History of textile production in Bangladesh
The textile and clothing (T&C) industries
provide the single source of economic growth in Bangladesh's rapidly developing economy. Exports of textiles and garments
are the principal source of foreign exchange earnings. Agriculture for domestic
consumption is Bangladesh’s largest employment sector. By 2002 exports of
textiles, clothing, and ready-made garments (RMG) accounted for
77% of Bangladesh’s total merchandise exports. By 2013, about 4 million people,
mostly women, worked in Bangladesh's $19 billion-a-year industry,
export-oriented ready-made garment (RMG) industry. Bangladesh is second only to
China, the world's second-largest apparel exporter of western brands. Sixty
percent of the export contracts of western brands are with European buyers and
about forty percent with American buyers. Only 5% of textile factories are
owned by foreign investors, with most of the production being controlled by
local investors.
Bangladesh's textile industry has been part of
the trade versus aid debate. The encouragement of the garment industry of
Bangladesh as an open trade regime is argued to be a much more effective form
of assistance than foreign aid. Tools such as quotas through the WTO Agreement on Textiles and Clothing (ATC)
and Everything but Arms (EBA) and the US 2009
Tariff Relief Assistance in the global clothing market have benefited
entrepreneurs in Bangladesh's ready-made garments (RMG) industry. Bangladesh,
with a population of about 156 million, is among
the most densely populated countries
in the world. In 2012 the textile industry accounted for 45% of all industrial
employment in the country yet only contributed 5% of the Bangladesh's total
national income.
From
1947 to 1971 the textile industry, like most industries in East Pakistan, were
largely owned by West Pakistanis. During that period, in the 1960s, local
Bengali entrepreneurs had set up their own large textile and jute factories.
Following its separation from East Pakistan the newly formed Bangladesh lost
access to both capital and technical expertise.
Until
the liberation of Bangladesh in 1971, the textile sector was primarily part of
the process of import substitution
industrialization (ISI) to replace imports. After the
liberation, Bangladesh adopted export-oriented
industrialization (EOI) by focusing on the textile
and clothing industry, particularly the readymade garment (RMG) sector.
Immediately after the founding of Bangladesh (1971) tea and jute were the most export-oriented sectors. But with the
constant threat of flooding, declining jute fiber prices and a significant
decrease in world demand, the contribution of the jute sector to the country’s
economy deteriorated.
In
1972 the newly formed government of Sheikh Mujibur Rahman who was also the head of the Awami
League, enacted the Bangladesh Industrial
Enterprises (Nationalization) Order, taking over privately owned textile
factories and creating a state-owned enterprise (SOE) called Bangladesh Textile
Mills Corporation (BTMC). President Rahman promoted democracy and a socialist
form of capitalism. The BTMC never managed to match the pre-1971 output and in
every year after the 1975–1976 fiscal years, lost money. Until the early 1980s
the state owned almost all spinning mills in Bangladesh and 85 percent the
textile industry's assets (not including small businesses). Under the 1982 New
Industrial Policy (NPI) a large number of these assets including jute mills and
textile mills were privatized and returned to their original owners.
In
the devastating famine in 1974, one million people died, mainly of starvation
caused in part by the flooding of the Brahmaputra
River in 1974, and a steep rise in the price
of rice. Partly in response to the economic
and political repercussions of the famine, the Bangladesh government shifted
public policy away from its concentration on a socialist economy, and began to
denationalize, disinvest and reduce the role of the public sector in the
textile industry while encouraging private sector participation. The 1974 New
Investment Policy restored the rights to both private and foreign investors.
Bangladesh's development model switched from a state-sponsored capitalist mode
of industrial development with mainly state-owned enterprises (SOE) to private sector-led industrial growth.
export
market
|
USA
(textile)
|
USA
(clothing)
|
EU
(textile)
|
EU
(clothing)
|
market share in 1995
|
<3%
|
4%
|
<3%
|
3%
|
market share in 2004
|
3%
|
2%
|
3%
|
4%
|
