow the above recommendations. We hope by maintaining proper management and policy strategies our country will take the apex position in future.

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Suggestions Regarding Fire Safety

We need to remember that when there is a fire, the first thing one should do is to run away from it. And this is what everyone does in such a situation. But the situation become dangerous and tragic when the escape doorways and gates are found locked. Precautionary should need to be adopted are given below:

1. Building should be constructed with fire resisting materials 2. Adequate exits and proper escape routes should be designed 3. Protection against fire and smoke should be ensured 4. Electrical wiring must be properly designed, installed and maintained 5. Escape routes should be lighted at all times, kept clear, be indicated by signs 6. Regular fire drills should be held 7. Doors should be protected and should open along the direction of escape 8. Doors should not open on the steps and sufficient space should be provided. 9. Smoke/Fire alarm systems must be installed 10. adequate number of extinguishers should be provided 11. Prior relationship with local Fire services should be established

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SOME COMPANY PROFILE

By taking information from four leading garments company to identify the problem of this sector. Short profile of the Company are given belowMillenium Garments Limited It is a manufacturing company, established in 1990. More than 1200 employees found their working place in this organization. Different types of modern equipment in here to run the production smoothly. Such as- 450 pcs of different type of cutting, sewing and finishing machines supplied by mostly Singer and Brother. Its main market for exporting is European Countries, USA . And the other customer groups are Ekinsa, Spain; Vesage, UK; Etam, Singapore; Vetura, France; Amcobus, U.S.A; Miles, Germany; Star Wear, U.S.A. It is one of the leading exports Garment Company of our country. RAHAN GARMENTS (PVT) LTD It was founded in 1993. Rahan started manufacturing and exporting from 1995. Manufacturer and exporter of all type of apparels, specialized in under garments, sportswear and knit & woven garments. The total working area comprises of 29,000 square feet in one floor. Their plant and office is located in the central part of the city. This give security and convenience for the transportation of goods and all kinds of supports needed for daily production and financial facility. TOKIO MODEL LIMITED. The company was established in 1990 as a Public Limited Company. The company authorized capital was in US $ 12.7 Million. Its production capacity is 29,000 Doz/ Month Approx. Oven & Knitwear Items. More than 750 employees participate here in the manufacturing activities. It is another leading Garment Company of our country. FABRICS & COMMODITIES EXCHANGE LTD Fabrics & Commodities Exchange Ltds a well reputed Garments Exporters in Bangladesh . Accordingly as a first step of their customer familiarization process, they would like to brief with their business process and how this could be of any interest to their organization. Based in Dhaka , Bangladesh they manufacture over 200,000 units a month including Knit, Woven and Sweater. A highly qualified team of QA foresees the manufacturing process. Reliability and cost effectiveness are on the utmost priority while we provide value added services to our vast growing client list.

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CONCLUSION T he textile industry has played an important role in Bangladesh s economy for a long time. Currently, the textile industry in Bangladesh accounts for 45 percent of all industrial employment and contributes 5 percent to the total national income. The industry employs nearly 4 million people, mostly women. A huge 78 percent of the countrys export earnings come from textiles and apparel, according to the latest figures available. Bangladesh exports its apparel products worth nearly $5 billion per year to the United States , European Union (EU), Canada and other countries of the world. It is the sixth largest apparel supplier to the United States and EU countries. Major products exported from Bangladesh include polyester filament fabrics, man-made filament mixed fabrics, PV fabrics, viscose filament fabrics and man-made spun yarns. Major garments exported include knitted and woven shirts and blouses, trousers, skirts, shorts, jackets, sweaters and sportswear, among other fashion apparel. The Ready-Made Garments (RMG) industry occupies a unique position in the Bangladesh economy. It is the largest exporting industry in Bangladesh , which experienced phenomenal growth during the last 25 years. By taking advantage of an insulated market under the provision of Multi Fibre Agreement (MFA) of GATT, it attained a high profile in terms of foreign exchange earnings, exports, industrialization and contribution to GDP within a short span of time. The industry plays a key role in employment generation and in the provision of income to the poor. To remain competitive in the post-MFA phase, Bangladesh needs to remove all the structural impediments in the transportation facilities, telecommunication network, and power supply, management of seaport, utility services and in the law and order situation. The government and the RMG sector would have to jointly work together to maintain competitiveness in the global RMG market. Given the remarkable entrepreneurial initiatives and the dedication of its workforce, Bangladesh can look forward to advancing its share of the global RMG market.

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References

Abdullah, Md. Abu Yousuf, 1997, International Trade Implications and Future of Ready-Made Garments Sector of Bangladesh Journal of Business Administration, Vol. 23, No. 3 & 4, Page 41-69.

Azim, M. Tahlil, and Nasir Uddin, 2003, Challenges for Garments Sector in Bangladesh After 2004: Avenues for Survival and Growth Bangladesh Institute of International and Strategic Studies Journal, Vol. 24, No. 1, Page 49-82.

Bhattacharya, D and M. Rahman, 2007, Prospects for Internalizing Global Opportunities in Bangladesh 's Apparel Sector, UNRISD Occasional Paper.

Bhattacharya, D and M. Rahman, 2009, Experience with Implementation of WTO-ATC and Implications for Bangladesh , CPD Occasional Paper Series, Paper 7.

Bhattacharya, D, M. Rahman and A. Raihan, 2010, Contribution of the RMG Sector to the Bangladesh Economy, CPD Occasional Paper Series, Paper 50. BANGLADESH BANK Policy Note Series: PN 0702

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