Impacts of RMG sector in Bangladesh Economy

 

Impact of RMG sector in Bangladesh economy

Since the late 1970s, the RMG industry started developing in Bangladesh primarily as an export-oriented industry although; the domestic market for RMG has been increasing fast due to increase in personal disposable income and change in life style. The sector rapidly attained high importance in terms of employment, foreign exchange earnings and its contribution to GDP.

Table: 1

Major Products Export From Bangladesh And Contribution to GDP
RMG	75.65%
Frozen Food	4.22%
Jute Goods	2.60%
Leather	2.19%
Chemical Products	1.77%
Raw Jute	1.21%
Agri Products	0.72%
Tea	0.06%
Others	11.56%

Table: 2

Comparative Statement On Export of RMG And Total Export Of Bangladesh
Year	Export of RMG (Million US $)	Total Export of Bangladesh (Million US $)	% of RMG's to total Export	Year	Export of RMG (Million US $)	Total Export of Bangladesh (Million US $)	% of RMG's to total Export
1983-84	31.57	811.00	3.89	1995-96	2547.13	3882.42	65.61
1984-85	116.20	934.43	12.44	1996-97	3001.25	4418.28	67.93
1985-86	131.48	819.21	16.05	1997-98	3781.94	5161.20	73.28
1986-87	298.67	1076.61	27.74	1998-99	4019.98	5312.86	75.67
1987-88	433.92	1231.20	35.24	1999-2000	4349.41	5752.20	75.61
1988-89	471.09	1291.56	36.47	2000-2001	4859.83	6467.30	75.14
1989-90	624.16	1923.70	32.45	2001-2002	4583.83	5986.09	76.57
1990-91	866.82	1717.55	50.47	2002-2003	4912.09	6548.44	75.01
1991-92	1182.57	1993.90	59.31	2003-2004	5686.09	7602.99	74.79
1992-93	1445.02	2382.89	60.64	2004-2005	6417.67	8654.52	74.15
1993-94	1555.79	2533.90	61.40	2005-2006	7900.80	10526.52	75.06
1994-95	2228.35	3472.56	64.17	2006-2007	9211.23	12177.86	75.64

Source: Various articles and Annual report of BGMEA.

The above mentioned table shows the status of RMG exports from Bangladesh to other countries of the world comparing with other goods. Every year Bangladesh earns a huge amount of foreign currencies by exporting RMG from abroad and plays a vital role in growth of GDP. According to the statistics report, Bangladesh earns $ 9211.23 million last year from RMG sector. Recently RMG sector of Bangladesh is the main item in the growth of GDP and its contribution to GDP is about 76%.

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 labor force. According to BGMEA, after the Liberation War of Bangladesh, in 1983 the Ready-Made-Garment (RMG) industry emerged to be a most promising sector in the socioeconomic context of Bangladesh. From that point of time till now, this industry has grown and developed so rapidly that currently Bangladesh is exporting RMG products worth 5 billion USD every year to countries like EU, USA, Canada and other countries of the world. Now, Bangladesh enjoys the position of being the 6th largest apparel supplier to the USA and EU countries.

The sector rapidly attained high importance in terms of employment, foreign exchange earnings and its contribution to GDP. In 1999, the industry employed directly more than 1.4 million workers, about 80% of whom were female. The total indirect employment created by the RMG industry in Bangladesh is estimated to be some 200,000 workers.

Year	Number of Garment Factories	Employment in million workers
1983-84	134	0.040
1984-85	384	0.115
1985-86	594	0.198
1986-87	629	0.283
1987-88	685	0.306
1988-89	725	0.317
1989-90	759	0.335
1990-91	834	0.402
1991-92	1163	0.582
1992-93	1537	0.804
1993-94	1839	0.827
1994-95	2182	1.200
1995-96	2353	1.290
1996-97	2503	1.300
1997-98	2726	1.500
1998-99	2963	1.500
1999-2000	3200	1.600
2000-2001	3480	1.800
2001-2002	3517	1.800
2002-2003	3760	2.000
2003-2004	3950	2.000
2004-2005	4187	2.000
2005-2006	4239	2.200
2006-2007	4480	2.400

Source: Various articles and Annual report of BGMEA.

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 marriage 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. It has also been found that RMG can generate huge employment, (85 % female) with comparatively much less investment.

As we know RMG sector is a rising sector and growing broad rapidly, it is spreading from urban place to rural portion throughout the country. As a result remotest part of the country will get touch of development, female population of the villages will develop the self confidence by becoming income generating member of the family. Naturally early marriage and curse of population growth will halt. RMG is the source of earning foreign exchange and also the tool for socio-economic growth of the country. Thus it gives two way benefits to the nation.

Beside these socio-economical impacts, RMG plays important role in Bangladesh economy in many ways.  With the growth of RMG industry, linkage industries supplying fabrics, yarns, accessories, packaging materials, etc. have also expanded. In addition, demand for services like transportation, banking, shipping and insurance has increased. All these have created additional employment.

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. 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. And we still have the shortage of raw materials. According to this sense there have a lot of scope of development of various industries like linkage industries in Bangladesh. By this way we can produce raw materials by using our own manpower with low cost, and can export more the RMG to the other countries for earning more foreign currencies.

All the above points prove that RMG is the most suitable industrial venture for Bangladesh. A number of RMG factories in different part of the country will enlighten the whole country.
Bangladesh already established itself as one of the leading Garment supplier to the world market. After implementing the above plan, any one from any part of the world think about Garments will first think about Bangladesh. Like Hoover means Vacuum cleaner, watch means Switzerland, Garments will mean Bangladesh.

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