Introduction

Readymade Garments (RMG) sector of Bangladesh has raised as the biggest earner of
foreign currency. Bangladesh exported garments worth USD 3.8bn in December 2021
and this took the annual export figure to USD 35.57bn. This figure was USD 2.5bn
higher than the previous record of USD 33.07bn which was set in 2019. In terms of
exports, the RMG sector contributes around 83 percent of all export earnings for
Bangladesh. This sector creates about 4.22 million employment opportunities and
contributes significantly to the GDP. Readymade garments (RMG) of Bangladesh is
powered by young, urbanizing, workers, where most of them are women.
Dominance of RMG Export Over Total Export of
Bangladesh
Value in
45000 million USD
40000
35000
30000
25000
20000
15000
10000
5000
0
4 6 8 0 2 4 6 8 0 2 4 6 8 0 2 4 6 8 0
3 -8 5-8 7-8 9-9 1-9 3-9 5-9 7-9 9-0 1-0 3-0 5-0 7-0 9-1 1-1 3-1 5-1 7-1 9-2
8 8 8 8 9 9 9 9 9 0 0 0 0 0 1 1 1 1 1
19 19 19 19 19 19 19 19 19 20 20 20 20 20 20 20 20 20 20
Export of RMG Total Export of Bangladesh
 History of RMG Sector in Bangladesh

Bengal exported cotton and silk textiles to markets such as

During the Cotton production Europe, Indonesia and Japan.
Mughal era (Muslin) Bengal produced more than 50% of textiles and around 80% of silks
imported by the Dutch from Asia

The MFA agreement imposed an export rate 6 percent increase every

year from a developing country to a developed country.
Multi Fiber Established It also allowed developed countries to impose quotas on countries
Agreement (MFA) in 1974 that exported at a higher rate than the bilateral agreements. In the face
of such restrictions, producers started searching for countries that were
outside the umbrella of quotas and had cheap labor.

Established in 1960 as
It served only domestic markets for about 15 years
a small tailoring outfit

Reaz Garments
In 1973, it changed its Expanded its operations into export market by selling 10,000 pieces of
name to M/s Reaz men's shirts worth French Franc 13 million to a Paris-based firm in 1978.
Garments Ltd. It was the first direct exporter of garments from Bangladesh
 History of RMG Sector in Bangladesh

Desh had technical and marketing collaboration with Daewoo

The first non-equity joint-
Corporation of South Korea. It was also the first hundred percent
venture in the garment
Desh Garments export-oriented company. It had about 120 operators
industry was established
including 3 women trained in South Korea, and with these
in 1979
trained workers it started its production in early 1980.

The first equity joint- Bangladeshi partners contributed 51% of the equity of the
Young ones venture garment factory new firm, named Youngones Bangladesh. It exported its first
Corporation with a Bangladeshi firm, consignment of padded and non-padded jackets to Sweden in
Trexim Ltd. in 1980 December 1980

Within a short period, Bangladeshi entrepreneurs got familiar with the world apparel markets and marketing. They
acquired the expertise of mobilizing resources to export-oriented RMG industries.

Foreign buyers found Bangladesh an increasingly attractive sourcing place. To take advantage of this cheap source,
foreign buyers extended, in many cases, suppliers' credit under special arrangements. In some cases, local banks
provided part of the equity capital.

The problem of working capital was greatly solved with the introduction of back-to-back letter of credit, which
also facilitated import of quality fabric, the basic raw material of the industry. The government assigned high priority
to the development of RMG industry
 Contribution to Economy
The Ready-Made Garments (RMG) industry contributes to the Bangladesh economy in a distinctive manner. The
last 22 years witnessed unparalleled growth in this sector, which is also the largest exporting industry in
Bangladesh. It has attained a high profile in terms of foreign exchange earnings, exports, industrialization and
contribution to GDP within a short span of time. The industry plays a significant role in terms of employment
generation. Nearly two million workers are directly and more than ten million inhabitants are indirectly
associated with the industry. In addition to its economic contribution, the expansion of RMG industry has caused
noticeable changes by bringing more than 2.9 million women into the workforce. Hence it is quite apparent
that this sector has played a massive role in the economic development of the country.

RMG’s contribution in terms of GDP is highly remarkable; it has reached 14.7 percent of GDP which was only
about 3 percent in 1991. It also plays a pivotal role to promote the development of other key sectors of the
economy like banking, insurance, shipping, hotel, tourism, road transportation, railway container services, etc.

One of the key advantages of the RMG industry is its cheap labor force, which provides a competitive edge over
its competitors. The sector has created employment opportunities for about two million people of which 70
percent are women who mostly come from rural areas. Thus the industry helps in the country’s social
development, women empowerment and poverty alleviation. Currently RMG earns the lion's share of foreign
exchange earnings.
 Percentage of RMG Export to Total Export

90

80

70

60

50

40

30

20

10

- 84 -86 -88 -90 -92 -94 -96 -98 -00 -02 -04 -06 -08 -10 -12 -14 -16 -18 -20
983 985 987 989 991 993 995 997 999 001 003 005 007 009 011 013 015 017 019
1 1 1 1 1 1 1 1 1 2 2 2 2 2 2 2 2 2 2

% of RMG’s to Total Export Year

 Number of Garment Factories
7000

6000

5000

4000
Total

3000

2000

1000

0
- 85 - 87 - 89 - 91 - 93 - 95 - 97 - 99 - 01 - 03 - 05 - 07 - 09 - 11 - 13 - 15 - 17 - 19 - 21
84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14 16 18 20
19 19 19 19 19 19 19 19 20 20 20 20 20 20 20 20 20 20 20

Number of Garments Factories Year

Number Garments Factory sudden decrease due to the collapse of the Rana Plaza building in Dhaka, Bangladesh on 24
April 2013, which housed five garment factories, killed at least 1,132 people and injured more than 2,500 .
 Bangladesh's Apparel Export to World
(CY 2019, CY 2020 & CY 2021)
Export Value in Million USD
Woven Knit Total Growth
Year 2019 2020 2021 2019 2020 2021 2019 2020 2021 in 2021
EU Countries 8799.08 7105.04 8486.86 11623.2 9915.06 13254.3 20422.3 17020.1 21741.1 27.74%
EU % of World 52.91 53.65 52.34 70.69 69.69 67.64 61.75 61.96 60.71
Growth % -1.9 -19.25 19.45 0.07 -14.7 33.68 -0.79 -16.66 27.74
USA 4494.48 3499.85 4653.69 1525.88 1567.58 2624.28 6020.36 5067.44 7277.97 43.62%
% of USA 27.03 26.43 28.7 9.28 11.02 13.39 18.2 18.45 20.32
Growth % 1.95 -22.13 32.97 6.28 2.73 67.41 3.01 -15.83 43.62
Canada 623.4 459.21 537.7 491.36 405.96 573.69 1114.76 865.17 1111.38 28.46%
% of Canada 3.75 3.47 3.32 2.99 2.85 2.93 3.37 3.15 3.1
Growth % 6.51 -26.34 17.09 4.05 -17.38 41.32 5.41 -22.39 28.46
Non-Traditional Markets
Non-Traditional Markets 2114.16 1686.92 1948.65 2094.12 1749.25 2324.22 4208.27 3436.18 4272.87 20.00%
Other Countries 599.52 491.33 589.49 707.13 590.52 819.03 1306.66 1081.85 1408.51 30.20%
Sub-Total (Non-Trad.) 2713.68 2178.26 2538.14 2801.26 2339.76 3143.25 5514.93 4518.03 5681.38 25.75%
% of Non-Traditional 16.32 16.45 15.65 17.04 16.44 16.04 16.68 16.45 15.86
% Growth of Non-Traditional -0.15 -19.73 16.52 2.88 -16.47 34.34 1.37 -18.08 25.75
GRAND TOTAL 16630.6 13242.4 16216.4 16441.7 14228.4 19595.5 33072.4 27470.7 35811.9 30.36%
Growth % -0.3 -20.37 22.46 1.21 -13.46 37.72 0.44 -16.94 30.36
Source: BGMEA
 Export in 2021 by
Destination
Non-Tra-
ditional Other Countries; 4%
Markets;
12%

Canada; 3%

EU Coun-
USA; 20% tries; 61%