History of Development of Knitwear of Bangladesh
Bangladesh is traditionally known for its Textile and Garments sector. But the textile sector was initially import based however the country was famous for Muslin. After the liberation, Bangladesh adopted policy for import substitution industrialization to replace imports focusing on the textile and clothing sectors particularly RMG along with other potential sectors.
The ready-made garment (RMG) industry is a strategic sector for Bangladesh. In FY2013-14, it provided 4.2 million direct jobs, 16 percent of GDP, and more than 75 percent of foreign exchange earnings. Over the past two decades, starting from the early 1980s, Bangladesh has built a strong reputation centered on price advantage via low-cost labor and investment incentives; production capacity, and satisfactory quality levels, especially in value and mid-market price point segments.
The RMG business in Bangladesh started in the late 70s with merely a casual & cursory effort. The first consignment of knitwear export was made in 1973 while the first shipment of woven was made in 1977. In 1981-82 the contribution of woven garments to total exports was about 1.10% whereas the agro-based the then economy received much of her foreign earnings from Jute & Jute products famously known as the Golden Fiber. But with the passage of time from agrarian to manufacturing transformation Bangladesh developed significantly in areas of poverty alleviation, employment, women empowerment, industrial growth and economic diversification - thanks solely to labor intensive RMG sector. Since MFA phase out in 2004 the growth of Bangladesh knitwear has escalated rapidly as statistically supported export volume adduces adequate proof to it despite its somewhat cluttered and shoddy start with absence of rudimentary plans and evolutionary industrial mechanism. In fact, from fiscal year 2007-08 Bangladesh knitwear continues to capture lion’s share in national exports (39.93% in FY 2013-14) what was slightly 7.64% in the two decades back, thereby slanting the economy towards knit garments.
The export-oriented Knitwear industry is the top-leading exporting sector in Bangladesh in terms of export. Its contribution in creating employment opportunities for female workers without high educational background in the formal sector is exceptional! The industry has a great contribution in poverty reduction by providing entry-level workers with a great scale of employment opportunities and earnings higher than the national poverty line. Such a dynamic development of the industry entails great diversity in efficiency, even in comparison with the garment industry of other developing countries. The Knitwear industry of Bangladesh has global competitiveness in terms of product quality & price through industrial upgrading in terms of usage of latest machineries and vertical integration and industrial agglomeration.
Export Trend of Bangladesh RMG Sector
Bangladesh Exports by Major Products in FY 2013-14
The central history of this remarkable development could be attributed to entrepreneurial expertise who aptly applied their gleaned knowledge to adopt technological modifications in the mechanical and management principles to the overall factory supervision methods. Supported with strong backward linkage and Generalized Systems of Preference (GSP) benefit, Bangladesh has showed remarkable agility over time for a prosperous future eschewing the hiccups in areas of overall management and infrastructures in this industry. At present, our apparel sector continues adding fresh ideas and modules like business intelligence, state-of-the art technology, modern management practices and production technique. These are indeed the manifestations of our relentless efforts to the global standards what was once considered unparallel to emulate techno-based advance economies.
Over the decades the growth of knitwear sector has been incessant rising over 20% at CAGR base and continuously grabbing more portions in the export pie of Bangladesh. This recent robust growth is partly achieved owing to preferential support from the European Commission’s GSP & Relaxation of Rules of Origin (RoO) and the Duty Free Quota Free (DFQF) access granted by Canada, Australia, Japan and members of European Free Trade Agreement (EFTA). At present, Bangladesh gets Duty free market Access from 49 countries including European Union. Along this BKMEA also taken market diversification and Expansion initiative to expand the market share of Knitwear product of Bangladesh in new but potential markets across the world contributed greatly for making it the most attractive sourcing hub.
Traditionally, the exports basket of Bangladesh has been leaning towards EU and the USA. So far the EU is the largest destination for Bangladesh knitwear, worth of value $8.7 billion with share of 72.03% exported in the year 2013-14 followed by the USA with $1.2 billion and a share of 9.93%. The one-stage transformation requirement of RoO in 2011 boosted signs for market penetration in the EU further; hence a growth of 46.63% in the FY 2010-11 over 2009-10 was remarkably noticeable.
Bangladesh RMG sector mainly comprises of Knit and woven garments competing dynamically to surpass each other for taking up the leadership yoke within the economy. It was in FY 2003-04 the knit garments for the first time exceeded woven wear and became the leader in terms of quantity exports with 91.6 million dozens as against 90.48 million dozens of woven garments. And from FY 2007-08, knitwear continues to widen the gap with woven both in terms of value and quantity. To the end the RMG sector, engine of our economic growth, has largely compensated with evolutionary mechanism in the overall designing of factory management - successfully leaving aside all the bottlenecks and making the economy a resilient one despite of natural disasters, poor infrastructure, weak governance and political turbulence.