Secrets of Bangladesh’s growth in textiles and clothing

Bangladesh’s mind-blowing growth in textiles and clothing has been possible mainly due to the strong partnership that exists between the apparel export industry represented by the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) and the government.

This partnership is an example for other regional countries like Pakistan to follow where the garment sector has little say in textile policies. In Bangladesh, the BGMEA and the state resolve friction points, improve competitiveness, and capture an increasingly greater share of world exports.

Bangladesh today has an exemplary ‘single-window’ clearance system.

The journey to glory is commendable given the fact that in 1971 it was declared a basket case when its GDP was only $6.2 million, which is now almost nearing 0 billion.

Bangladesh’s transformation has been largely driven by the ready-made garments (RMG) sector.

In 1974, the Multi-Fiber Arrangement (MFA) set quotas on garment exports from new emerging countries of Asia to the US market. Exporters from quota-restricted countries explored the option of shifting production to countries where the quota was abundantly available as they had no garmenting units.

Daewoo from South Korea was among the first few investors in Bangladesh to form a joint venture with Desh Garments in 1977. Of the 130 supervisors and managers that were trained at a state-of-the-art plant in South Korea, 115 left Desh to work at other newly formed RMG companies in Bangladesh. The real change occurred began between 2004 and 2014 after the abolition of the quota regime, during which Bangladesh, India, and China increased apparel exports threefold but Pakistan continued to export low-value-added basic textiles. After 2014 the global RMG scenario entirely changed as China started losing markets due to rising labor costs.

Bangladesh grabbed the opportunity to take its textiles and clothing exports from $22 billion in 2014 to $42 billion. Indian exports remained stagnant at about $16 billion. Pakistan doubled its garment exports to around $9 billion.

Bangladesh now has more than 4,000 factories that serve almost all major global fashion brands.

These factories employ over 4.4 million people, 83 percent of whom are women. Bangladesh’s success in garments in the early years can be attributed to FTA with Europe and a loose compliance regime, but now it is commanding global sales on the strength of its competitiveness and quality. It has reformed its factoring and labor standards after the Rana Plaza accident. Child labor is banned.

Bangladesh enjoys a major advantage over its regional competitors having greater flexibility in labor deployment. Its government allows up to 10-hour shifts that give RMG producers in Bangladesh a 15 percent advantage on labor costs over Pakistan and India. New labor codes have provided states flexibility on some key dimensions. This advantage is over the low wages officially approved in Bangladesh.