Readymade Garments in Bangladesh

In Bangladesh, Ready Made Garment (RMG) sector earned $34,133.27 million within $40,535.04 million total export revenue in FY18-19, which was $30,614.76 million within $36,668.17 million total export revenue in FY17-18. Export revenue growth was showing a positive trend during the last couple of years 10.55% in FY18-19 in which RMG sector revenue increased 11.49% during the financial year FY18-19.

RMG sector generates its revenue based on two products as Woven and Knit. Both are almost the same during the last 19 years but woven products dominated the RMG sectors during these financial years. A large amount of export revenue is generated from the readymade garment industry from both products (Woven and Knit). During the last couple of years, woven garments slightly increased from Knit garments. It was about 50.52% and 49.48% respectively woven and knit garments in FY18-19 which was 50.39% woven and 49.61% knit garments in FY17-18 and 51.13% woven and 48.87% knit garments in FY16-17. It indicated both products providing an equal contribution to the national economy in the last 19 years.

Total export revenue of the Country increased so far from during the last financial year FY18-19, which was about 10.55% in overall export revenue in which RMG revenue earnings growth was approximately 11.49% in FY18-19 than last year FY17-18. Major RMG product items in the Bangladesh RMG sector are Shirts, Trousers, Jackets, T-Shirt, and Sweater, etc. In FY18-19; all of the above-mentioned products’ export revenue increased from last financial year FY17-18. In FY18-19, all the major products contributed at 9.33%, 27.85%, 17.60%, 28.14%, and 17.08% respectively Shirts, Trousers, Jackets, T-Shirt, and Sweater. The main product contribution was reported (Shirt, Trousers, Jackets, T-Shirt, and Sweater) respectively 9.21%, 28.53%, 17.76%, 28.09% in FY17-18. Total export revenue of Bangladesh RMG the sector is generated from European, USA, Canada, and non-traditional markets. The major portion of export revenue generated from European Countries especially Germany, the United Kingdom, Spain, France, Italy, Belgium, Netherlands, Sweden, the Czech Republic, and Poland, etc. Bangladesh earned 61.91% export revenue from the European union in FY18-19, which was 64.12% of RMG export revenue from European Countries in FY17-18. The second-largest amount of export revenue generated from the USA, Bangladesh garments companies generated 17.97% worth of export revenue from the USA in FY18-19, which was 17.48% in FY17-18. However, the Export volume of Bangladesh gradually increased in European Countries and the non-traditional market.

Month wise overall export revenue from the Woven and Knit sectors increased from the month of last financial year gradually except August 2018 and June 2019; during these two months’ export slow down slightly from the previous one. The largest volume of export growth was occurred in September 2018 (51.65%), October 2018 (36.96), July 2018 (21.72%) and May 2019 (14.88%), overall growth during these years 11.49%, where woven items grew 11.79% and knit items grew 11.19% in FY18-19. But the largest amount of export revenue generated in May 2019, which was $3,243.18 million.

Major challenges faced by the sector is mostly due to the impact of the epidemic COVID-19, which may create a negative impact on the demand-supply gap, the revision in wage rate since December 2014, and continued pressure from the buyer side on the unit price that tightens the margin of the sector incumbents to some extent. Moreover, due to the Rana Plaza collapse and Tazreen Garment's fire incident, the issues related to Compliance escalated the fixed cost requirement of the industries. Additionally, the uninterrupted gas supply is a pre-requirement for the knit-garments industry. However, in recent times, there has been a huge shortfall in the supply of gas, which hampers uninterrupted production. Moreover, labor unrest in the RMG industry is a very alarming issue leading to a high migration rate among RMG workers. Moreover, there are risks associated with foreign currency fluctuations, potential supply disruptions, monitoring of quality standards, changes in fuel & transportation prices, and international trade policies. Nonetheless, according to economists, Bangladesh most likely stands to suffer from the effects of the US-led Trans-Pacific Partnership (TPP) trade deal, especially in terms of export earnings. 

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