As Bangladesh marks 50 years of independence, it is being hailed as a rising economic star, and rightfully so. The 1971's War of Liberation, apart from claiming three million lives, had also left the country's infrastructure and economy in tatters. At that time around 80 per cent of Bangladesh's population was living in extreme poverty and the country was characterised as economic basket case. But in the last five decades Bangladesh has undergone tremendous transformation and become one of the fastest growing economies of the world.
Our socio-economic progress, human development indicators and achievements of MDGs are widely acclaimed. Especially in last 13 years under the visionary leadership of our Honorable Prime Minister Sheikh Hasina, Bangladesh has become a global model of development. Our per capita income has reached USD 2,554 from USD 676 in the FY 2008-2009, which is one of the highest in South Asia. Poverty rate declined to 20.5 per cent, both way trade increased from USD38 billion to USD82 billion during the same time. Foreign exchange reserve is crossing the records every month which is now at USD 45 billion.
How has this happened? Certainly, it was not a case of simply waving a magic wand!
Well, the success story has largely been woven by the ready-made garment (RMG) industry. And those of us involved in this sector can take some pride in our remarkable contribution to the development of the country.
Let's look at a few facts and figures. The apparel sector contributes 11 per cent to GDP and supports over 4 million jobs directly. With 3,500 active clothing factories at present, it accounts for $20 billion in investment, and generates export revenue of 31.4 billion that is about 81 per cent of total export from Bangladesh. The impressive growth of Bangladesh RMG industry has made it the world's second largest garment supplier, with its products going to 167 countries.
Figures aside, the RMG industry truly embodies Father of the Nation Bangabandhu Sheikh Mujibur Rahman's dream of building a self-reliant nation. In his first speech to the independent Bangladesh, Bangabandhu had said, "Our independence will be futile, if the people of my Bengal are not fully fed. Our independence will not be fulfilled, if the mothers and sisters of this country do not get clothes for the protection of their modesty. Our independence will not be fulfilled, if the people of this country, the youth, do not find employment."
The RMG industry is leading from the front in making Bangladesh self-reliant. It is a vital cog in Bangladesh economy and also the largest formal employment sector, especially for women. Approximately 60 per cent of garment workers are women, mostly within the age group of 18-30 years. As a result, the industry has not only immensely contributed to women empowerment and poverty reduction, but also brought about numerous positive changes in the society like drop in early marriage and early motherhood, increase in female literacy rates, curb in population growth, and increase in environmental and personal hygiene awareness etc. Moreover, the RMG sector provides economic opportunities to thousands of backward and forward linkages.
Even beyond this tangible socio-economic contribution, the apparel industry itself has gone through massive transformation and grown manifold since its inception. The technology features, workplace safety, product quality and range, and environmental sustainability-- all have improved significantly. The industry's high level of adaptability has been so impressive and successful in making the business sustainable that perhaps other industries can take some lessons from it.
Since the very beginning the successive leaderships of BGMEA worked hard to take the industry forward amid myriad challenges. We humbly remember their contributions and show our deep respect to all the leaders, especially former Presidents of BGMEA. As we look back, broadly there are four areas in which significant advancements have taken place and of which we can all be really proud of.
First, the advancement in workplace safety and value chain responsibility. Today Bangladesh's RMG industry can boast of having been transformed into a state-of-the-art, safe, secured and green hub of sustainable and ethical manufacturing. The sector insiders' relentless pursuit for staying competitive in the global supply chain has helped the industry make great strides in safety and sustainability.
After the introduction of Harkins Bill of Child Labour elimination in 1994, we have made an unprecedented success in eliminating Child Labour from the RMG industry in 1995 and rehabilitate them through 'earn and learn programme'.
We, the entrepreneurs, have committed ourselves to turn around and rebuild the industry to make it safer, risk-free and sustainable for our workers and employees, especially after the tragic building accident of 2013. We have engaged ourselves with the government, ILO, local and international labour federations and brands through the initiatives titled 'ACCORD', 'Alliance' and 'National Action Plan'. Bangladesh made a joint declaration with ILO, EU, USA and Canada called the Sustainability Compact in 2013 to monitor the progress of the transformation. The three initiatives as I named before have carried out safety inspection in all the export oriented RMG factories in Bangladesh in the area of fire, electrical and structural safety. The response from the industry in terms of remediation works was phenomenal.
Since the tragic building collapse incident in 2013 a paradigm shift has happened. All the factories have gone through robust remediation programme and installed all the required safety equipment as per the standards. To complete the safety remediation plan, a factory on an average spent around USD 500,000. And in the case of relocation or rectification, the cost was even 4-6 times higher. Not only that, the factory inspections reports were disclosed online which has set a unique example in the world on the issue of workplace safety
Then we have formed RMG Sustainability Council (RSC) to build local capacity as a national safety monitoring regime, involving equal number of representatives from industry bodies, brands and unions in its governance.
As we believe that capacity building is an important part to develop the culture of safety, particularly by engaging the workers, we have entered into collaborative arrangement with a number of development partners and the government to train workers and mid-management officials on occupational safety and health and on social dialogue.
Thanks to these unprecedented strides over the years, the industry has earned global recognition. McKinsey & Company has termed Bangladesh RMG industry as "a front-runner in transparency regarding factory safety and value-chain responsibility", while QIMA ranked Bangladesh 2nd in its ethical manufacturing audit 2020.
Second, the advancement in environmental sustainability. Today the factories are not only safer, but also have become more dynamic, modern, energy-efficient and environment-friendly. Bangladesh has by far the highest number of green garment factories in the world. US Green Building Council (USGBC) certified a total of 152 Bangladeshi factories as LEED (Leadership in Energy and Environmental Design), among them 44 are LEED platinum-rated and 94 are LEED gold-rated units. Moreover, 500 more factories are in the pipeline for certification. Factories are increasingly opting for modern, energy-efficient technologies.
Besides, an increasing number of factories from Bangladesh are joining UNFCCC (United Nations Framework Convention on Climate Change), the German Green Button initiative, and a circular fashion project with GFA, which testifies the industry's strategic vision and committed efforts toward environmental excellence. I also want to proudly share with the readers that BGMEA has been recently honored with USGBC Leadership Award 2021, which is by far the first of its kind for any associations in Bangladesh. In the recently ended COP26, we have reaffirmed our commitment to climate action.
Third, technological advancement. Our factories are increasingly moving from semi-automatic to more automatic mode using sophisticated machines, technologies and software to prepare the industry for next phase of growth. Energy and resource-efficient technologies like low liquor dyeing machine, Ozone washing machines, Jacquard machines, auto trimming, ERP are increasingly being used in factories. These machines are not only resource-efficient but they also enhance efficiency in production. Most of our new generation factories are equipped with sophisticated technologies, able to handle top quality products of diverse styles, making the product price competitive as well.
Moreover, we are using many environment-friendly technologies like-- rainwater harvesting, daylight saving, solar energy etc. which save our natural resources and reduce the environmental pollution. As far as transparency and traceability of the supply chain management is concerned, different types of supply chain tools are used. Some factories are using technology like -- IOT to analyse sewing motion, radio-frequency identification RFID for production and inventory tracking system, smart dying system, automatic dosing system, smart garment measurement system, finishing roll QC system, mobile apps for QC etc. Automated screening tools are being used to detect organic and zero hazardous chemicals which reduce the consumption of water and energy.
Fourth, and perhaps the most important, is our ability to manufacture world-class products. Today our products compete with the best in the world. Apart from being meticulous in product development, our unfailing commitment to deliver quality products on time also gives Bangladesh a competitive edge.
Moreover, our manufacturing quality is steadily improving and our products are increasingly winning hearts and minds of global consumers. Still, there is a lot of work to be done. We need to enhance our value addition capacity so that our products can become more competitive both in terms of cost and quality.
Considering all these areas of impressive advancement, there is no denying that Bangladesh RMG industry has come a long way. In our journey of almost four decades, we have gone through various challenges and currently, as the whole world suffers from the pandemic of the century-- Covid-19, our manufacturers are also confronted with an unprecedented situation. However, with the support from Honorable Prime Minister Sheikh Hasina, we have been able to successfully fight the initial blow and as a result of mass vaccination around the world, our export is rebounding.
The potential of the industry is much larger and we must aspire to reach the very top. However, the question is- what will it take? In simple words the misconception about the industry needs to be changed, and it must be seen as an important economic growth driver for Bangladesh. Yes, factories are required to address workplace safety, wage and environmental issues. Over the years, these issues have been dealt with successfully, thanks to the action taken by the government and the industry.
Another important thing to do is - we have to carve out a niche for ourselves in high-end garment products, especially with a focus on harnessing the potential of man-made fibre (MMF). The global market for MMF products is huge. About 75 per cent of the total consumption of global textiles is non-cotton, where the share of Bangladesh is only 25 per cent. Bangladesh is also heavily dependent on imports to meet the demand for non-cotton fabrics. So, rapid localisation of MMF will provide a big opportunity for the RMG sector. The share of 5 core items -- trousers, T-shirts, blouses, sweaters and underwear -- is 82.04 per cent, whereas we have huge scope in items like active-wear, athleisure, suits and high-end formal-wear, outerwear, lingerie etc.
The next phase of business sustainability will also require advancement in the area of 4th industrial revolution. We must make continuous effort to cope up with the global fashion trends and realign our business strategies accordingly. The industry is now more focused on product diversification, especially on non-cotton and high-end apparel products like suits/blazers, lingerie, jackets, swimwear, sportswear, uniform, work-wear etc. Thus we must strive to remodel our business from labour intensive to a value-added one through innovation, modern manufacturing, diversification, technology upgrading, up-skilling and re-skilling of our workforce.
One of the major sources of Bangladesh's competitiveness is the young and vibrant workforce. Bangladesh has a vibrant population, 70 per cent below 40 years of age. Being a highly populated country, we have to focus on our people to achieve our desired economic development. Better utilisation of human resources for maximising value to the economy requires a critical analysis and appropriate policy. Considering the potentials of emerging as a middle income country, we have to take a People Centric Approach in devising our strategies and policies. It is encouraging that significant investment in skill development and R&D is already taking place in factories. While individual factories are working on their own to develop and design high-end products for exports, BGMEA with the support of the commerce ministry has set up the Centre for Innovation, Efficiency and OSH for garment factories to enhance competitiveness of the industry. It is hoped that the Centre will contribute to industry's preparedness to keep pace with the changing demands.
Last but not least, as the nation aspires to be a developed country by 2041, the RMG industry has a lot more to contribute and will play a pivotal role in the journey. Therefore, the government and the industry must continue to work together to keep up the growth momentum of this vital sector in the days to come. If everything goes well, achieving the target of $50 billion export earnings from this sector is well within our reach.
Faruque Hassan is the President of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) and the Managing Director of Giant Group.