Export, Import, Remittance & Economic Growth in Bangladesh-International Trade & Garments

1. 1
Executive Summury
Readymade Garments Industry is the leading foreign currency earning sectors of
Bangladesh. Now-a-days Bangladesh financial sector is very much dependent upon this
sector. The annual export income of garments sector is driven from two sources one is
woven garments and others is knit wear. Readymade garments are a 100% export
oriented garments. Readymade garments exports various garments product in foreign
market. The company makes shirts, ladies dress, shorts, trousers, and others for U.S.A,
U.K, Europeans countries.
They use high tech machineries to produce a quality garments product. They also add
new machineries to increase their production line. They have a mission and the vision is
profit maximization. The merchandising philosophy of Readymade garments is to keep
good relation with their buyers.
The garment industry maintains a good relationship with every buyer. Hard working and
commitment maintenance is their main strategy. They always try to satisfy their buyers.
In this perspective the merchandiser always try to do their merchandising activities in
due time. The merchandiser of this company is not very much skilled person. More over
him has no assistant. For this reason
Sometimes the company face problem. So, here Readymade garments can recruit high
skilled people with giving high salary.
The Readymade garments should improve their product quality, packing system,
internal environment, and other merchandising activities to satisfy their foreign buyers.
This report is prepared on “Merchandising activities and buyer satisfaction of
readymade garments. The OCP report helps the reader to know about the
merchandising activities, practiced in Readymade garments And the buyer satisfaction
level towards the merchandiser.

2. 2
Sources
Primary source:
From different employees in garments I get information. To collect this information I
communicate with company’s different department employees .
Secondary source:
To prepare this report I user different news papers, books which are secondary
information. Especially I use various websites as well as Bangladesh garments industry.

3. 3
The economy of Bangladesh is largely dependent on agriculture. However, in recent
years, the Ready –Made Garments (RMG) sector has emerged as the biggest earner of
foreign currency. The RMG sector has experienced an exponential growth since the
1980s. The sector contributes significantly to the GDP. It also provides employment to
around 4.2 million Bangladeshis. An overwhelming number of workers in this sector are
women. This has affected the social status of many women coming from low income
families.
History of our cloth Industry
Once the cloth of Bangladesh achieved worldwide fame. Muslim and Jamdani cloth or
our country were used as the luxurious garments of the royal figures in Europe and
other countries. The British rulers in India didn’t develop our cloth industries at all.
Rather they destroyed them and imported cloths from England.
In 1960,the first garment factory of Bangladesh namely Reaz Garments was established
at Urdu Road in Dhaka.In1967,ten thousand pieces shirt from Reaz garments were
exported in England. In the early 1980s some Bangladeshi received free training from
Korean Daewoo company. After these workers came back to Bangladesh, many of
them broke ties with the factory they were working for and started their own factories. At
present about four thousand and eight hundreds garment factories are located in
Bangladesh. At present about four thousand are to be found in Dhaka city area and or
nearby Dhaka city (savar,gazipur,tangail) and rest of them are positioned in Chittagong
city. More than 2.5 million of workers are employed in the garment industry and among
them about 90% are female. In 1991 the number of workers in the ready mate garment
industry of Bangladesh was 582000,and it grew up to 1,404,000 in 1998.The RMG
sectors now accounts for about 76% of the total foreign exchange.

4. 4
IMPORT
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.
The following were Bangladesh’s import partners as of 2008:
 China: 15.8%
 India: 15.7%
 Kuwait: 8.1%
 Singapore: 7.6%
 Japan: 4.4%
Bangladesh imports many goods (related to garments) from India.

5. 5
EXPORT
“Bangladesh has gained expertise in this sector. We are also committed to improve it
along with working environment and safety measures,” Faruque Hassan, vice-president
of Bangladesh Garment Manufacturers and Exporters Association (BGMEA) said.
Bangladesh, the world’s second largest garment exporter after China, exported
garments worth over $19 billion in FY 2012, when the aggregate exports of the country
amounted to $24 billion. Readymade garment exports from Bangladesh have risen
while apparel exports from India and Pakistan continue to show downward trend.
Besides traditional markets like the United States and the European Union, some other
countries including India, Japan, China, South Korea, South Africa, Russia, Brazil,
Mexico and Chile are increasingly buying more Bangladeshi apparels, sources in the
Export Promotion Bureau (EPB) of Bangladesh and BGMEA said.

6. 6
The exports of garments from Bangladesh rose by 8.8 percent year-on-year to US$
1.36 billion in November 2012, according to the data released by the Export Promotion
Bureau (EPB). Of these, woven garment exports fetched US$ 710.04 million, while
knitwear earned US$ 653.96 million.
Bangladesh posted positive growth in its garment exports in spite of the ongoing debt
crisis in several European nations, the traditional buyers of Bangladeshi clothing items.
In the first four months of the current Bangladeshi fiscal 2012-13, woven and knit
apparel exports have increased by 16 percent year-on-year to over US$ 6.6 billion.
In comparison, India’s apparel exports declined by 0.75 percent year-on-year to US$
907 million in October 2012, figures for which are available, according to the Apparel
Export Promotion Council (AEPC).
India’s garment exports during the first seven months of the current Indian fiscal year
2012-13 too declined by 9.1 percent year-on-year to reach SU$ 7.133 billion, different
agencies reported.
AEPC attributed the decline in exports to economic crisis in Western Europe, US and
Canada, in addition to stiff competition from Bangladesh and Vietnam in US market and
from Turkey in EU market.

7. 7
The garment industry of Bangladesh has been the key export division and a main
source of foreign exchange for the last 25 years. At present, the country generates
about $5 billion worth of products each year by exporting garment. The industry
provides employment to about 3 million workers of whom 90% are women. Two non-
market elements have performed a vital function in confirming the garment industry's
continual success; these elements are (a) quotas under Multi- Fibre Arrangement1
(MFA) in the North American market and (b) special market entry to European markets.
The whole procedure is strongly related with the trend of relocation of production.
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.
In 1983-84, RMG exports earned only $0.9 billion, which was 3.89% of the total export
earnings of Bangladesh. In 1998-99, the export earnings of the RMG sector were $5.51
billion, which was 75.67% of the total export earnings of the country. The net foreign
exchange earnings were, however, only about 30% of the figures quoted above
because approximately 70% of foreign exchanges earned were spent in importing the
raw materials and accessories to produce the garments exported.
Bangladesh GDP Growth Rate
The Gross Domestic Product (GDP) in Bangladesh expanded 6.30 percent in 2012 from
the previous year. GDP Growth Rate in Bangladesh is reported by the Bangladesh
Bank. Historically, from 1994 until 2012, Bangladesh GDP Growth Rate averaged 5.58
Percent reaching an all time high of 6.70 Percent in June of 2011 and a record low of
4.08 Percent in June of 1994. Bangladesh is considered as a developing economy. Yet,

8. 8
almost one-third of Bangladesh’s 150m people live in extreme poverty. In the last
decade, the country has recorded GDP growth rates above 5 percent due to
development of microcredit and garment industry. Although three fifths of Bangladeshis
are employed in the agriculture sector, three quarters of exports revenues come from
producing ready-made garments. The biggest obstacles to sustainable development in
Bangladesh are overpopulation, poor infrastructure, corruption, political instability and a
slow implementation of economic reforms. This page includes a chart with historical
data for Bangladesh GDP Growth Rate.

9. 9
Bangladesh Trade: Export Partners
The following were Bangladesh’s export partners as of 2008:
 United States: 24%
 Germany: 15.3%
 United Kingdom: 10%
 France: 7.4%
 The Netherlands: 5.5%
 Italy: 4.5%
 Spain: 4.2%
Social contribution
In addition to its economic contribution, the expansion of the RMG industry has caused
noticeable social changes by bringing more than 1.12 million women into labour force.
The economic empowerment of these working girls/women has changed their status in
the family. The attractive opportunity of employment has changed the traditional
patriarchal hegemony of the fathers, brothers and husbands. Most working women/girls
can now chose when to get married or become mothers. The number of early marriages
is decreasing; so is the birth rate; and the working girls tend to send their little brothers
and sisters to school, as a result, the literacy rate is increasing. They can participate in
family decision-making. Most importantly, the growth of RMG sector produced a group
of entrepreneurs who have created a strong private sector. Of these entrepreneurs, a
sizeable number is female. A woman entrepreneur established one of the oldest export-
oriented garment factories, the Baishakhi Garment in 1977. Many women hold top
executive positions in RMG industry.

10. 10
ProblemsRegardingWith RMG
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 , leavi ng BEPZA i n full control over work condi ti ons, wages and
benefi ts. 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 s 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 inGarments 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 m a nuf a c t ur i ng
m e t ho d s , l a c k o f t r a i ni ng o r g a ni za t i o ns f o r i nd us t r i a l w o r k e r ,
supervisors and managers, autocratic approach of nearly all the investors, fewer
process uni ts for texti les and garments, sluggi sh backward or forward
blendi ng procedure, incompetent ports, entry/exit complicated and
loading/unloading takes much time, time-consuming custom clearance etc.
Safety Problems
Safety need for the worker is mandatory to maintain in all the organization. But without
the facility of this necessary product a lot of accident is occur incurred every
year inmost of the company. Some important cause of the accident are given below-
● Routes are blocked by storage materials
● Machine layout is often staggered
● Lack of signage for escape route
● No provision for emergency lighting
● Doors, opening along escape routes, are not fire resistant.
● Doors are not self-closing and often do not open along the direction of escape.
● Adequate doors as well as adequate staircases are not provided to aid quick exit
● Fire exit or emergency staircase lacks proper maintenance
● Lack of proper exit route to reach the place of safety
● Parked vehicles, goods and rubbish on the outside of the building obstruct exits to the
open air
● Fi re i n a Bangladesh factory i s li kely to spread qui ckly because
the pri nci ple of compartmentalization is practiced
● Lack of awareness among the workers and the owners.
But now the situation is much improved and we found, all the surveyed
garments are fulfilling the requirement of emergency exit. It is provided in all
the cases, signage is present and fire fighting equipments are up to date, a departure
from the past. Even fire drill is held once in a month.
Prospects of the RMG Industry

11. 11
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 periodpartly reflects the impositionof ‘safeguard quotas’ byUS and si mi lar
restri cti ons by EU admi ni strati on on C hi na up to 2008, whi ch has
been the largest supplier of textiles and apparel to USA. Other factors like price
competitiveness ,enhanced GSP faci li ty, market and product
di versi fi cati on, cheap labor, i ncreased 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. Someof 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 7th and 5th 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 FY07, a successful turnaround was
observed in exports to third countries, which having a negative growth in
FY06 rose three-fold in FY07, 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.
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-on-
year)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 rangi ng from ordi nary shi rts, T-shi rts,
trousers, shorts, pajamas, ladi es and chi ldren’ s wear to
sophi sti cated hi gh value i tems li ke quali ty sui ts, 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.
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
stilled ends 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.

12. 12
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
a nd t e c hno l o g y. F i g ur e 3 i nd i c a t e s t ha t t he i nve s t m e nt
o ut l o o k i n t hi s s e c t o r i s encouraging, although the uncertainties before
the MFA phase-out period caused sluggish investment scenario. In part the
momentum in the post-MFA phase-out period is i nd i c a t i ve o f t he e f f o r t s
und e r w a y t o w a r d s c a p a c i t y b ui l d i ng t hr o ug h b a c k w a r d
integration. This is evident in the pace of lending to the RMG sector and in
the rising import share of RMG related machinery. However further progress would be
necessary to improve and sustain competitiveness on a global scale.
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
credi t guarantee scheme, tax holi day and related faci li ti es. At
present government operates a cash compensati on scheme through
whi ch domesti c suppli ers to export-oriented 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 i ts earli er level for the peri od up to June 30, 2008. The reduced
tax rates and other facilities are likely to have a positive impact on the RMG
sector.
Infrastructural Impediments
The e xi s t e nc e o f s o und i nf r a s t r uc t ur a l f a c i l i t i e s i s a
p r e r e q ui s i t e f o r e c o no m i c development. In Bangladesh, continuing growth of
the RMG sector is dependent on the development of a strong backward linkage in order
to reduce the lead time. However, other factors constraining competitiveness of

13. 13
Bangladesh’s RMG exports included the absence of adequate physical infrastructure
and utilities.
Labor Productivity
The p r o d uc t i ve e f f i c i e nc y o f l a b o r i s m o r e i m p o r t a nt
d e t e r m i na nt f o r g a i ni ng comparative advantage than the physical abundance
of labor. In Bangladesh, the garment workers are mostly women with little
education and training. The employment of an uneven number of unskilled labors
by the garment factories results in low productivity and comparatively more expensive
apparels. Bangladesh labor productivity is known to be lower when it compared with of
Sri Lanka, South Korea and Hong Kong. Bangladesh must look for ways to improve the
productivity of its labor force if it wants to compete regi onally i f not globally.
Because of cheap labor i f our country makes the labor producti vi ty i n
the apex posi ti on, then we thi nk the future of thi s sector i s hi ghly
optimistic.
ResearchandTraining
The country has no dedicated research institute related to the apparel sector.
RMG is highly fashion oriented and constant market research is necessary to become
successful in the business. BGMEA has already established an institute which
offers bachelor’s degree i n fashi on desi gni ng and BKMEA i s planni ng
on setti ng up a research and t r a i ni ng i ns t i t ut e . The s e a nd
r e l a t e d i ni t i a t i ve s ne e d e nc o ur a g e m e nt p o s s i b l y intermediated by
donor-assisted technology and knowledge transfer. A facilitating public sector role can
be very relevant here.
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 confli ct, proper
management poli cy, 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

14. 14
37 were already in operation and were improved upon. Also, rebates were
given on import duties and indirect taxes, there were tax reductions on export income,
and export financing was arranged. Under the XPL scheme, exporters of non-traditional
products received import licenses for specific products over and above their
normal percentage allotment based on the f.o.b. value of their exports. Under the
Duty Drawback System, exporters of manufactured goods were entitled to get refund of
duties and taxes paid on imported inputs used in export production, and also all
excise duties paid on exported finished goods. For certain fast-moving items such
as RMG, a notional system of duty payments was adopted in 1982-83. Under this
system, exporters were exempted from paying duties and taxes on imports used in
export production at the time of importation, but were required to keep records of
raw and 21packaging materials imported. The duties and taxes payable on the
imports were kept in a suspense account. Liabilities to pay the amounts in suspense
were removed on proof of exports. The discussion in this section clearly points to the
positive contribution made by policy reforms to the growth of the RMG industry in
Bangladesh. In particular, two policies– the SBW facility and the back-to-back L/C
system- led to significant reduction in cost of producing garments and enhanced
competitiveness of Bangladesh’s garments exports. It also allowed garment
manufacturers to earn more profit which, when necessary, could be used to
overcome difficulties arising from weak governance. Furthermore,
poor governance, reflected i n the leakage of duty-free i mported
fabri cs i n the domesti c market, paradoxi cally enough also helped the
garment manufacturers to earn extra ‘profit’ and thereby enabled them to
absorb the ‘high cost of doing businesses – a fall out of bad governance.
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 confli ct, proper
management poli cy, 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.

15. 15
Present Situation
DHAKA - Blame for a string of tragedies in Bangladesh's garment industry must be
shared between ruthless factory bosses, a negligent government and Western retailers
who place cost above safety, say activists.
More than 700 (mostly woman) have died in the latest disaster to befall the sector,
which generated $20 billion in exports for the impoverished South Asian country last
year and put "Made in Bangladesh" clothes in almost every Western home.
The collapsed Rana Plaza near the capital contained five garment factories where
workers paid as little as $37 a month were cutting clothes for low-cost British retailer
Primark, among many other brands.
In November a fire at a factory in the capital Dhaka (Tazreen Fashion) killed 158
workers, who are mostly women, spotlighting the widespread disregard for safety which
leads to regular protests and complaints from activists.
Locked fire escapes, a lack of fire-fighting equipment and managers telling staff that the
fire alarm was a rehearsal was blamed for the death toll, then the worst in the local
industry's history.
Following Wednesday's disaster survivors told how the previous day bosses had
ordered workers to return to factories on the upper floors of the building despite an
evacuation when cracks appeared on the outside of the structure.
In the wake of the November fire, the government and the nation's powerful textile
lobby, which effectively counters the generally toothless worker unions, vowed to
compensate the victims and clean up the sector.
"The government of Bangladesh has been promising for years to take meaningful steps
to improve safety in apparel factories and they have never delivered on those
promises," said Scott Nova from the Worker Rights Consortium.
"The government understands that strict labor rights regulation, which would raise
production costs, would likely lead to brands and retailers shifting orders elsewhere,"
added Nova, executive director of the Washington-based group.
In January, despite concern about Bangladesh's reputation after the November fire,
apparel exports rose over 20 percent compared with the year before, to $2.09 billion,
government figures show. Vice president of the Bangladesh Garment Manufacturers
and Exporters Association Shahidullah Azim said that accidents are due to old non-
compliant factories that need to be upgraded.

16. 16
Some points are now come after “Savar Tragedy”. Let’s have a look on
them :
 Political Situation
The present political situation is very unstable. This will keep a long time impact on
RMG sector. For this, the investment will decrease & the investor won’t want to invest
anymore. For hartal, garments can’t fulfill the order. This will keep a bad impression on
RMG sector.
 Cheap Rate of Labor
After “Savar Tragedy ” UN told that the wage of garments workers is very low in
Bangladesh. They told reason for this. The main reason is labor is available in country.
 Insurance of Workers
In a garments factory, there must have insurance of 200 workers. But after Savar we
noticed that they only insured 100 workers & all machineries. BGME didn’t notice that or
didn’t take any action that time.