final bus com report

8/11/2019 Final Bus Com Report

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United InternationalUniversityQUEST FOR EXCELLENCE

Title page

Prepared for

Md. Kaium Hossain

Assistant Professor

!chool of Business "I"

Prepared by

Md. #a$mul Hossan

Md. !an%id Ahmed Tan&eer

!adia Binte An'ar

#hen (ay

Tithi !hi)der


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1. Letter of Authorization

*ate+ ,, -anuary ,/0

Md. Kaium Hossain

Assistant Professor


!ub%ect+ *eclaration regarding the &alidity of the report

*ear !ir

This is our truthful declaration that the 1Problems and Prospect of Garments Industry in

Bangladesh2 'e ha&e been prepared is not a copy of any report pre&iously made by any

other students.

(e also e3press our honest confirmation in support of the fact that the said 1Report2 has

neither been used before to fulfill any other course related purpose nor it 'ill be

submitted to any other person or authority in future.

4ours truly

Md. #a$mul Hossan


!adia Binte An'ar

#hen (ay

Tithi !hi)der


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2. Letter of Transmittal

*ate+ ,, -anuary ,/0

Md. Kaium Hossain

Assistant Professor


!ub%ect+ !ubmission of Report on Problems and Prospect of Garments Industry in

Bangladesh.

*ear !ir

Here 'e are submitting our report on 1Problems and Prospect of Garments Industry in

Bangladesh2 prescribed by you in your course Business 5ommunication. 6or this

Purpose 'e ha&e gone through internet different boo)s and class lecture sheets for the

rele&ant information of the assigned topic.

Please call me for any further information at your con&enient time and place.

4ours truly

Md. #a$mul Hossan


!adia Binte An'ar

#hen (ay

Tithi !hi)der


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3. Table of contents

Items Page no.

0. 73ecuti&e summary i

8. Introduction ii

8./. 9rigin of the report ii

8., Purpose of the !tudy ii

8.: 9b%ecti&es of the !tudy ii

8.0. ;imitations of the Report ii


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4. Executive summar

The phase out of the @uota is li)ely to ha&e particular significance for the e3port of

Bangladesh apparels to the "! mar)et. M6As impacts are much related to a @uestion of

our , billion e3ports to the "!AC of the 8 'orth of e3ports made by Bangladesh

globally. Rather it is a @uestion of ho' Bangladeshs entire economy 'ills is affected by

the issue of @uota phase out. RMG e3ports constitute about =8D of Bangladeshs annual

e3port and pro&ide direct employment to 0., million Bangladeshis. The global clothing

trade is in&ol&ing on a continuous basis that the phase out of @uota restrictions and

forming of trade blocs has become a reality. Moreo&er Bangladesh is con&ulsed by fierce

class struggles centered on the countrys garment industry. Many tens of thousands of

'or)ers ha&e gone on stri)e bloc)ed roads attac)ed factories and other buildings

demonstrated fought the police and rioted in the streets. 7&eryday comes ne's of fresh

stri)es in a &ariety of industriesE mainly the ready made garment FRMG sector but also

mill 'or)ers ri&er transport 'or)ers rail 'or)ers %ournalists lecturers and teachers. There&olt began on ,thMay ,< 'ith garment 'or)ers stri)es in the Bangladeshi capital

*ha)aE beginning in a small number of factories o&er issues including the arrest of

'or)erEacti&ists and nonEpayment of 'ages. By ,:rdMay ,< this struggle has been

generali$ed 'ith action at a much larger number of factories and demonstrations across

the country. A massi&e army and police presence around garment factories in some cases

completely bloc)ading and creating chec) points for entry to 73port Processing ones

temporarily calming thingsC but stri)es continued to ta)e place at numerous factories

leading to solidarity stri)es from nearby 'or)places. It is largest manufacturing sector

contributing about 8D to the G*P.

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!. Intro"uction

!.1. #rigin of the re$ort%

6or the assessment secondary data 'as collected. 6or this 'e ha&e gone through internet

different boo)s and class lecture sheets for the rele&ant information of the assigned topic.

And 'e also analysis some report of &arious garment industries.

!.2 Pur$ose of the &tu"%

The report is re@uired course for the students 'ho are studying BBA in AI! FBachelor

of Business Administration in Accounting Information !ystem of "nited International

"ni&ersity under the course titled Business 5ommunication.

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!.3 #b'ectives of the &tu"%

Broad Objective:The main ob%ecti&e of this study is problems and prospects of garments

sector of Bangladesh.

Specific Objective:

To present an o&er&ie' of )ey concept relating problems.

To study the definition of &arious problems.

To study the classification of problems and prospects.

To study the prospects of Bangladesh.

To study the challenges of de&elopment of Bangladesh.

To study the effect of global in Bangladesh.

!.4. Limitations of the (e$ort

!ince our study is based on both primary and secondary data there is a possibility of

getting fa)e information. If the sur&eyed personnel pro&ide us 'ith any fabricated

information about their 9pinion of their organi$ation then the report findings may be

erroneous. Abo&e all this study is 'ea) in some points. The notable ones are an 9pinion

of their organi$ation and then the report findings may be erroneous. Abo&e all this study

is 'ea) in some points. The notable ones are as under+

The study 'as conducted in a &ery short time so 'e 'ere not able

to collect more information.

This study made on crisis situation of Bangladesh so it 'as

difficult to collect more samples. 9nly the big and the reputed Garments 5ompany consider here as

sample.

). *etho"olog of +ata ,ollection

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The report 'as fully e3ploratory in nature. *ata ha&e been collected from

secondary sources.

MsE(ord and other re@uired computer program 'ere used to process the

uantitati&e data on 'hich final report 'as prepared.

The theoretical part of this report has been collected from te3t that 'e studied in

our program.

Most of the parts are collected from internet in different 'ebsite.

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-. In"ustr #vervie

The Ready JMade Garments FRMG sector of Bangladesh has emerged as the

biggest earner of foreign currency. The RMG sector has e3perienced an e3ponential

gro'th since the /?>s. The sector contributes significantly to the G*P. It also pro&ides

employment to around 0., million Bangladeshis. An o&er'helming number of

'or)ers in this sector are 'omen. This has affected the social status of many 'omen

coming from lo' income fa mil ies . Ba ng lad es hE or ig in pr od uc ts me t @u al i t y

sta nd ar ds of cu sto me rs in #o rt h America and (estern 7urope and prices

'ere satisfactory. Business flourished right from the startC many o'ners made

bac) their ent ir e capi ta l in&estment 'i th in a year or t'o and thereaf te r

continued to reali$e great profits. !ome >8 percent of Bangladeshi production

'as so ld to #orth American cus tomers and & irtual ly o&ern igh t

Bangladesh became the si3th largest supplier to the #orth American mar)et. After

foreign bus inesses began building a readyEmade garment indus try

Banglades hi capitalists appeared and a &eritable rush of them began to organi$e

companies in *ha)a 5h ittagong and smaller to'ns 'here basic garmentsEE

mens and boys cotton shirts 'omens and girls blouses shorts and baby

clo thes EE'ere cut and assembled pac)ed and sh ippe d to cus tom ers

o&e r s eas F mos t l y i n t he "n i t ed ! t a t e s . ( i t h & i r t ua l l y no go&e r nmen t

r egu l a t i on t he number o f f i r ms p r o l i f e r a t ed C no de f i n i t i &e coun t 'as

a&ailable but there 'ere probably more than 0 firms by /?>8 'hen the

boom 'as pea)ing. After %us t a fe' years the readyE made ga rmen t indust ry

employed more than , people. According to some estimates about >

percent 'ere 'omen 'hich 'ere ne&e r noticed pre&iously in the indust ria l

'or) force. Many of them 'ere 'oefully underpaid and 'or)ed under harsh

condi tions. The net benef it to the Bangladeshi economy 'as o n l y af r a c t i o n o f e 3 p o r t r e c e i p t s s i n c e & i r t u a l l y a l l m a t e r i a l s u s e d

i n g a r m e n t m an u fa c tu r e ' e r e i m po r te d C p r a c ti c al l y a l l t h e & a l u e

added in Bangla desh 'as f rom labor .

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The garment industry of Bangladesh has been the )ey e3port di&ision and a main source

of foreign e3change for the last ,8 years. #ational labor la's do not apply in the 7Ps

lea&ing B7PA in full control o&er 'or) conditions 'ages and benefits. Garment

factories in Bangladesh pro&ide employment to 0 percent of industrial 'or)ers. But

'ithout the proper la's the 'or)er are demanding their &arious 'ants and as a result

conflict is began 'ith the industry. ;abor unrest is a great problem in the RMG sector.

;o' 'or)ing salary is another &ital fact 'hich ma)es the labor conflict. (or)ers made

stri)e &andali$e industries to capture their demand. As a result disruption in the

production occurred 'hich delay in the shipment of products ma)ing a bad image of

industry. !ometimes buyers cancel order 'hich is &ery harmful for the o'ner. Another

problem is the insufficient infrastructure regarding RMG sector. In our country there is an

acute shortage of electricity and gas supply. Because of load shedding disruption in

production occurred and o'ners use generator for electricity. This problem also hampers

production and increase production cost 'hich is threatening in the competiti&e mar)et.

There are some other problems 'hich are associated 'ith this sector. Those areElac) of

mar)eting tactics absence of easily onEhand middle management a small number of

manufacturing methods lac) of training organi$ations for industrial 'or)ers super&isors

and managers autocratic approach of nearly all the in&estors fe'er process units for

te3tiles and garments sluggish bac)'ard or for'ard blending procedure incompetent

ports entryLe3it complicated and loadingLunloading ta)es much time timeEconsuming

custom clearance etc.

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/. The Problems an" Pros$ects

/.1. Problems%

The garment industry of Bangladesh has been the )ey e3port di&ision and a main source

of foreign e3change for the last ,8 years. #ational labor la's do not apply in the 7Ps

lea&ing B7PA in full control o&er 'or) conditions 'ages and benefits. Garment

factories in Bangladesh pro&ide employment to 0 percent of industrial 'or)ers. But

'ithout the proper la's the 'or)er are demanding their &arious 'ants and as a result

conflict is began 'ith the industry. ;o' 'or)ing salary is another &ital fact 'hich ma)es

the labor conflict. (or)er made stri)e layout to capture their demand. !ome time bonus

and the o&ertime salary are the important cause of crisis. Insufficient go&ernment policy

about this sector is a great problem in Garments 5ompany. There are some otherproblems 'hich are associated 'ith this sector. Those areElac) of mar)eting tactics

absence of easily onEhand middle management a small number of manufacturing

methods lac) of training organi$ations for industrial 'or)ers super&isors and managers

autocratic approach of nearly all the in&estors fe'er process units for te3tiles and

garments sluggish bac)'ard or for'ard blending procedure incompetent ports

entryLe3it complicated and loadingLunloading ta)es much time timeEconsuming custom

clearance etc. There are many types of reasons for 'hich problems are created or raised

in the garments industry 'hich is belo'+

(a materials%

Bangladesh imports ra' materials for garments li)e cotton thread color etc. This

dependence on ra' materials hampers the de&elopment of garments industry. Moreo&er

foreign suppliers often supply lo' @uality materials 'hich result in lo' @uality products.

0nsille" orers%

Most of the illiterate 'omen 'or)ers employed in garments are uns)illed and so their

products often become lo'er in @uality.

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Im$ro$er oring environment%

Ta)ing the ad&antages of 'or)ers po&erty and ignorance the o'ners forced them to 'or)

in unsafe and unhealthy 'or) place o&ercro'ded 'ith 'or)ers beyond capacity of the

factory floor and improper &entilation. Morning to e&ening to earn our countries the

ma%or portion of our foreign e3change anybody &isiting the factory the first impression

he or she 'ill ha&e that these 'or)ers are in a roost. Improper &entilation stuffy

situation filthy rooms are the characteristics of the ma%ority of our factories. The o'ners

profit are the first priority and this attitude has gone to such an e3tent that they do not

care about their li&es.

Lac of managerial nole"ge%

There are some other problems 'hich are associated 'ith this sector. Those areE lac) of

mar)eting tactics absence of easily onEhand middle management a small number of

manufacturing methods lac) of training organi$ations for industrial 'or)ers super&isors

and managers autocratic approach of nearly all the in&estors fe'er process units for

te3tiles and garments sluggish bac)'ard or for'ard blending procedure incompetent

ports entryLe3it complicated and loadingLunloading ta)es much time timeEconsuming

custom clearance etc.

en"ere" "ivision of labor%

In the garment industry in Bangladesh tas)s are allocated largely on the basis of gender.

This determines many of the 'or)ing conditions of 'omen 'or)ers. All the 'or)ers in

the se'ing section are 'omen 'hile almost all those in the cutting ironing and finishing

sections are men. (omen 'or)ers are absorbed in a &ariety of occupations from cutting

se'ing inserting buttons ma)ing button holes chec)ing cleaning the threads ironing

folding pac)ing and training to super&ising.

ages%

The go&ernment of Bangladesh sets minimum 'ages for &arious categories of 'or)ers.

According of Minimum (age 9rdinance /??0 apprentices helpers are to recei&e T)8

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and T)?: per month respecti&ely. Apprentices are helpers 'ho ha&e been 'or)ing in the

garment industry for less than three months. After three months Apprentices are

appointed as helpers. 9ften female helpers are discriminated against in terms of 'ages

le&els and these 'ages are also often fi3ed far belo' the minimum 'age rate. A sur&ey

conducted in /??> sho'ed that =:D of female helpers as opposed to /8D of their male

counterparts did not recei&e e&en the minimum 'age.

Insufficient of loan%

Insufficiency of loan in time uncertainly of electricity delays in getting materials lac) of

communication and Problem in ta3es etc. 9ften obstruct the industry. In the 'orld

mar)et //8 to /, items of dress are in demand 'here as Bangladesh supplies only ten to

t'el&e items of garments. India !outh Korea Hong Kong !ingapore Thailand Tai'an

etc ha&e made remar)able progress in garments industries. Bangladesh is going to

challenge the garments of those countries in the 'orld mar)et.

0nit labor cost%

"nit labor cost+ Bangladesh has the cheapest unit labor cost in !outh Asia. It costs only

// cents to produce a shirt in Bangladesh 'hereas it costs =? cents in !ri ;an)a and ,ocloc). They are as)ed to 'or) 'hole months at a time the 6actory

Act 'hich stipulates that no employee should 'or) more than ten days consecuti&ely

'ithout a brea).

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Poor accommo"ation facilities%

As most of the garment 'or)ers come from the poor family and comes from the remote

areas and they ha&e to attend to the duties on time these 'or)ers ha&e to hire a room

near the factory 'here four to fi&e huddle in a room and spend life in sub human

condition.

&afet Problems%

Because of the carelessness of the factory management and for their arrogance factory

doors used to be )ept loc)ed for security reason defying act !afety need for the 'or)er is

mandatory to maintain in all the organi$ation. But 'ithout the facility of this necessary

product a lot of accident is occur incurred e&ery year in most of the company. !ome

important cause of the accident are gi&en belo'E

Routes are bloc)ed by storage materials

;ac) of signage for escape route

*oors opening along escape routes are not fire resistant

*oors are not selfEclosing and often do not open along the direction of escape

Ire e3it or emergency staircase lac)s proper maintenance

Price com$etitiveness%

5hina and some other competitors of Bangladesh ha&e implemented sharp priceEcutting

policies in e3porting garment products o&er the last fe' years but Bangladesh has failed

to respond effecti&ely to such policies. 5hina 'as able to drop the e3port price of ,?

garment categories by 0


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/.2. Pros$ects%

Bangladeshi Garment Industry is the largest industrial sector of the country. Though thehistory of Ready Made Garment Industry is not older one but Bangladeshi clothing

business has a golden history. Probably it started from the Munhall age in the Indian

subcontinent through *ha)a Muslin. It had global reputation as 'ell as demandable

mar)et around the globe especially in the 7uropean mar)et. After industrial re&olution in

the 'est they 'ere busy 'ith technological ad&ancement started outsourcing of

readymade garments to meet up their daily demands. Many ;*5s too) that chance

started readymade garment e3port at that mar)ets. As an ;*5 Bangladesh too) this

chance en%oyed @uota other facilities of them. Thus readymade garment industry

started to contribute in our economy from late eightiesF/?==.The history of the garment

industry dates bac) to /?== 'hen the first consignment 'as e3ported to then (est

Germany by -e'el Garments. The number of units ho'e&er remained a meager 0< until

the end of /?>:. 6rom a humble beginning the sector has thus made phenomenal gro'th

o&er the last t'o decades the number of units gro'ing to around 08. The RMG

industry achie&ement is note'orthy particularly for a country plagued 'ith poor resource

endo'ments and ad&erse conditions for industriali$ation. 73ports increased from

appro3imately :, million "! dollars in /?>:L>0 to /.0 billion dollars in /??,L?:. In

/?>=L>> the RMG e3port share surpassed that of ra' %ute and allied products. The figure

further rose to 8.= billion dollars in ,:L0 representing a contribution of about =8

percent of the countrys total e3port earnings in that year. The employment generated by

the sector is estimated to be around /.8 million 'or)ers. !e&eral factors account for the

outstanding successes of the RMG industry in Bangladesh. At the same time this industry

had faced till facing many problems also. These problems prospects of RMG

industry in Bangladesh is my topic to find out as 'ell as to ma)e critical analysis on

these. The importance of my study has been raised up by recent labor unrest in RMG

sector. *espite many difficulties faced by the RMG industry o&er the past years it

continued to sho' its robust performance and competiti&e strength. The resilience and

bold trend in this M6A phaseEout period partly reflects the imposition of Nsafeguard

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@uotas by "! and similar restrictions by 7" administration on 5hina up to ,> 'hich

has been the largest supplier of te3tiles and apparel to "!A. 9ther factors li)e price

competiti&eness enhanced G!P facility mar)et and product di&ersification cheap labor

increased bac)'ard integration high le&el of in&estment and go&ernment support are

among the )ey factors that helped the country to continue the momentum in e3port

earnings in the apparel sector. !ome of these elements are re&ie'ed belo'C

*aret +iversification%

Bangladeshi RMG products are mainly destined to the "! and 7". Bac) in/??


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acar" Integration%

RMG industry in Bangladesh has already pro&ed itself to be a resilient industry and can

be a catalyst for further industriali$ation in the country. Ho'e&er this &ital industry still

depends hea&ily on imported fabrics. After the liberali$ation of the @uota regime some of

the ma%or te3tile suppliers Thailand India 5hina

5lo of Investment%

It is plausible that domestic entrepreneurs alone may not be able to de&elop the te3tile

industry by establishing modern mills 'ith ade@uate capacity to meet the gro'ing RMG

demand. It is important to ha&e significant flo' of in&estment both in terms of finance

and technology. 6igure : indicates that the in&estment outloo) in this sector is

encouraging although the uncertainties before the M6A phaseEout period caused a

sluggish in&estment scenario. In part the momentum in the postEM6A phaseEout period is

indicati&e of the efforts under'ay to'ards capacity building through bac)'ard

integration. This is e&ident in the pace of lending to the RMG sector and in the rising

import share of RMG related machinery. Ho'e&er further progress 'ould be necessary to

impro&e and sustain competiti&eness on a global scald.

Polic (egime of overnment%

Go&ernment of Bangladesh has played an acti&e role in designing policy support to

the RMG sector that includes bac)EtoEbac) ;L5 bonded 'arehouse cash incenti&es

e3port credit guarantee scheme ta3 holiday and related facilities. !cheme through 'hich

domestic suppliers to e3portEoriented RMG units recei&e a cash payment e@ui&alent to 8

percent of the net 69B &alue of e3ported garments. At the same time income ta3 rate for

te3tile manufacturers 'ere reduced to /8 percent from its earlier le&el for the period up

to -une : ,>. The reduced ta3 rates and other facilities are li)ely to ha&e a positi&e

impact on the RMG sector.

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(esearch an" Training%

This country has no dedicated research institute related to the apparel sector. RMG is

highly fashion oriented and constant mar)et research is necessary to become successful in

the business. BGM7A has already established an institute 'hich offers bachelors degree

in fashion designing and BKM7A is planning on setting up is search and training

institute. These and relate initiati&e !need encouragement possibly intermediated by

donorEassisted.

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6. Analsis an" 5in"ing

&trength% RMG is the leading industry in Bangladesh. It is basically a laborE

intensi&e industry and it needs limited financial in&estment and relati&ely simple

technology compared to other high technical industries. The success story of

Garment Industry in Bangladesh is the story as to ho' the readymade garments

starting in the late se&enties as an insignificant nonEtraditional item of e3port. In

/??>E?? this sector has earned 0/?.?> million "! through e3porting 'hich

is=8.


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most important sector for the economy of Bangladesh. It accounts for =8./0D in

,E,/ of the country total e3port earnings FBGM7A #e'sletter ,/

About/.8 million 'or)ers of 'hom ?D are distressed 'omen are engaged in

about :, garment factories as on -une ,FBGM7A /??=E?>.It is largest

manufacturing sector contributing about 8D to the G*P.

eaness%In RMG sector &alueEaddition is :D only because a RMG unit has

to import =D of the total &alue of the product. The lo' &alue added represented

that the bac)'ard lin)age industries such as fabrics and accessories 'hich

directly feed into the garment sector ha&e not satisfactorily de&eloped. The

'ea)est point of the Bangladeshi apparel industry is that it is still at the mercy of

the e3terior suppliers of its main ra' materials namely the fabrics. Right no'

Bangladesh has &ery limited capacity to produce fabrics re@uired by the RMG

factories. Her competitors India Pa)istan Thailand Malaysia and other countries

ha&e their te3tiles mills that can produce @uality fabrics for the respecti&e apparel

industries. This sector 'ill remain intense competition in the conte3tC it is &ery

necessary to find out opportunities and challenges of RMG industry of

Bangladesh in order to face firm competition in the free mar)et en&ironment.

-apan is one of the potential mar)ets for e3ports from Bangladesh. uality and

fashion conscious -apan is importing readymade garments from Bangladesh at an

increasing rate e&en though this increase is &ery negligible. An e3tremely large

program has to be ta)en to increase the e3ports. There e3ists supporti&e policy

en&ironment in the RMG sector of Bangladesh. The pac)age of te3tile sector

incenti&e has been aimed at primarily to boost up the e3porters. Go&ernment has

e3tended some ma%or incenti&es and facilities for the local and foreign in&estors

to help increase in&estment in the country for all industrial sectors includingte3tiles and clothing !till there are some threats e3isting in our RMG sector.

According to the Ministry of Te3tiles the local fabric manufacturers currently supply less

than /?D of total 'o&en fabric re@uirement. About =D of the total fabric re@uirement of

the )nit sector is domestically produced as reported by the BTMA. Te3tile policy /??8

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en&isages established of ,0< spinning mills 'ith ,8spindleseach 0>/ 'eaning mills

each 'ith capacity to produce /= million meters of fabrics 0>/dyeingEprintingEfinishing

units each 'ith same capacity for yarn and 'o&en fabric by the year ,8. The findings

sho' that the 'or)ers needed significantly shorter time to produce a shirt of a gi&en

specification than the time.

#$$ortunit%The hundred percent export-oriented RMG industries

have experienced phenomenal growth during the last 15 years. Within

a very short period of time it has attained great importance in terms

of its contri!ution to G"# foreign exchange earnings and employment

and also as a vehicle of social changes. The export earnings data

of $angladesh shows that in 1%&&'-&5 ready-made garment sectorearned 1(.)% *+ ,11 million of the total export. This was raised to

).' *+ ,'/1 million in 1%&%-%0. This share rapidly went up to 5).)

*+ ,10' million in 1%%1-%(. urprisingly the share showed no

increase for the last three years. $angladesh garments products are

facing various !arriers and di2culties in the international mar3et.

Garments contri!ution to the total export earning remained constant at

around 5(* for the last two years +5(.&'* in 1%%'-%5 and 5(.)* in

1%%5-%. This stagnant situation demands immediate attention of theinternational mar3et researcher and the government as well. This

research therefore attempts to assess the present status of the RMG

sector and suggests strategies to overcome the present crises. The

most youthful export sector in $angladesh the RMG industry has !een

earning over 0* of the foreign currency for the country during the

last few years. 4n 1%%5 it contri!uted * to the nations total earning

from export. The mem!ership of $GM67 which started with 1%

+8ineteen in early 1%&) has reached ()&) as on 7ugust )1 1%%increasing !y (5* each year. Garment export in value has !een

increasing on an average !y (/* each year. 7s the rate of increase

+(0* per year is expected to continue through the M97 phasing out

transition growth prospect of apparel industry loo3s !righter +The

"aily ang !ad: 1%%.$angladesh has opportunities of expanding the

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mar3et through the following strategies +;ost 6


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9n the other hand since these shares do not carry residual rights on the assets of

the firm Funli)e ordinary shares in consideration of the time &alue of the

redemption &alue Fpresent &alue this 'ould effecti&ely ha&e some characteristics

of a go&ernment grant Fassuming no premium on redemption. As in the case of

any other preference shares these shares 'ould also re@uire the firms to pay

preference di&idends to the go&ernment out of their profits Fif profitable before

paying di&idends to ordinary shareholders. Generally preference shares ran)

belo' ordinary shares and abo&e debt finance in terms of the return e3pected by

in&estors in consideration of their ris)s. In consideration of all these factors these

funds 'ould be &ery lo'Ecost source of finance 'ith least strains on their costs

Fprofitability and their cash flo's. The magnitude of the benefits 'ould be

determined by the conditions of the share issue including the di&idend rates the

premium on redemption if any and 'hether these shares 'ill be sub%ect to

accumulation of di&idends. 6irms issuing these shares 'ill continue to sho' the

amount recei&ed from the go&ernment as a liability Fpreference share capital

effecti&ely represents debt rather than e@uity in their balance sheets. Assuming

the go&ernment 'ill not re@uest their redemption in the foreseeable future and no

obligation to pay di&idends on these shares still they 'ould not be able to treat

the funds as a re&enue For reduction in costs unless the go&ernment e3plicitly

'ai&es its rights. Instead they can use those cash resources to finance their

'or)ing capital needs long term in&estments or discharge other costly or

maturing liabilities 'ith no 'orries o&er the cost and the repayment of the ne'

finance. This 'ill effecti&ely reduce the cost of financing and hence can be

treated as a cheaper source of finance. 9n the other hand its @uestionable as to

'hat e3tent and ho' these funds Fe&en if the go&ernment relin@uishes its rights

'ill be able to pro&ide a cushion against such impediments in the long term.

Though this may be &iable in the short term it seems sensible to focus on

increasing the scale benefits longEterm cost reduction.

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1:. (ecommen"ation

Bangladesh economy at present is more globally integrated than at any time in the past.

The M6A phaseEout 'ill lead to more efficient global realignments of the Garments and

5lothing industry. The phase out 'as e3pected to ha&e negati&e impact on the economy

of Bangladesh. Recent data re&eals that Bangladesh absorbed the shoc) successfully and

indeed RMG e3ports gre' significantly both in 64< and Fespecially in 64=. *ue to a

number of steps ta)en by the industry Bangladesh still remains competiti&e in RMG

e3ports e&en in this post phaseEout period.

9ur Garments Industries can impro&e their position in the 'orld map by reducing the

o&erall problems. !uch as management labor conflict proper management policy

efficiency of the manager maintainable time schedule for the product proper strategic

plan etc.

Go&ernment also ha&e some responsibility to impro&e the situation by pro&idingE proper

policy to protect the garments industries sol&e the license problem @uic)ly loading

facility in the port pro&iding proper en&ironment for the 'or) )eep the industry free

from all )ind of political problem and the biasness. 5redit must be pro&ided 'hen the

industry fall in need.

To be an upper position holder in the 'orld Garments !ector there is no 'ay e3cept

follo' the abo&e recommendations. (e hope by maintaining proper management and

policy strategies our country 'ill ta)e the ape3 position in future.

1:.1 &uggestions (egar"ing 5ire &afet%

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'e need to remember that 'hen there is a fire the first thing one should do is to run a'ay

from it. And this is 'hat e&eryone does in such a situation. But the situation become

dangerous and tragic 'hen the escape door'ays and gates are found loc)ed.

Precautionary should need to be adopted are gi&en belo'+

/. Building should be constructed 'ith fire resisting materials

,. Ade@uate e3its and proper escape routes should be designed

:. Protection against fire and smo)e should be ensured

0. 7lectrical 'iring must be properly designed installed and maintained

8. 7scape routes should be lighted at all times )ept clear is indicated by signs

. *oors should not open on the steps and sufficient space should be pro&ided.

?. !mo)eL6ire alarm systems must be installed

/. Ade@uate number of e3tinguishers should be pro&ided

//. Prior relationship 'ith local 6ire ser&ices should be established

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11. ,onclusion

The ReadyEMade Garments FRMG industry occupies a uni@ue position in the

Bangladesh economy. It is the largest e3porting industry in Bangladesh 'hich

e3perienced phenomenal gro'th during the last ,8 years. By ta)ing ad&antage of an

insulated mar)et under the pro&ision of Multi 6iber Agreement FM6A of GATT it

attained a high profile in terms of foreign e3change earnings e3ports industriali$ation

and contribution to G*P 'ithin a short span of time. The industry plays a )ey role in

employment generation and in the pro&ision of income to the poor. To remain

competiti&e in the postEM6A phase Bangladesh needs to remo&e all the structural

impediments in the transportation facilities telecommunication net'or) and po'er

supply management of seaport utility ser&ices and in the la' and order situation. The

go&ernment and the RMG sector 'ould ha&e to %ointly 'or) together to maintain

competiti&eness in the global RMG mar)et. Gi&en the remar)able entrepreneurial

initiati&es and the dedication of its 'or)force Bangladesh can loo) for'ard to ad&ancing

its share of the global RMG mar)et.

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12. (eferences

Abdullah Md. Abu 4ousuf /??= 1International Trade Implications and 6uture of ReadyE

Made Garments !ector of Bangladesh2 -ournal of Business Administration Qol. ,: #o.

: 0 Page 0/E


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Islam !ade@ul ,/ The Te3tile and 5lothing Industry of Bangladesh in a 5hanging

(orld 7conomy 5P* and The "ni&ersity Press ;td.

Mlachula Montfort and 4ong$heng 4ang ,0 1The 7nd of Te3tiles uotas+ A 5ase

!tudy of the Impact on Bangladesh2 IM6 (or)ing Paper (PL0L>.

(orld Trade 9rgani$ation ,

final bus com report

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