Ready-Made Garments (RMG) sector of Bangladesh

October 10, 2017 General Studies

Introduction:

Wholly export oriented Ready-made Garments ( RMG ) sector of Bangladesh has experienced a notable sweetening since its beginning in last half of 1970s. Queerly adequate, though this major industry is now wholly based on private entrepreneurial attempts, its startup was rooted into an export cargo of Shirt which was done by Trading Corporation of Bangladesh ( TCB ) , the province operated trading bureau, in mid ‘70s. The export consignment held with some East-European states. However, the entryway of private enterprisers in this sector gifted it with a enormous encouragement.

Background:

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Reformed domestic policy and the international Multi-Fiber Agreement ( MFA ) are the cardinal processs that ameliorated the status of Bangladeshi RMG export ( Quddus and Rashid, 2000 ) .

In the decennary of ‘80s, Bangladesh adopted a alteration in national economic policy to run its economic system under the tuition of World Bank and International Monetary Fund ( IMF ) . Constitution of Export Processing Zones ( EPZ ) channeled foreign direct investing in this sector ( Bhattacharya, et al. , 2001, p.2-26 ) . Money-spinning installations like hard currency aid, income revenue enhancement discount, cargo and power rate discount, revenue enhancement vacation, loans at lower rate, proviso of dorsum to endorse Letter of Credit ( LC ) , warrant strategy for export recognition, diminishing involvement rate in export recognition, cut downing seaport charges, bond installations for warehouse, responsibility free imports of natural stuffs and productive machineries, were offered to export oriented RMG industries ( Mayumi, 2004 )

The MFA was an understanding of World Trade Organization ( WTO ) , done in 1974 which set quotas for export of fabric and garments related merchandises from the developing states ( Rahman, 2004 ) . Under this understanding, USA and Canada, the so largest RMG importers, imposed quota limitations and maintained a bound in importing merchandises from states such as Hong Kong, Singapore, Thailand, South Korea, Sri-Lanka, India, Taiwan, Malaysia and Indonesia. Furthermore, some states had besides major internal jobs, like, sudden addition in labour cost in Sri-Lanka ( Siddiqui, 2003 ) . As a consequence, for minimising the cost, the importers started looking for alternate beginnings and Bangladesh became a moneymaking beginning for them for installations like low labour cost and big export quotas ( Wigg, 1990, p.154-159 ) . Bangladesh received discriminatory intervention by USA and European Union, as a less developed state. Paradoxically, within 1985, Bangladesh appeared as a giant in international dress sector and became a major rival for the providers in USA, Canadian and European market. Therefore, the bed stone of this major industry of Bangladesh was set down and easy & amp ; bit by bit this industry has become the nucleus of the national economic system. Later, RMG sector besides received other installations like Generalized System of Preferences ( GSP ) from USA and UK.

Major jobs of RMG industry of Bangladesh:

In malice of being the chief beginning of the money watercourse in internal economic system of Bangladesh, the Ready-made Garments sector is in uninterrupted menace by some major and important factors. As a consequence, the whole sector is in hazard and in a volatile state of affairs which may ingloriously fall in the whole sector every bit good as the country’s economic system. These jobs or menaces can be categorized in following subdivisions:

  1. Critical political status
  2. In-apt workers
  3. Lack of proper in-work precautional security steps
  4. Workers Dissatisfaction

I. Critical political status:

Internal political instability and security menaces due to such instable status has become a serious concern for the RMG industry. If we focus on recent state of affairs, merely during the political agitation in October and November, 2013, this industry had to number a loss of minimal TK. 2000 corer and orders deserving $ 2.40 million were cancelled by the purchaser merely in first 10 yearss of December, 2013. Furthermore, due to the rail-road encirclement, the exporters had to make air cargo which besides compelled them to bear an excess disbursal of $ 0.9 million. For delayed cargo the exporters experienced a monetary value cut by $ 4.65 million as orders valuing $ 6.6 million were supplied in hold ( Bangladesh Sangbad Sangstha, December 12, 2013 ) .

two. In-apt worker:

Bangladesh is now a major rival in international RMG market. This makes it mandatory to keep the quality of the merchandise. Quality control in production unit mostly depends on clip to clip preparation and workshop plans organized for the workers. But, ironically, such enterprises are absent in Bangladesh. As a consequence, the qualities of the merchandises are degrading which sometimes result in cancellation of the cargo and creates a negative image in the international market.

three. Lack of proper in-work precautional security steps:

The most serious issue sing the RMG sector of Bangladesh is most of the mills lack proper safety steps against any unwanted hazards. This is doing the working zone vastly hazardous which besides violates the regulations and ordinances of International Labor Organization ( ILO ) . Such irresponsible attitude of the mill proprietors is the cardinal ground behind many accidents in recent old ages which have taken great tolls of life. In past 11years, about 730 workers were blazed and killed and about 4700 workers were injured in several fire accidents in garments mills. The sum of deceases and casualties in edifice prostration is legion. Merely in the edifice prostration on April 24, 2013 of Rana Plaza in Savar, 1,130 people were reported to be dead and about 2,515 injured people were reported to be rescued from the edifice ( New Age, April, 2013 ) . Continuous accidents like Spectrum Sweater Industries, Phoenix Garments, Smart Export Garments, Tazreen Fashion, Garib & A ; Garib, Matrix Sweater, Ha-Meem Group and many more has made the foreign purchasers excessively much concerned about the issue.

four.Workers Dissatisfaction:

The RMG sector has faced several incidents of work stoppages by the workers for the issue of unequal payment. The workers belong to the lower income group of the society. Although, this sector is the anchor of the country’s economic system, the radio detection and ranging of the sector, the workers, are non even paid the lower limit to maintain their bosom and psyche together. The sector became volatile due to labour agitation for the first clip in 2006 and since so it has become a regular phenomenon. In 2006 the unrest status was mitigated by treatment with the labour representatives and the minimal wage rate was decided to be Tk. 1662.50. But the agitation aroused once more in 2010 and the rate was revised to Tk. 3000 per month which came into consequence in November 2010 ( The Daily Star Forum, August 2012 ) . But, if we consider the current rising prices and life cost, the logical lower limit pay should be higher. Harmonizing to Center for Policy Dialogue ( CPD ) , the minimal pay of a worker is shown below:

Issues

Tk.

Daily Food Costs ( norm of male and female )

108

Monthly Food Costss

3240

Monthly Non-Food Costss ( 52 % of entire cost as per the FGD )

3510

Food + Non Food Costss

6750

Required Monthly Minimum Wage= ( Food costs + Non-food costs )

6750

*Moazzem, K.G. and Raz, S. , 2013, Revision of the minimal pay in RMG sector, pp.28.

Decision:

In current position, RMG sector is the lifeblood of the economic system of Bangladesh. Both GDP and GNP depend on this sector. As a consequence, for the improvement of the national economic system it’s must to endeavor to relieve the jobs of this sector. Furthermore, the sector presently employs about 4.2 million workers whose destiny straight depends on the being of RMG sector.

Mentions:

Moazzem, K.G. and Raz, S. , 2013. Revision of the minimal pay in RMG sector, pp.28

Mridha, R.U. , 2012, Causes of RMG unrest.The Daily Star Forum,[ cyberspace ] August

Available at: hypertext transfer protocol: //archive.thedailystar.net/forum/2012/August/rmg.htm

[ Accessed 4 March 2014 ]

Alamgir, M. and Haque, M. , 2013. RMG workers killed in fires, mill prostrations in 11 old ages.The Daily New Age, [ cyberspace ] 25 April

Available at: hypertext transfer protocol: //www.newagebd.com/detail.php? date=2013-04-25 & A ; nid=47200

[ Accessed 4 March 2014 ]

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