Basic Garments Products of Bangladesh

For Bangladesh, the ready-made garment export industry has been the proverbial goose that lays the golden eggs for over fifteen years now.  The sector now dominates the modern economy in export earnings, secondary impact and employment generated.  The events in 1998 serve to highlight the vulnerability of this industry to both internal and external shocks on the demand and supply side.  Given the dominance of the sector in the overall modern economy of Bangladesh, this vulnerability should be a matter of some concern to the policymakers in Bangladesh. Although in gross terms the sector’s contributions to the country’s export earnings is around 74 percent, in net terms the share would be much less partially because the backward linkages in textile have been slow to develop.  The dependence on a single sector, no matter how resilient or sturdy that sector is, is a matter of policy concern.  We believe the policymakers in Bangladesh should work to reduce this dependence by moving quickly to develop the other export industries using the lessons learned from the success of apparel exports.  Support for the apparel sector should not be reduced.  In fact, another way to reduce the vulnerability is to diversify the product and the market mix.  It is heartening to observe that the knit products are rapidly gaining share in overall garment exports as these products are sold in quota-free markets and reflect the strength of Bangladeshi producers in the fully competitive global apparel markets.

Preliminary data and informal evidence indicate that this sector seems to have weathered the devastating floods relatively well.  The industry is one hundred percent export-oriented and therefore insulated from domestic demand shocks; however, it remains vulnerable to domestic supply shocks and the smooth functioning of the banking, transportation and other forward and backward linkage sectors of the economy.  The Dhaka-Chittagong road remains the main transportation link connecting the production units, mostly situated in and around Dhaka and the port in Chittagong, where the raw material and the finished products are shipped in and out.  Despite increased dependence on air transportation, trucks remain the main vehicles for transporting raw materials and finished products for Bangladesh garment exports.  The floods disrupted the normal flow of traffic on this road.

Eventually, this road link was completely severed for several days when large sections of the road went under water for a few weeks during the latter phase of the floods.  This delinking of the road connection between Dhaka and the port in Chittagong was as serious a threat as one can imagine for the garment exporters.  The industry responded by calling upon the Bangladesh navy to help with trawlers and renting a plane from Thai Air that was used to directly fly garment consignments from the Dhaka airport to the Chittagong airport several times a day.

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