Recent Growth in RMG Exports of Bangladesh: Defying the Pessimists

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The RMG industry in Bangladesh has had a significant impact on the country’s socioeconomic structure and has rapidly expanded its global market share. The achievements have initiated a transformative journey into the celestial realm, enhancing capabilities and establishing strategic partnerships with significant global allies such as China and India.

The labor market in Bangladesh has undergone significant changes over time, necessitating a prolonged period of growth and development. This phenomenon may be attributed to its strong association with the general population of Bangladesh, particularly those impacted by famine, poverty, and political instability. Bangladesh’s Ready-Made Garment (RMG) industries experienced significant growth in the previous decade. The positive trend mentioned earlier has alleviated public concerns and contributed to a robust domestic labour market.

The significant growth of the ready-made garment (RMG) industry can be attributed to several factors, such as the sector’s origins in small-scale enterprises, a large workforce, favourable trade policies, and the presence of inexpensive labour. Bangladesh has emerged as a prominent hub for garment manufacturing, attracting multinational corporations seeking affordable production options.

Deconstructing the myths surrounding Bangladesh’s RMG industries

Bangladesh’s Ready-Made Garments (RMG) sector stands out as a brilliant example of success in the dynamic and ever-changing world of international commerce and industrial activities. The industry’s recent incredible growth is a testament to its endurance and capacity to innovate, effectively overcoming skeptics’ doubts and embodying the nation’s unwavering will to survive in the face of adversity.

Navigating the Triple Crisis: Multifaceted RMG Industry Growth

The world society has recently faced a succession of unusual difficulties, including the disruptive effect of the COVID-19 epidemic and geopolitical conflicts, such as the present crisis in Ukraine. Despite difficult conditions, Bangladesh’s ready-made garment (RMG) sector has maintained its strong export figures. Despite the interruptions caused by the epidemic and several foreign wars, the sector’s export performance shown extraordinary endurance.

The supposed stagnation of Bangladesh’s RMG sector is a common myth. However, when the trajectory of Bangladesh’s RMG exports over the last four decades is examined, a strong growth pattern emerges. From 1984 through 2022, the industry grew at an exponential pace, indicating a significant shift. The Export Promotion Bureau (EPB) recently reported a notable milestone in the Ready-Made Garments (RMG) business, with the overall value of exports for the fiscal year 2022-23 ranging from July to April reaching a noteworthy figure of $38.57 billion.

Bangladesh’s Apparel Export to World ( in million USD)

Region 2020 2021 2022 Growth in 2022
EU 13924.52 17931.15 23040.35 28.49%
EU % of import 50.69 50.07 50.41  
Growth % -16.05 28.77 28.49  
USA 5067.44 7277.97 9059.94 24.48%
% Of USA import 18.45 20.32 19.82  
Growth % -15.83 43.62 24.48  
U.K. 3096.32 3811.06 4751.92 24.69%
% of U.K. import 11.27 10.64 10.40  
Growth % -19.30 23.08 24.69  
Canada 865.17 1111.38 1497.71 34.76%
% of Canada import 3.15 3.10 3.28  
Growth % -22.39 28.46 34.76  

The aforementioned result represents a noteworthy 9.09% increase over the previous fiscal year’s similar quarter. Additional significant insights and understandings emerge as a result of a more rigorous investigation of the given facts. Knitwear contributed $20.96 billion in export value, while woven clothes contributed $17.60 billion. The aforementioned numbers show growth rates of 8.97% and 9.24%, respectively, indicating a constant rising trend seen across several RMG categories.

Notable growth in the quantity of garments factories

One prevailing misconception about the ready-made garment (RMG) sector pertains to the notion that its quantity is diminishing. However, empirical evidence contradicts this claim, as the number of RMG enterprises has actually shown an upward trajectory in recent times, a trend substantiated by statistical data. The upward trend in the sales of garments.

Despite the apprehension surrounding the growth of Bangladesh’s Ready-Made Garment (RMG) industry, empirical evidence reveals a substantial surge in the production volume of RMG garments over the last several decades. This phenomenon contradicts commonly held beliefs on fixed output figures.

The number of occurrences saw a rise from 4482 in fiscal year 2016/17 to 4621 in fiscal year 2018/19, indicating a growth of 3.10%. According to forecasts, it is anticipated that the compound annual growth rate (CAGR) for the fiscal years 2018/19 and 2020/21 would amount to 1.53%. The projected outcome of this growth is anticipated to yield a cumulative total of 4764 factories.

International Links and Growing Export Markets

Another prevalent fallacy or misperception about popular culture is to the purported decline in exports to the global market. Bangladesh has lately seen a notable surge in its export activities to international stakeholders within a particular geographical region. The proportion of increase in the United States is recorded at 24%, whilst in the European Union, it stands at 28%.

In contrast to prevailing public opinion, it is evident that the garment sector in Bangladesh maintains robust connections with a diverse range of nations. The trade volumes of Bangladesh’s exports have seen a notable surge in relations with the United States, the United Kingdom, the European Union, and Canada. This expansion contradicts the concept of a limited market scope.

The phenomenon of heightened international involvement and deliberate market positioning. The ready-made garments (RMG) industry in Bangladesh has implemented proactive measures to attract fresh investments and enhance its market standing, aligning with patterns seen in established economies like the United States and the European Union. This phenomenon is occurring within the context of evolving global dynamics. The sector has successfully established itself in established fields and has also actively expanded into uncharted domains, highlighting its impressive growth trajectory and undiscovered opportunities. Moreover, data from recent years’ RMG exports to other nations indicate a notable surge in the presence of international stakeholders in places where RMG had previously lacked prominence.

Changes in labour wages

Addressing false claims about stagnating worker salaries in Bangladesh’s RMG industry is crucial. A thorough examination reveals that over the past 12 years, both the government and RMG firms have made significant efforts to raise worker salaries, dispelling the notion of fixed wage structures. The data shows a notable 30% rise between 2014 and 2018. The minimum wage for textile workers has risen by 51% since December 2018, likely due to noticeable enhancements in working conditions.

Salary levels for workers of different RMG (BDT)

Grade Gross wage 2010 Gross wage 2013 Gross wage 2018
Grade 1 9,300 13,000 17,510
Grade 7 3,000 5,300 8,000

Securing employment

In addition, Bangladesh has experienced substantial growth in its labor force, with approximately 4 million individuals employed in the Ready-Made Garments (RMG) industry by 2022. The growth mentioned has affected both the RMG market and the non-RMG industry, as well as the socioeconomic status of different regions. The industry has a significant impact on towns and communities. Additionally, the proposal to establish a 100-economic zone presents a promising opportunity for future job creation.

The diversification of exports and exploration of non-traditional markets

Global economic disruptions and remonetisation have enabled the development of new models for exporting RMG (Ready-Made Garments) to non-traditional markets. Empirical evidence demonstrates Bangladesh’s successful expansion of its RMG exports to non-traditional markets, thus disproving assertions of insufficient market diversification. Export diversification has led to an increase in the development of ready-made garments (RMGs) commodities in recent years. Bangladesh’s exports to Japan, Australia, and China have increased by 45%, 42%, and 30% respectively by 2022. Undoubtedly, it is a strategy.

Ecologically sustainable export

Bangladesh currently has 187 environmentally conscious factories that have been awarded the esteemed Leadership in Energy and Environmental Design (LEED) certification, with the garment industry leading this commendable initiative. The factories have been awarded different LEED ratings, with 63 achieving platinum, 110 obtaining gold, and 10 receiving silver, showcasing the industry’s dedication to sustainable development.

To summarise, Bangladesh’s ready-made garment (RMG) industry has seen extraordinary expansion, which can be identified by increasing commerce as well as a rising number of factories around the country. Despite widespread misunderstanding, the industry is compliant with international norms. Truth reveals that the RMG business in Bangladesh has a bright future ahead of it. The country has increased its trade volumes with major economies, which challenges the notion that the market has limited potential.

– S. M. Saifee Islam is a Research Associate at the KRF Center for Bangladesh and Global Affairs (CBGA).

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