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Ready-Made Garments (RMG) Industry in Bangladesh. It is a fact that the Ready-Made Garments (RMG) sector has become the most dominant and influential industry on behalf of the economy of Bangladesh. From the start of the three decades, it has grown from a just emerging industry to be a force to reckon within this world. The RMG sector therefore involves the manufacturing of apparel from textiles whereby the company offers to sell the fabrics and finished products. These products are in turn exported to the global market specifically the United States, Europe, and Canada market. Currently, Bangladesh is the second largest exporter of ready-made garments in the globe and is lagging behind only the People’s Republic of China and this industry contributes a large percentage of the export revenue. It explains how cheap labor can be availed from Bangladesh, government support, and preferential trade agreements help the industry in keeping itself to build a niche in the global market.

This sector’s wholesome development has influenced the country’s overall socio-economic development. The RMG industry generates employment opportunities for more than 4 million people and a large portion of the workforce is female people from rural backgrounds. Thus, social employment opportunities for women have been chosen, their status has advanced in the economic aspect, and they have helped to minimize poverty in the country. Further, the boom in the industry has given rise to additional sectors like textile, dyeing, packing, and transportation. Thus, the RMG sector has turned out to be one of the vital means for the economy of Bangladesh and the portion of the Gross Domestic Product (GDP) of the country has also experienced considerable growth because of this sector.

Impact of the RMG Sector on the Bangladeshi Economy

The RMG industry of Bangladesh has a very significant role to play in the development of this nation’s economy. It provides about 84% of the total exports of the country and it is therefore the greatest source of foreign exchange. The direct contribution of the sector to the national GDP is about 11% which shows the role of this sector in the Bangladeshi economy. This contribution, therefore, is not only in export earnings but in employment creation, empowering women, and reducing poverty levels as well. Through the legitimate RMG business, the country’s economy motivated several other related businesses in sectors like banking, insurance, property and transport among others. This ripple effect has gone further to improve the economy thus making Bangladesh to register great progress in regards to Human Development Indicators and Poverty Eradication.

The expansion of the RMG industry has also catalyzed increased investment on infrastructural facilities. The government and private sectors have embarked on the construction new factories, rehabilitating factories that are already in existence, and developing the transport infrastructure to cater to the growth of the industry. They have fostered the conditions necessary for even further growth of the economy and have put Bangladesh on the map of the apparel-exporting countries. The RMG industry has also been a major contributor to the government’s revenue generation that has been used to support social goods such as the provision of education, and healthcare, among others, as well as developing infrastructure.

Would it be possible to Direct the Contribution of RMG Sector in Bangladesh?

There exists an opportunity that the RMG sector can be much more contributive to the economy of Bangladesh than it is contributing at present. At present, the industry’s participation is mainly realized through exports, foreign exchange income, and employment opportunities. But here there is the possibility of more capital and money direct input through value addition, new technology, improved skills etc. By bearing in mind the strategies of expansion of product portfolio, vertical integration, and value addition, Bangladesh can take a bigger piece of the global apparel market.

Furthermore, new technologies and methods of automation also will contribute to the increase of productivity, the reduction of expenditures and the increase of quality. This would not only contribute to continuous growth in the global market but also increase the number of foreign investments. Similarly, the scope of the direct contribution can also be expanded by improving the backward linkages or the fabric sector like weaving, dyeing, and finishing. Depending on local supplies for raw materials also helps to cut down on importation thus saving foreign exchange and boosting the direct impact of the sector to the economy.

RMG Industry of Bangladesh

The industry of rmg in Bangladesh is competitive, growing and very much prone to changes. The industry emerged at the earlier part in the 1970s and has expanded tremendously to relation. The first wave was touched off by cheap labor, supportive government policies and policies on international trade with the main markets such as the United States and the European Union. The industry has expanded and evolved from offering simple apparel products; t-shirts and trousers to more complex forms of apparel products; jackets, sportswear, fashionable wear etc.

At the present time, RMG sector has almost 4500 factories and millions of workforce exist in this sector. Most of these factories are situated in Dhaka, Chittagong and Narayanganj cities and are mostly specialized in the manufacturing of apparel. Most companies are large export-oriented units; however, there is a large number of SMEs that are quite significant as suppliers. Some of the constraints it has encountered include competition by other countries, compliance, increase in production cost among others but the industry has continued to grow by focusing on issues like quality, product differentiation and labor conditions.

Analysis of Bangladesh RMG Industry Step-by-Step

To analyze the RMG industry in Bangladesh, one has to necessarily look into the development path, situation prevailing at present, its strengths, and weaknesses, the opportunities for further development, and the threats that lie ahead. Here is a step-by-step analysis:

Growth Trajectory: The growth of RMG industry of Bangladesh started in the late seventies when export to developed countries started. The first step was pulled by favorable government policies, a Multi-Fiber Agreement or MFA, and cheap labor cost. As this paper will examine following the MFA phase-out in 2005, the textile and Apparel Industry was still able to find ways to sustain its growth through means such as an increased focus on productivity and competitiveness.

Current Status RMG is the largest export-earning sector of Bangladesh earning more than 30 billion US dollar foreign exchange every year and it is the second largest exporting country of RMG in the world. Direct employment opportunities in the industry comprise of more than four million people with sixty percent of women among them. The sector makes a cumulative of 11% towards the national GDP and 84% towards total exports in the country.

Strengths RMG industry of Bangladesh enjoys low cost labor, political support, and favorable trade terms with the most important buying centers. The industry has therefore been able to bear the shock of global economic downturns and competition by competitors.

Weaknesses: Nonetheless, the industry has some glaring weaknesses, which include scarcity of skilled workforce, low levels of vertical integration, regulatory violations and reliance of the industry on imported inputs. They can influence productivity as well as cost competitiveness in and operations of various firms.

Opportunities: Presently, there is potential growth in diversified products, value addition and innovation the use of technology. It can also expand markets, penetrate value added apparel manufacturing markets and build a more viable supply chain to create greater competitiveness for Bangladesh.

Threats: There is potential for cost pressure due to increasing manufacturing costs, increasing environmental and labour regulation standards, and threats fromVietnam,India and Cambodia. The industry is also influenced by the fluctuations of the global economy as well as changes in the trade policies.

Challenges of rmg sector in Bangladesh.

Compliance and Labor Issues: An important issue that which RMG sector faces is non-compliance with international labour standards and safety measures. The Rana Plaza incident in the year 2013 drew attention in the way factories were built and the conditions under which people worked. Although a lot have been achieved in this respect, sustained endeavors are still necessary to uphold and enhance these standards.

Lack of Skilled Labor: The industry is more dependent on cheap human resource kit, however; skilled workers are required in manufacturing high value apparels. Skill development and training programs have to be invested in order to promote productivity and to ensure that the college is able to achieve international competence.

Dependency on Imported Raw Materials: RMG industry in Bangladesh is highly dependent on imported materials such as fabrics, accessories etc. This leads to high cost of production and longer lead time. Forming a strong local supply base is most important for decreasing import dependence and improving the competitiveness of the industry.

Competition from Other Countries: The competition that Bangladesh’s garment industry is facing includes other garment manufacturing countries such as Vietnam, India and Cambodia. These countries are spending in technology, raising the standard of employees, and expanding their product portfolio to cover a wider market.

Environmental Sustainability: RMG industry is one of the major pollutants of the environment because of its use water in many activities and the usage of chemical products. To sustain the industry, accordingly, the incorporation of green factories, water recycles and waste management system are relevant.

Rising Production Costs: Higher wages cost, the cost of utilities and cost of raw materials all have affected production cost in Bangladesh. Then it is critical for the industry to concentrate on the aspects such as productivity enhancement, minimization of wastage, and adoption of technology.

In fact RMG industry plays a pivotal role in the growth and development of the economy of the country Bangladesh. This society has been very vital in the change of the socio-economic fabric with regard to the generation of employment opportunities, the advancement of women and poverty alleviation. In the same way though, the industry is not without unique challenges that it must overcome where necessary. If the RMG industry emphasizes value addition, skill development, proper technological implementation, and sustainability, it will be beneficial for Bangladesh’s economy as it can further maintain and contribute a lot more. These challenges and opportunities therefore foretell the future growth of the RMG sector depending on how the sector will manage them to sustain a competitive advantage in the worldwide market.