BANGLADESH GARMENT INDUSTRY AN APPAREL MANUFACTURING POWERHOUSE OF SOUTH ASIA
Content 1. Country Overview 2. Economy Snapshot 3. Bangladesh RMG Industry: Some Facts 4. Bangladesh RMG Exports Year-wise 5. Percentage of RMG Exports of Bangladesh to the World 6. Value of Bangladesh’s RMG Exports in FY ‘17 7. Trade relations with other countries 8. SWOT analysis of Bangladesh RMG industry 9. Possible solutions of the problems in Bangladesh 10. Government initiatives to boost RMG industry in 2018
Country Overview Population: 166,368,149
Area: 147,570 Sq. Kms
Region: South Asia
GDP: US $ 285.81 billion
Capital: Dhaka
Economy Snapshot
GDP growth rate ~ 6.5%
Total Exports ~ US $ 35 billion (as on FY ’17 end)
44th largest economy (in nominal terms) and 32nd largest (in ppp terms)
Export oriented Industries: garments, jute, leather, frozen food
Bangladesh RMG Industry: Some Facts The industry contributes 28.1% in the country’s total GDP
The industry contributes 65% in the total industrial development
The industry employs around 4.5 million people and 80% of them are women
Bangladesh RMG Industry: Some Facts In the FY ’17, it generated US $ 28.14 billion revenue Contributes 81.23% of the total export earnings
Target of reaching US $ 50 billion by 2021
RMG Industry in Bangladesh
Bangladesh RMG Industry: Some Facts Bangladesh RMG Exports
The 3rd largest exporter of garments in the world.
Denim industry generates around US $ 2 billion of export value every year.
Major markets are European Union, US, Japan and Australia.
N o . o f Fa c to rie s
Bangladesh RMG Industry: Some Facts Total number of garment factories in Bangladesh
7000 6000 5000
5150
5400
5876 4222
4296
4328
4482
2014
2015
2016
2017
4000 3000 2000 1000 0
2011
2012
2013
Year
Bangladesh RMG Exports Year-wise 40 31.2
30.1
30 25
34.6
34.2
35 24.4
25.4
28
28.1
20
Total exports of Bangladesh (in USD billion)
15 10 5 0
Exports of RMG (In USD billion)
2013-14
2014-15
2015-16
2016-17
Percentage of RMG exports of Bangladesh to the world 15.09
3.36 18.49 63.06
EU US Canada Non-traditional markets
Non-traditional Markets
Canada
US
20 15 10 5 0
EU
Value of Bangladesh’s RMG exports in FY 2016-17 (country-wise)
Trade Relationship with other Countries Bangladesh and USA
The US is the 2nd largest export destination for Bangladesh.
Longer lead time, lower prices, lesser imports by US retailers, inefficient port operations, appreciation of the local currency against US $ led to the decline in garment exports to US.
Bangladesh’s exports face 15.62% duty to the US markets, which is quite high in comparison to what Bangladesh’s competitors such as Vietnam, Turkey, China and India have to face.
The exports to US declined by 7.47% on YoY basis to US $ 5.2 billion in FY ‘17.
Trade Relationship with other Countries Bangladesh and EU
Bangladesh exports to European Union, though slow, but secured a growth of 3.49% in fiscal 2016-17.
The growth was attained despite speculations around Brexit negotiation, national elections in major European countries, depreciation of the euro against the dollar.
According to EPB data, Bangladesh’s exports to EU reached to US $ 17.75 billion in FY ‘17.
Trade Relationship with other Countries Bangladesh and China
Bangladesh’s RMG exports to China increased 14.77% to US $ 391.59 million in FY ‘17 due to duty free trade privilege.
China might soon become the second Asian country for Bangladeshi exports.
It is predicted by the industry experts that export value to China will soon cross US $ 1 billion figure in next few years.
SWOT analysis of RMG Industry of Bangladesh
Strength
It can offer competitive prices. The industry is quite versatile with extensive production capabilities. Duty free access to EU, UK, Canada, Japan, Australia and recently India are big plus. Financial support from world bank to improve the country’s RMG industry. Vertically integrated manufacturing is one of the positives.
SWOT analysis of RMG Industry of Bangladesh Longer lead time for some raw materials.
Weakness
Poor and underdeveloped infrastructure.
Less investment in man made fabrics and warp knitting. 80% of Bangladesh textile exports comprise low value added products such as trouser, shirt, sweater etc. Inefficiency in adaptability of fast fashion to survive in the rapidly changing garment industry
SWOT analysis of RMG Industry of Bangladesh
Opportunities
Due to intense use of lean tools the garment industry is getting benefits for longer term. More engagement and empowerment of local management teams is possible.
Sustainable pricing as compared to its competitors.
Health, safety & environment and Human resource management are gradually improving in Bangladesh.
SWOT analysis of RMG Industry of Bangladesh
Threats
Slow working of the Government institutions and corruption in public services are some reasons that create problems for companies in Bangladesh.
Inconsistent supply of gas and electricity.
Tight profit margins due to lower product price and higher cost of production. Port capacity is not great so shipment gets delayed sometimes.
Possible solutions for Bangladesh’s problems
Bangladesh should focus on enhancing their human capital as it reduces the cost of production.
The industry should focus on a holistic approach for sustainability across textile and clothing value chain.
To come out of “cheap product and cheap price” market positioning, Bangladeshi textile and garment companies should focus on brand positioning. Strong foreign policy and diplomacy can overcome these reputational threats.
To maintain competencies in the sector, it is essential to boost the infrastructural development of the industry.
Having comprehensive business friendly policies is essential to inspire new entrepreneurs to come and invest in country’s textile and apparel industry.
To understand consumer demand, to design new and value-added products, and to analyze market situations, there should be more emphasis on research and development part.
Government initiatives in recent years to boost Bangladesh RMG industry
The government has commissioned two studies to analyze the feasibility of a floating terminal and a mid-sized seaport, both near the Chittagong seaport.
Further, the government has invested US $ 6 billion and has undertaken the construction of a new seaport the Payra seaport, and the Padma bridge that will help apparel buyers with better lead times. The Government is investing to enhance enhancing its power generation capabilities as well.
The government of Bangladesh is focusing on use of big data. For the same, DIFE (Department of Inspection for Factories and Establishments), a Bangladesh government entity, in partnership with ILO, has provided a digitized method of data collection for safety and compliance issues in apparel manufacturing factories.
Government initiatives in recent years to boost Bangladesh RMG industry ď ľ
The government initiatives are supporting Bangladesh industry to be more diverse and specialized. With growing maturity of industry, technical skills are also maturing.
ď ľ
The government of Bangladesh is focusing on industry to be more eco-friendly. The top 3 environmentally friendly garments factories in the world are located here. Bangladesh has 7 out of top 10 LEED factories of the world. The government is promoting this trend by providing loans at 9% to garment manufacturers that intend to go green.
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