|
6 THE TEXTILE AND GARMENT
SECTOR OF BANGLADESH
|
|
Early 19th century Bengal has been a major producer of silks, muslin
and cotton products, that were exported throughout Asia and Europe.
At present, the textile sector is mostly based on imported cotton
and locally produced jute. Jute, once the main export earner of
Bangladesh, lost its place as principle export product to ready-made
garments, under the ever bigger threat of synthetic fabrics.
The cotton textile industry comprises mostly yarn spinning and
cloth weaving. Handloom weaving produces 80% of cotton cloth for
domestic consumption. The products are mainly sold to the poor in
rural and urban areas in the form of lunghis and sarees.
Ready-made garment factories are often found in blocks of office
buildings, with a different factory on each floor. The manufacturing
process generally comprises cutting, stitching, washing, ironing,
assembly and packaging. Products are confined to basic, non-fashioned
garments such as shirts, blouses, trousers, and skirts.
THE READY-MADE GARMENT INDUSTRY
The ready-made garment industry, largely based in the capital Dhaka
and the major port Chittagong, is about 20 years old. The number
of garment factories has grown from about 300 in 1978 to 2500 today.
The garment industry now employs 1.5 million people (15% of all
industrial employment), 90% of them are women.
One reason why managers hire so many women is because they believe
they are more docile than men are.
Through the spectacular growth, the garment industry today is Bangladesh'
top earner that covers 68% of total exports. Export rose from $31
million in 1983 to $1.900 million in 1996. However, only about 30%
of the proceeds of the garment export remain in the country. The
other 70% is used mainly for the import of fabrics, cotton and accessories
from East Asia countries.
The ready-made garment sector is a so-called free sector in which
no or hardly any income- and export taxes are imposed. For exporters
membership of the Bangladesh Garment Manufacturers' and Exporters'
Association (BGMEA) is compulsory. The BGMEA therefore wields a
heavy influence over the garment industry as a whole.
The main market in the mid-1980s was the United States. In 1994 the
United States still accounted for 52% of garment export from Bangladesh,
the percentage has declined to 39,33 today. Europe now takes about
54% of its exports.
PROCESS OF RELOCATION
The rise of the garment industry in Bangladesh needs to be understood
in a fast changing international context, characterised by a process
of relocation. This process started in the 1950s and 1960s. The
garment sector appears to find every time more lucrative production
locations.
| First there was a movement from Europe and the United States
to the Middle East and to countries of the Far East. Later
on there was a shift of garment production from the so-called
Newly Industrialised Countries - Hong Kong, Taiwan and South
Korea - to other parts of Asia such as Bangladesh, Indonesia,
China and Vietnam. More recently, companies have moved towards
other parts of the Third World and also to Eastern Europe. |
Since 1974 world trade in textiles and garments
has been governed by the Multi Fibre Arrangement (MFA). Through
the MFA industrialised countries have been able to restrict imports
of garments from developing countries. This 'protectionist' agreement
could not prevent that some of the developing countries have captured
a prominent part of world's market. Because of its status as one
of the Less Developed Countries (LDC's), Bangladesh could circumvent
part of the MFA. It has profited from the free entrance to the
European market. Also the United States has enlarged the scope
for imports from Bangladesh. This combined with low wages, made
Bangladesh a highly attractive country for the intermediaries
.(1)
SYSTEM OF SUBCONTRACTING
A lot of production work has disappeared from Europe,
partly due to automation and partly due to the subcontracting
process: companies limit their activities to the beginning and
the end of the production chain, i.e. research and design, distribution
and marketing. Direct production - the labour intensive part -
is contracted out to countries where wages are lower. Bangladeshis
are among the cheapest workers of Asia. The labour cost per garment
is highly competitive. In industrialised countries labour costs
form 75% of the total costs of a garment product; In Bangladesh
this is about 5%. The system of subcontracting is made possible
through better means of communication and transportation. A new
international division of labour has been created.
| The Multi Fibre Arrangement was set up in 1974 within the
General Agreement on Trade and Tariffs (GATT) in order to
regulate imports of garments from 'low-wage countries' towards
industrialised countries through the instruments of quota's
- quantities of specified items. The Agreement on Textiles
and Clothing (signed at the GATT Uruguay Round in 1986; in
force from January 1995) is a multinational agreement on trade
that aims to bring textiles and clothing into line with free
trade policies of the World Trade Organisation. The ATC provides
a framework for the phasing out of the MFA before the year
of 2005. This agreement is very important to developing countries
for which the garment industry is one of the main sources
of export earnings. The consequences for the producing countries
are difficult to predict, but it is established that the phasing
out of the MFA will result in growing competition. |
-
C. Crabbé
|
