Bangladesh, the sixth largest apparel supplier to the USA and EU, offers major investment and sourcing opportunities. Niki Tait speaks with members of the Bangladesh Manufacturers and Exporters Association.

Bangladesh currently ranks as the sixth largest apparel supplier to the USA and EU, with stringent social policies and child labour-free reforms.

The country exports, mainly on an FOB basis, nearly US$5 billion of apparel products per year, a mix of children's, ladies' and men's wear and all types of woven, knitwear and sweater items - though the major products are knitted and woven shirts and blouses, trousers, skirts, shorts, jackets, sweaters, sportswear and casual apparel.

Garments are exported to 90 countries with the United States the single largest buyer at 40 per cent. Canada, Germany, UK, France, Italy, Spain, Sweden, Holland, Denmark, Greece, Portugal, Austria and Belgium rank as other major destinations.

In addition to quota and duty free access to Europe, textiles and clothing from Bangladesh have been awarded duty free access to New Zealand, Norway, Japan and, since 1 January 2003, Canada.

Linking at Jams Sweaters, Dhaka

Clothing is produced within two main areas of the country: the capital Dhaka where approximately 2560 factories are located, and Chittagong where there are around 555 companies. The average sized export factory employs 1000-1200 people.

Because the factories tend to be located in cities the industrial infrastructure is satisfactory, although nearly all have their own stand-by generators, and some may need to ship in additional water. However, because the export industry is so important to the country, the government tends to give priority to clothing factories.

The government is also offering incentives to companies to relocate or expand employment into the smaller towns and villages. As the industry is labour orientated with low wages it tends to use unsophisticated machinery, such as hand knitting rather than electronic, and mechanical rather than electronic sewing equipment.

Leading export earner
From a start in the late 1970s as a small non-traditional export sector, by 1983 ready made garments (RMG) had emerged as a promising export earner. The industry has experienced unprecedented growth over the last decade and half, with exports accounting for approximately 76 per cent of total Bangladesh export earnings in 2000 2001.

The sector directly employs 1.8 million workers, 80 per cent of whom are women. 0.8 million are engaged in clothing accessories, and a further 10 million are indirectly dependant on the clothing sector. One of Bangladesh's key advantages is the fact that it is endowed with an abundance of cheap labour. The per capita gross national income is just $361 (2001).

Estimates show that about 80 per cent of garment accessories like cartons, threads, buttons, labels, poly bags, gum tapes, shirt boards and neck boards are now being produced within Bangladesh, contributing to the national GDP. But the textile (spinning, weaving, finishing) industry is still growing.

Although the country exported clothing worth US$4583.75 million in 2001/2, the value addition in the ready-made garment industry amounted to US$1883 million or 41 per cent of the total exports. The industry accounts for 9.5 per cent of Bangladesh's GDP, 29.7 per cent of the manufacturing GDP.

Final pressing at BHIS Apparels

Presently, the clothing industry's fabric requirements amount to approximately three billion yards, of which 85 90 per cent are imported from countries like China, India, Hong Kong, Singapore, Thailand, Korea, Indonesia, and Taiwan. This requirement is increasing at around 20 per cent per annum and offers a tremendous opportunity for further industrialisation in the country.

Indeed, it is estimated by the BGMEA (Bangladesh Garment Manufacturers and Exporters Association) that by 2005, 60 moderate size composite textile mills, each capable of producing 30 million yards of fabrics per year, are required by the industry.

To this end the Government of Bangladesh has developed an extensive programme of incentives to speed up investment in the country. These include tax exemption and duty free importation of capital machinery and spare parts for 100 per cent export oriented industries, no ceiling for investment, tax holidays of up to 10 years, residency permits for foreign nationals including citizenship, easy capital profit and dividend repatriation facilities, and tax exemption on the interest payable on foreign loans.

Investors can also take advantage of the generalised system of preference that allows duty free access to European and Japanese markets. Imports of cotton are also duty free.

The Bangladesh clothing industry is well aware that survival in the quota free world after 2005 will depend on its global competitiveness. Market diversification, development of an adequate and efficient backward linkage industry, compliance with international standards, and garment specific industrial parks are believed to be indispensable for improving this competitive edge.

Capital outlay is needed for these programmes, and the BGMEA is actively lobbying the government for support.

Brief background of BGMEA

Fusing at BHIS Apparels

Since its inception in 1977, BGMEA has grown from 19 to around 3500 garment manufacturers, buying houses, agents and exporters as its members.

Its fundamental objective is "to establish a healthy business environment for a close and mutually beneficial relationship between the manufacturers, exporters and importers in the process ensuring a steady growth in the foreign exchange earnings of the country."

To this end, BGMEA has been playing a very active role as mediator between the industry and government, as well as establishing contacts with foreign buyers and business associations. It is the major trade negotiator in the international market and with global trade bodies like the WTO, and concerned UN agencies like ILO, UNCTAD, UNICEF, and UNFPA.

In addition to holding the largest annual garment fair, the Dhaka-based Bangladesh Apparel and Textile Exposition (BATEXPO), and helping members attend overseas fairs, it has also launched the country's first ever business-to-business web portal: opening up e-commerce between its members and buyers worldwide.

Social sector development programs and projects
BGMEA operates a number of projects and programmes to ensure better healthcare, workplace safety and labour rights for garment workers.

Key is the elimination of child labour, and so far an estimated 10,546 child workers have been removed from Bangladesh's garment sector. An ILO report in 2001 ruled that 100 per cent of the BGMEA member factories are now child labour free.

Following its success in eliminating child labour, the ILO is working with the BGMEA to improve labour relations and working conditions in Bangladesh's garment sector. Key objectives are to ensure occupational health and safety, human resources management, labour and welfare and continued monitoring of the child labour situation.

Since 1994, BGMEA has also established ten medical centres for garment workers providing free primary health care and medicine. Construction of a 150 bed modern hospital is also underway.

Band knit cutting at BHIS Apparels

The BGMEA Institute of Fashion and Technology (BIFT) was established at Uttara in April 2000, and aims to equip the industry with students properly trained in design, fashion and technology. Affiliated with the National University, BIFT currently offers four year honours courses in garment manufacturing management and design and pattern cutting. The institute also provides six month certificate courses in merchandising, product management, quality control and pattern cutting.

Construction has also started on the US$14 million BGMEA Complex. This 15 storey building, situated in Dhakar, will house the BGMEA office block, fashion institute, conference halls, galleries, space for international fairs, commercial offices and other facilities for members and buyers.

BGMEA member profiles

  • Rafty Apparels Ltd and Rafty Sweaters, members of the Karim Group, are based in Dhaka and produce 3 to 12 gauge sweaters with a capacity of 21,000 units per month.
  • Al-Muslim Group produces a wide variety of woven garments. Monthly capacities vary between 20,000-30,000 for long trousers, Bermuda shorts, cargo pants and shorts, overalls, jogging suits and skirts.
  • Razzak Textile Mills employs 450 people producing 2.5 million cut and sew knitwear garments per year including basic T-shirts, polos, tank tops, shorts.
  • Kera Group exports knitwear and woven garments to promotional, corporate, and wholesale buyers and major department stores throughout Europe. Garments include T-shirts, polos, sweatshirts, tank tops and other cut and sew knitted garments to a manufacturing capacity of 150,000 pieces per month. The woven divisions produce trousers, dresses, and jackets and have a capacity of 105,000 dozen per year.
  • BHIS Apparels produces men's shirts (60 per cent), ladies' blouses (20 per cent), and children's shirts (20 per cent) in 100 per cent cotton and cotton blends. With a woven and knitted production unit, capacities are 150,000 woven pieces per month and 90,000 basic T-shirts. The company has 550 employees.
  • Jams Sweaters has a capacity for 130,000 knitted pieces per month covering children's, women's and men's sweaters, pullovers, cardigans, vests and overcoats made from wool, cotton, manmade and mixed yarns. It employs 1567 people.
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Niki Tait, C.Text FTI, FCFI heads Apparel Solutions, which provides independent assistance to the apparel industry in the areas of manufacturing methods, industrial engineering, information technology and quick response.