T he name "Bangladesh," meaning "Country of Bengal," is derived from a Hindu word signifying "wetland." Located north of the Bay of Bengal, this low-lying delta in South Asia is the largest wetland in the world, having a total area of 144,000 square kilometers. With an estimated population of more than 153 million as of July 2008, Bangladesh is among the world's poorest and most densely populated countries.

The textile industry in Bangladesh has been an important contributor to the economy for centuries, and today is one of the country's most crucial economic sectors. According to the country's Ministry of Textiles and Jute, its textile and apparel industry encompasses textile processes from spinning; weaving; knitting including hosiery and knit dyeing; dyeing and finishing; yarn dyeing; and sewing thread; up to the final outputs, including ready-made garments and nonwovens such as technical textiles. 


Ready-Made Garments Sector

Taken as a whole, the textile industry is Bangladesh's number-one export earner, accounting for approximately 80 percent of the country's exports and foreign exchange earnings. Although jute, cotton and other textiles constitute some of the country's principal industries, the ready-made garments (RMG) sector is by far the largest export-oriented manufacturing industry in the country. The sector employs roughly 2.5 million workers, 80 percent of whom are women.

Bangladesh's RMG sector, which is composed of the knitwear and woven garments sub-sectors, had its beginnings in the 1970s and has been growing at an increasing rate ever since, with a 27-percent cumulative average growth rate. According to recent figures from the government's Export Promotion Bureau, the sector had exports of US$10.7 billion in fiscal year (FY) 2007-08 (July-June), constituting nearly 76 percent of Bangladesh's total exports. In July 2008 alone, RMG exports of woven apparel rose by 58.6 percent, and of knitwear, by 84.7 percent over July 2007.

Woven garments and knitwear mainly are exported to the European Union (EU) - which takes in approximately 60 percent of Bangladesh's total RMG exports - followed by the United States, which accounts for more than 32 percent of the total.

For the first time in the RMG sector's history, knitwear exports exceeded woven apparel exports in 2007. Knitwear has become the dominant sub-sector in terms of quantity exported - with a national export share of 37.39 percent in FY 2006-07 - and it is steadily gaining share. Over time, the knitwear sector has become almost self-sufficient in terms of fabric and yarn supply, as a result of spinning factories growing at the same rate as the country's stitching capacity, therefore increasing fabric and yarn needs. Furthermore, as knitwear exports have increased, upstream supplier capacity has gradually increased correspondingly. As a result, domestic suppliers can provide 90 percent of the sector's total fabric requirement. In addition, the number of spinning mills has grown as knitwear exports have increased.

According to the most recent Bangladesh Garment Manufacturers and Exporters Association (BGMEA) Statistical Report, Bangladesh's woven apparel exports increased by 1.8 percent in 2007 for a value of US$4.61 billion, while knitwear exports increased by 8.05 percent in the same year, for a value of US$4.74 billion. Data from the report suggest that in 2007, the sector overall experienced growth of 4.67 percent - a rate not quite as good as rates achieved in previous years, but reasonable compared to growth by regional competitors.

Though exports of both woven garments and knitwear have increased substantially, helping the RMG sector maintain its role as a main contributor to Bangladesh's economy, a few other textile products show potential, as they recently have experienced considerable growth. According to the country's Export Promotion Bureau, in July 2008 over July 2007, home textiles exports increased by 55.19 percent, and terry towel exports increased by 34.4 percent. However, the biggest growth was in exports of textile fabric - though representing a very small part of total exports, it showed a massive 697.9-percent increase in exports in July 2008 over July 2007.


Imports

According to the German Engineering Federation (VDMA) Textile Machinery Association, textile technology imported by Bangladesh comes predominantly from Chinese suppliers, which in 2006 delivered technology worth around 230 million euros. However, Germany also has exported a large volume of textile machinery to Bangladesh over the last five years. In 2003, German exports were worth approximately 31 million euros; and in 2007, more than 40 million euros. Though Germany's exports to major markets such as China, Turkey and India decreased considerably during the first half of 2008, deliveries to Bangladesh actually increased by 6 percent during that period to more than 28 million euros.

From 2005 through 2007, spinning machinery comprised the majority of Germany's textile machinery exports to Bangladesh, totaling 75.4 million euros. In 2007, spinning machinery exports totaled 25.2 million euros. Finishing machinery totaled 8.3 million euros; knitting and hosiery, 7.3 million euros; and weaving, 1.3 million euros in 2007. 


Textile Associations

After Bangladesh became independent from Pakistan, the new government nationalized the textile industry and in 1972 organized all of its factories under the Bangladesh Textile Mills Corp. (BTMC). Over the past 15 years, a large number of public-sector textile mills have been denationalized, significantly changing BTMC's role within Bangladesh's textile industry. Before denationalization, BTMC had a near-monopoly within the country's yarn and fabric market, with no competitive yarn sources. The organization continues its goal of developing the textile sector to increase fabric production so it can meet the country's increasing domestic and export needs.

Bangladesh has many textile associations supporting the country's industry. The Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), formed in 1996 and comprising about 1,500 knitwear manufacturers and exporters, represents the country's largest export-earning sector. The organization works to protect sector interests, promoting and developing the sector's capacity as well as the market. BKMEA also works to improve social compliance status, and provides education and spreads awareness of basic rights.

BGMEA represents 4,490 Bangladeshi export-oriented apparel manufacturers. BGMEA helps promote the RMG sector by establishing a profitable business environment and cultivating relationships among the manufacturers, exporters and importers, with the goal of increasing Bangladesh's foreign exchange earnings.

Government Support

The Bangladeshi government actively supports the country's textile industry. Operating under the Ministry of Commerce, the Export Promotion Bureau administers several Export Processing Zones (EPZs), including one in the capital city of Dhaka and one in Chittagong - the country's second-largest city and its commercial and industrial hub. The EPZs offer numerous incentives to potential investors in the export-oriented apparel industries, such as customs- and tax-free importing of capital-intensive machinery, equipment and raw materials; duty-free export of goods produced in the zones; 10-year tax holidays; exemptions on income tax on salaries paid to foreign nationals for three years; and dividend tax exemptions for the tax holiday period; among other incentives.

Bangladesh enjoys trade advantages with the United States and several other countries through various instruments, including the Generalized System of Preferences, and bilateral trade and investment treaties. In addition, the government has budgeted many ongoing projects under the Annual Development Program in support of the textile sector. 

Post-MFA Effects And The Future

With regard to the effects of the January 2005 expiration of the Multi Fibre Arrangement (MFA), which imposed quotas on developing countries' exports to developed countries, Bangladesh was expected to suffer greatly, as many expected it to face more competition from textile giants like China. However, Bangladesh has benefited from the removal of quotas, as its labor is some of the cheapest in the world, whereas China's labor costs are rising.

However, in the past couple of years, there has been an ongoing unrest as textile workers, among some of the lowest-paid in the world, have been staging demonstrations in an effort to achieve a higher minimum wage, regular days off and safer working conditions.

Addressing these issues, Mohammed Anwarul Iqbal, an advisor for the Ministry of Labour and Employment and the Ministry of Textiles and Jute, stated: "We have developed a Decent Work Country Programme 2006-2009 in collaboration with the ILO [International Labor Organization]. The programme addresses post-MFA challenges, promotion of decent and productive employment, elimination of worst forms of child labour, and fulfillment of workers' rights in the Export Processing Zones." Iqbal also stated that "Bangladesh is addressing the challenges it faces to improve the condition of its working population and remains committed to implement applicable international labour standards."

Though the political instability in Bangladesh has slowed down some investment in the textile sector, the industry certainly has high hopes for the future. Just recently, the BGMEA vowed to "increase the country's exports to $25 billion by 2013, provided the coming elected government and all concerned could maintain political stability and ensure right economic policies." According to BGMEA President Anwar Ul Alam Chowdhury Parvez, only 5 percent of the country's 4,000 factories do not regularly pay workers' wages and other benefits, and these failures are informing the somewhat negative perception of the whole industry. Parvez did acknowledge that several areas must improve in order for Bangladesh's textile industry to remain successful.

November/December 2008