Group Name: Bingoo

Group Members: 04

Name ID
Adeeb Imtiaz 1820389
Mir Yashfi Ali 1830861
Sabiha Afrin 1821833
Tahmid Ahnaf Khan 1830606

Course Title: Bangladesh in International Business

Course ID: INB 304
Section: 01
Semester: Summer
Year: 2021
Date of Report Submission: 24/07/2021

Submitted To: Prof, Dr. Raisul Awal Mahmood

1
Table of Contents
1. Introduction:......................................................................................................................................3
1.1 Description of knitwear – meaning and content............................................................................3
1.2 Importance of knitwear in country’s export basket:....................................................................3
1.3 Purpose of the report:.....................................................................................................................4
2. Level of export of Knitwear..................................................................................................................4
2.1 Quantity and value of knitwear export in most recent year – say, as of 2020.............................4
2.2 Changes in quantity and value over time – table, chart, graph....................................................5
2.3 Possible reasons for increase over time..........................................................................................6
2.4 Possible export of Knitwear in the future......................................................................................7
3. Destination of export of knitwear.........................................................................................................8
3.1 Major destinations of knitwear from Bangladesh – regions, countries.......................................8
3.2 Destinations by knitwear items.......................................................................................................8
3.3 Emerging Destinations....................................................................................................................9
3.4 Possible reasons for importance of particular country or region.................................................9
4. Reasons for export of knitwear from Bangladesh:............................................................................10
4.1 Basis of trade in knitwear from Bangladesh:..............................................................................10
4.2 Major Competitors of Bangladesh in knitwear exporting:.........................................................10
4.3 Comparative advantage of Bangladesh:......................................................................................10
5. Challenges faced in export of knitwear..............................................................................................11
5.1 Types of Challenges facing in exporting Knitwear......................................................................11
5.2 Demand Side Challenges...............................................................................................................11
5.3 Supply Side Challenges:................................................................................................................13
6. Suggestions to Overcome Challenges.................................................................................................14
6.1 What can be done to overcome challenges:..................................................................................14
6.2 Role of Government.......................................................................................................................14
Summary:.................................................................................................................................................15
Conclusion................................................................................................................................................15
References................................................................................................................................................16

2
 1. Introduction:
1.1 Description of knitwear – meaning and content

Knit wears are made of knit fabric which consists of a structure formed by interlocking loops of
yarn. It is one of the oldest forms of cloth making in human civilization. The word knit came
from a combination of a Dutch word ‘knutten’ and an old English verb ‘cynttan’ (to knot).

The earliest forms which used needles and yarn to knit wool, spread from Egypt and the Middle
East then all over Europe. Earliest examples of knitwear were found in Egypt dating back to the
3rd-5th centuries. Wool trade routes were developed during the 3 rd and 5th centuries with Nomads
taking knitting on their travels and sharing their skills. Europe started producing knitwear
commercially by establishing the Parisien Guild of Knitters in 1268.

In Bangladesh the knitwear factories are mainly located in Narayanganj district. There are also a
few firms located in Chittagong, Dhaka, and Gazipur districts. The knitwear industry in
Narayanganj emerged at the early stage of the 19th century.

Initially wooden spindle wheels were used for making clothes, later handlooms were brought in
from India. And it initiated the transformation of the local cloth industry into a specialized
sector. This industry expanded both vertically and horizontally to meet growing demand for
fabrics within a few years.

Along with the production of sweaters and socks, the major output of the knitwear industry
involves two processes; namely, knitting of fabric and making of knitwear using the fabric thus
knitted.

1.2 Importance of knitwear in country’s export basket:

Historically Bangladesh was reputed for its production of textile products in addition to famous
Dhaka muslin. Fabrics produced in this area were found in ancient Egyptian tombs, and were
traded with the Roman and Chinese empires in the medieval age. In ancient times we had a great
deal of experts of textile products. In rural Bengal both men and women practiced weaving. And
their skills and disciplines in sewing and weaving are passed down through generations and
nowadays have transferred to production lines in modern knitwear factories.

In Bangladesh independent investments in the readymade garments (RMG) sector started to

bloom since the early 1980s. Initially as it was mainly small-scale production, it received very
little government attention. But within a decade, the RMG industry in Bangladesh started
flourishing at a good rate and by the early 1990s it emerged as a major employer sector. The

3
privatization of this sector and then the private leadership with policy support from the
government helped it become one of the major exporting items for Bangladesh’s export basket.

The RMG business was initiated with the export of knitwear consignment in 1973.witin years the
RMG sector accelerated exports dominated by woven garments. The knitwear sector’s
significant contribution in the country's export share was 1.1% in FY 82. Since then it gradually
increased its share in exports. While the contribution of woven garments to the 4 export baskets
was 42.8% in FY 91, the knitwear sector’s contribution rose to 7.6%.

Export quantity of knitwear items increased to 241.59 million dozens. This is roughly equal to
163.7% growth between FY 04 and FY 08. At present knitwear is the largest export earning
sector of Bangladesh contributing 41.8% to national export earnings at the end of FY 09 (July-
April). Bangladesh’s exports shipment of knitwear goods posted an 11.19% growth to $16.88
billion in the fiscal year 2019-20.

1.3 Purpose of the report:

This report is about one of the biggest export sectors in Bangladesh which contributes about 41%
of our national export earning. It aims to give an overview of the knitwear sector in Bangladesh.
It starts from the history of the production of knitwear and discusses its current performance,
level of export of knitwear, destinations, advantages of its production, challenges it is facing and
ends with some suggestions to overcome the challenges and to thrive at a better rate in future.

1.4 Organization of the report:

This report is organized into seven different sections. After the introductory part, section two
describes the level of exports of knitwear in Bangladesh. Section three discusses the destination
of export such as major and emerging destinations for the knitwear sector of Bangladesh.
Section four covers the reasons for exporting knitwear and its comparative advantage for
Bangladesh. Section five shows the challenges that the knitwear sector is facing currently. And
Section six suggests some possible ways to overcome the challenges. Section seven concludes
the report discussing the summary.

2. Level of export of Knitwear

2.1 Quantity and value of knitwear export in most recent year – say, as of 2020
The earnings made from the apparel shipment has seen a drop of 2.99% and has contributed an
amount of $15.54 bn. According to the export receipts, knitwear shipment was responsible for
bringing in $8.52 bn. As a result, the export value from knitwear has received a boost and
increased by 3.9% from the previous year [CITATION Sta21 \l 2057 ].

4
2.2 Changes in quantity and value over time – table, chart, graph
In order to show the changes in quantity and value over time for knitwear export, tables, charts
and graphs will be shown.
The following is a table representing Bangladesh’s export of knitwear on the fiscal year basis:
Table 2.1:

Year Value in Million USD

2011-2012 9486.39
2012-2013 10475.88
2013-2014 12049.81
2014-2015 12426.79
2015-2016 13355.42
2016-2017 13757.25
2017-2018 15188.51
2018-2019 16888.54
2019-2020 13908.00
2020-2021 16960.03

Up next is a table that represents the export of knitwear in calendar year basis:
Table 2.2:
Year Value in Million USD
2011 9961.67
2012 9670.71
2013 11448.68
2014 12162.70
2015 12797.26
2016 13736.95
2017 14538.94
2018 16245.84
2019 16441.74
2020 14228.37

It is also important to show the export performance of knitwear (export in million USD) from Bangladesh
in different countries [ CITATION BGM21 \l 2057 ]:

Table 2.3:

Countries Knit
EU Countries 2018 2019 2020

5
 Austria 23.84 28.33 20.63
Belgium 409.81 401.71 272.90
Bulgaria 3.42 2.13 1.81
France 1150.09 1187.19 936.30
Germany 3322.20 3133.42 2692.84
Greece 33.12 34.28 25.61
Spain 1317.30 1298.12 1053.56
U.K. 1963.24 2030.41 1785.68
Hungary 3.21 6.95 40.03
USA 1435.67 1525.88 1567.58

Canada 472.25 491.36 405.96

Non-Traditional Markets
Brazil 81.99 65.61 45.33
China 196.18 196.45 122.03
India 110.34 158.65 140.83
Mexico 91.70 99.27 65.81
Korea Rep. 119.93 153.22 158.38

The following is a chart that represents Bangladesh’s export of knitwear products from a period of July,
2018 to January, 2021 [ CITATION CEI21 \l 2057 ]:

Bangladesh’s export of knitwear products

4600
4445.75
4464
4400
4206.85 4170
4200 4148.3
4087.7
4063
4036
4000
3867.4
3800
3749
3600

3400

3200
1500 2000 2500 3000 3500 4000 4500 5000

July'18 Oct'18 Jan'19 Apr'19 July'19

Oct'19 Jan'20 Apr'20 July'20 Jan'21

2.3 Possible reasons for increase over time

In order to understand the possible cause of increase of knitwear export from Bangladesh, it is
enough to look at the nation’s recent performance. The apparel industry is resilient and it is
reflected by a 25.9% growth in their knitwear product export to the market in the USA. This
spike in export has come about when USA has shrunk import of these items by 1.6%.
6
There are multiple reasons that have accounted for this increase. Firstly, this section of the
apparel industry is almost self-sufficient. The knitwear manufacturing companies in the country
are the suppliers of 90% of all the knit fabric necessities. Secondly, a high number of garments
possess their own dying units as well as units for finishing. In fact, a complete industry has been
founded based on dying and finishing which contributes to several knitwear manufacturing
companies as a support act [ CITATION The201 \l 2057 ].

Thirdly, it is well known that yarn suppliers in the country supply nearly 3/4 th of the entire
requirement of this sector. There is a total of 802 texture mills, 403 mills for manufacturing yarn
as well as 244 dyeing-printing and finishing mills. However, Bangladesh has an even bigger
advantage in this sector i.e., they are very hard to beat when it comes to price advantage.
A lot of people may think that this has happened due to the country having a cheap labor force.
While this may be true, they have the ultimate advantage due to their superior stitching ability. In
addition, Bangladeshi companies can rely on the backward lineage industry. As a result, several
companies can ship goods inside a short time frame [ CITATION Tex19 \l 2057 ].

2.4 Possible export of Knitwear in the future

The apparel industry in general as well as the knitwear sector is seemingly in a critical condition
due to the pandemic. Whether the country can thrive in the future cannot be predicted properly at
the moment. If technology keeps on expanding and improving at its current rate then the apparel
industry will bear witness to a lot of changes by the start of the new decade. This will happen if
the companies decide to focus on faster working machines to save cost instead of looking for
cheap labour force.
At the moment, the future condition of knitwear export depends on the behaviour from North
American as well as European economies. In fact, it is hard to predict the pattern for
consumption expenditure. If Bangladesh has to keep up with the export volume reached in 2019
then companies need to introduce two shifts with wages that will not increase the overall labour
cost for each garment [ CITATION For20 \l 2057 ].
The good news is that the government has provided subsidies to several companies in the apparel
industry. In addition, the currencies of major competitors in the market have depreciated more
than Bangladesh against the dollar. The global consumers of both knitwear and woven products
are demanding sustainable fashion items. As such, retailers cannot go by with having just some
racks of eco-clothing in their stores.
Now, if the companies in Bangladesh can fully accept the changes in customer demands while
adapting to a lower-volume production then the country can take full advantage [ CITATION Mos19
\l 2057 ].

7
 3. Destination of export of knitwear
3.1 Major destinations of knitwear from Bangladesh – regions, countries
Europe is the major continent that imports knitwear from Bangladesh. Of all the countries in the
continent, Germany is the biggest export destination when it comes to knitwear items. In the
fiscal year of 2018-2019, Bangladesh had earned about $3.30 bn from just exporting knitted
items. After Germany, Bangladesh has strong ties with United Kingdom which is why it is the
second biggest export destination.
In the same fiscal year, Bangladesh earned $2.02 bn from exporting knitwear items. As for the
USA, they are not too far behind as they have imported $1.51 bn worth of knitwear items. There
is also a non-traditional market section in which Japan is another exciting export destination. The
land of the rising sun has imported knitwear items worth $603.71 million [ CITATION Tex191 \l
2057 ].

3.2 Destinations by knitwear items

The apparel industry has become one of the most important sectors of Bangladesh as it has not
only brought in foreign revenues but also created a lot of employment opportunities. Now is the
time to take a look at some of the export destinations by knitwear items:
Brand Name Country
C&A Belgium
H&M Sweden
Zara Spain
GAP USA
Target USA
M&S UK
Bonmarche UK
GU Japan
PUMA Germany
Adidas Germany
ERIMA Germany

There are a number of knitwear items that Bangladesh exports to these countries [ CITATION
ORD19 \l 2057 ]:

8
3.3 Emerging Destinations
For Bangladesh, in terms of knitwear export, quite a few markets have emerged. These markets
are: Japan, China, Australia, India, Brazil, Chile, South Korea, Mexico etc. According to experts
of this sector, if there is an increase in export to these markets then Bangladesh can increase
revenue greatly.
BKMEA has launched a program called the New Market expansion. As such, the export of
knitwear to China has increased. The same can be said for the markets in Japan and South Korea
as well as Russia, Brazil and Mexico [ CITATION BKM21 \l 2057 ].

3.4 Possible reasons for importance of particular country or region

As seen in Table 2.3, Bangladesh exports a larger share of its knitwear to Europe over any other
continent. The reason being that EU has been providing trade preference to the developing
countries as a means of supporting them. These trade preferences are a part of the EU’s
Generalised Scheme of Preferences (GSP). The Enabling Clause of WTO is what the GSP is
based on. As such, developed countries of the EU can grant unilateral as well as non-reciprocal
tariff preference for supporting developing countries.
When Bangladesh was an LDC (Least Developed Country), the country enjoyed quota-free entry
into the market. The involvement of tariff preferences has provided substantial competitive
advantage whereas Most Favoured Nation (MFN) tariff rates have been on the higher side. Even
after Bangladesh successfully graduates from being an LDC, the country can apply for GSP Plus.
The GSP Plus is the second best when it comes to the preferential regime. If they are successful
in attaining GSP Plus, they will get duty-free entry inside 66 percent of EU’s tariff lines
[ CITATION Raz19 \l 2057 ]. For these reasons, there is a lot of importance placed on exporting
knitwear to Europe from Bangladesh.

9
 4. Reasons for export of knitwear from Bangladesh:
4.1 Basis of trade in knitwear from Bangladesh:

Bangladesh offers high quality and diversified products at a comparatively lower price than most
of the countries who produce knitwear. We have duty and quota free market access to many
developed and developing countries' markets.

Bangladesh has a strong backward linkage facility for this sector. We also have long experience
in the apparel business and it has created a value chain across the globe. We have a huge labor
force to support which is not only cheap labor but also labor with peerless stitching capabilities.

4.2 Major Competitors of Bangladesh in knitwear exporting:

India: Indian clothing and apparel industry is one of the largest export earning sector after
agriculture in India and is sixth largest exporter in the world. Indian clothing industry is very old
which dates back to Harappan Civilisation and it is one of the oldest clothing manufacturing
industry in the world. They also have a huge labor force and their labor price is also cheap which
gives them a big advantage in knitwear production. And it is one of the biggest competitors for
Bangladesh.

Pakistan: it is another big competitor of Bangladesh’s knitwear sector. According to Wikipedia

the textile industry is the largest manufacturing industry in Pakistan, the fourth largest global
producer of cotton, and the eighth largest exporter of textile products in Asia. It contributes to
8.5% of GDP and provides employment to 30% of the 56 million strong national workforce, or
40% of industrial employment. Punjab Province dominates the textile industry in Pakistan.

Colombia: The garment industry in Colombia represents the largest portion of the country's
manufacturing sector, accounting for 80% of all exports. In 2012, exports grew to $4.61 billion,
up 8% over 2011. The sector employs 335,400 workers, of which 91% are female.

The sector operates largely in the final phase of garment production, that is turning yarns and
fabrics into garments, as the country lacks a strong textile manufacturing base [ CITATION Hos19 \l
2057 ].

4.3 Comparative advantage of Bangladesh:

The main strength is the backward linkage. The investment in the allied industries to increase the
overall capacity. As the earning from the export increases the development of this sector also
increases almost at a same pace. Nowadays we have a competitive advantage in not only the
product price but also in the product quality [ CITATION BKM211 \l 2057 ]. The major advantages
which give Bangladesh a comparative advantage in producing knitwear are given below:

10
1.cheap labor and high-quality diversified products
2. strong backward linkage industry in the knit sector
3. implementation of social compliance, fire safety mechanism in the factories.
4.ensuring quality assessment process for the products to be made.
5.adapting green factory mechanism in many factories.
6. structural adjustment policies of the factories.
7. productivity campaign to ensure best quality products.

5. Challenges faced in export of knitwear

5.1 Types of Challenges facing in exporting Knitwear
Bangladesh is residence to one of the world's major knit clothing manufacturing industries. For
global fast fashion firms, the industry produces high-quality knit clothes. The knit sector in
Bangladesh, like many other sub-segments of the textile and garment industry, has been
experiencing a profitability crisis. The situation has recently improved as a result of rising
expenses.
The most important factor that contributes to the labor conflict is low pay. Workers went on
strike and set up a layout to capture their demands. The major causes of the issue are sometimes
bonuses and overtime pay. Insufficient government policy in this area is a major issue in the
garment industry. Strikes, layoffs, corporate closures, political issues, economic issues, rising
prices, and other factors all contribute to lower exports in this key sector.
In Bangladesh, it was clear that technical inefficiency in the knitwear business was reducing.
While this is true for most manufacturing businesses, the knitwear industry deserves special
attention due to its contribution to foreign exchange profits and employment.
Due to a lack of adequate working capital, certain size groups in the knitwear industry are
constantly handicapped. The availability of resources for these units must also be improved.
Institutional credit has primarily benefited large businesses so far. The time has come to re-
allocate funding to medium and smaller businesses that offer a higher return on investment. To
become self-sufficient in any sector, there is no other option than to have an abundant supply of
raw materials [ CITATION Rak15 \l 2057 ].

This is critical for Garments exports to protect the security of international purchasers who come
here to spend a lot of money on garments. So, if people are afraid to travel to this country, we
won't be able to sell our products abroad, and if we don't sell them, we won't be able to stay in
business. As a result, the seller of our country should provide whatever security they require.
5.2 Demand Side Challenges

11
In the early 1990s, the United States was the primary export destination for Bangladeshi RMG
products, followed by the European Union, but the European Union has since surpassed the
United States. These two destinations account for more than 90% of Bangladesh's overall RMG
export earnings.

 Export competitiveness in the United States market

In comparison to the early 1990s, Bangladesh has seen some product diversity in its
garment exports to the United States in recent years. However, in terms of the US market,
the country's success in improving its products is insignificant. In the 1990s, the country
saw a significant surge in garment exports to the United States market. China, India, and
Bangladesh, for example, earned $3.6 billion, $0.8 billion, and $0.4 billion in textile and
garment export earnings from the United States in 1990, respectively, and climbed to
$22.4 billion, $4.6 billion, and $2.5 billion in 2005. China's rapid increase in exports
poses a great threat to other exporters.

• Export competitiveness in the European Union market

Between 1996 and 2005, Bangladesh saw both quantitative and qualitative
developments in its garment exports to the European Union market. Bangladesh's export
revenues from the European Union for textiles and garments climbed from 1.2 billion euros
in 1996 to 3.7 billion euros in 2005. During the years 1996-2005, garment items accounted
for more than 95 percent of Bangladesh's total textile and garment exports to the European
Union. India and China have similar shares of less than 75% and 80-90 percent, respectively.
The top five product groupings accounted for 76% of Bangladesh's total garment export
revenues from the European Union. In 1996, India and China had 62 percent and 34 percent
of the market, respectively, while in 2005, they had 54 percent and 45 percent. This trend
shows that Bangladesh's product diversification is lower than India's and China's when it
comes to exporting garments to the European Union market. Bangladeshi knitwear has made
significant inroads into the European market .
Health & Hygiene Issues

 High temperatures are causing many people to become ill.

 High levels of dust are linked to the beginning of cancer.
 Wages are low for major jobs.
 Child labor is a crime against humanity.
 Override the International Labor Organization's (ILO) idea of the worker.
 The worker suffers from mental illness as a result of his or her confinement.
 Problems with quality control to generate a high-quality product and unethical business
practices.

12
  The majority of production incidents in Bangladesh are due to the industry's failure to
create an alternative inventory plan due to a misunderstanding.
 Due to unethical movement, there is a shortage of accurate and helpful inventory
products.
 Because there is no training for it, there is a lack of connection with production and
manufacturing systems.
5.3 Supply Side Challenges:
Cost of Production
Along with all of the other procedures in merchandising, costing is the most important. The
contract for a visible costing of manufacturing will make the processes of completing the entire
merchandising activity simple. The first step in determining the cost of a sweater is to create a
sample that meets the requirements for style, size, and weight. The weight of a dozen sweaters
must be computed. Wastage percentages, which may vary depending on the stage, must also be
included. Sweater costing includes technical package analysis, measuring specifications, product
pattern, sample weight, raw material consumption, such as yarn consumption and costing,
ribbons and accessories consumption and costing, production cost, washing cost, commercial
charge, and profit.
A technical package (tech pack) contains a significant amount of information that a manufacturer
requires to construct the full garment, reduce the chances of sample and production
miscommunication between buyer and supplier. It contains a variety of important information on
how to arrange an item, such as the buyer's name, the supplier's name, the shipment date, the
style number, the style title, the season, the colors, and the fabric.
The RMG sector is still working hard to enhance worker efficiency and create new ways to
produce garments in less time and for less money. However, whether sufficient efforts are made
to minimize the amount of loss sustained as a result of quality rejections during production
remains an issue. Quality rejections occur in a garment manufacturing facility owing to both
external and internal issues [ CITATION Ass20 \l 2057 ]. The availability of a motivated workforce,
as well as the skill levels of both workers and management teams, product knowledge, having
processes in place to fulfill required standards, and having a skilled staff are all important aspects
in achieving high-quality levels. Although the cost of production is rising every year, merchants
and brands are not raising their pricing for garment goods purchased from Bangladesh per unit.
To promote a better life for workers, the Bangladesh government has boosted the minimum
salary to 51%. According to industry leaders, production costs have risen by over 20% in the last
few years.
According to the BGMEA, 2,000 garment companies have spent an average of $5 lakh on
factory cleanup as a result of the Accord and Alliance's directives. Prices, on the other hand,
were not raised and, in some circumstances, were significantly decreased. Many entrepreneurs
have even run their businesses accepting prices below manufacturing costs to survive and pay

13
their employees since they are unable to generate a profit. In the last year, 30 factories have been
closed due to the ongoing pressure from buyers to cut prices.

6. Suggestions to Overcome Challenges

6.1 What can be done to overcome challenges:
Bangladesh has one of the world's largest knit garment production capacities. Knit factories in
Bangladesh have developed their capacity at a quick speed over the past decade, and they are
now very significant volume makers of knit clothes.
Impact of the unplanned capacity growth targets of $ 50 billion:
To meet this goal, RMG enterprises in Bangladesh needed to grow at a rate of 15% per year
constantly. However, the global fashion market was declining rather than rising at the same rate.
To meet the goal, the country had no choice but to grab business from its competitors. To win the
competition at the time, an in-depth analysis of the competitor's business plan was required.
Manufacturing companies, on either hand, continued to grow their capacities on an established
product line, resulting in increased related to the overall to market demand, particularly on some
common categories. This created severe internal competition among Bangladeshi factories. As a
result, customers are taking advantage of the situation.
Products and their diversification:
Bangladesh now has had a large market share in Cotton and Cotton-rich knit products for the
past 15 years, with practically all major retailers. It was not possible to gain market share on
those product lines anymore because no customer's strategy is to place all of their goods over one
cart. Now the manufacturers must identify the products in which they have a low market share
and acquire expertise in those areas. The majority of value-added items are sold in lower
amounts. The training highlighted the significance of Bangladeshi companies learned the art of
properly processing tiny orders [ CITATION Ala19 \l 2057 ].

Counter customer price pressure:

 Show all connected people and any hidden expenses in a good light by sharing the logical
open cost break up and actual margin with the consumer.
 Present a hypothetical study of the consequences of fulfilling a customer's exaggerated
goal price.
 Return to the same customer-service methodology to make excuses for other
departments. At the start of each costing session, emphasize the positive characteristics of
the business.
 Address the detrimental impact of price cuts on the compliance and ethical departments
of customers.

14
6.2 Role of Government
Bangladesh is not a politically stable country. Political instability contributes significantly to any
of our country's industries. Strikes and hartals are major barriers to any industry's growth.
Because of repeated hartals and strikes, production costs rise and productivity falls. Because of
hartals and strikes, garment manufacturers are unable to honor their contracts with buyers.
Back-to-back L/C, bonded warehouse, cash incentives, export credit guarantee scheme, tax
holiday, and other policy support for the RMG industry have all been designed by the
government of Bangladesh. Currently, the government operates a cash compensation plan in
which domestic suppliers to export-oriented RMG businesses are paid 5% of the net FOB value
of exported garments in cash. At the same time, for the period ending June 30, 2008, the income
tax rate for textile manufacturers was decreased from 20% to 15%. The government's
industrialization psychology changed dramatically from the late 1970s, when the emphasis was
on export-oriented growth led by the private sector, in contrast to the public sector-led import-
substituting industrialization strategy pursued during the first few years after independence.
Various policy adjustments were implemented in the 1980s for this purpose [ CITATION SSR19 \l
2057 ]. Exporters of manufactured goods were entitled to a refund of duties and taxes paid on
imported inputs used in export manufacturing, as well as all excise charges paid on exported
finished goods, under the Duty Drawback System. In 1982-83, a national system of duty
payments was implemented for some fast-moving commodities, such as RMG. The discussion in
this part demonstrates how policy reforms have supported the expansion of the RMG business in
Bangladesh. Two measures, in particular, the SBW facility and the back-to-back L/C system,
resulted in significant cost reductions in garment production and improved Bangladesh's garment
export competitiveness. It also increased the earnings of apparel producers.

Summary:
As Bangladesh has a high labor supply, the effective utilization of this resource is crucial to the
success or failure in the future. As the country is still developing the Government of Bangladesh
also plays a major role in the industry. The focus on competition is because not only will
competition lead to better prices for buyers, but also bring about innovation in the industry as
new entrants will try to incorporate new strategies to carve their share of this lucrative industry.

Conclusion
In conclusion although there may be a plethora of challenges regarding the Knitwear industry
there are ways to mitigate the problems to come to beneficial situation for Bangladesh. It is now
2021 and the country must implement contemporary cutting-edge strategies to foster growth in
the Knitwear and RMG sector as a whole. The buyers have changed along with their demands
and the market now requires much more than low prices. The Knitwear producers of Bangladesh
must revolutionize their methods of production whilst keeping the demands of their customers in
mind. Implementation of sustainable business practices along with operational strategies which
reinforce the many points of compliance must be integrated into future operations. The

15
Government already is regulating the industry and also has successfully helped millions come
out of poverty through the laws and regulations already in place for RMG production. They must
continue to augment the positive situation for the workers with even more policies to protect
their rights and freedoms, which will draw even more buyers. Furthermore, the Government
should also subsidize aspects of the RMG sector so more entrants can enter the market to
increase competition. The high barriers to entry are limiting the potential of the RMG industry as
it is limiting competition. The modern buyer has changed, and now the producers of our great
nation must be more dynamic to keep succeeding in the industry. The Government must work
with our producers, workforce and infrastructure to further spur growth in the industry.

References
Alam, M., 2019. 3 ways to tackle challenges of Bangladesh RMG sector. [Online]
Available at: https://www.textiletoday.com.bd/3-ways-to-tackle-challenges-of-bangladesh-rmg-sector/
[Accessed 21 July 2021].

Assignment Point, 2020. Problems and Prospects of Readymade Garments Export in Bangladesh.
[Online]
Available at: https://www.assignmentpoint.com/science/textile/problems-prospects-readymade-
garments-export-bangladesh.html
[Accessed 20 July 2021].

BGMEA, 2021. Export Performance. [Online]

Available at: https://www.bgmea.com.bd/page/Export_Performance
[Accessed 17 July 2021].

BKMEA, n.d. Market Research. [Online]

Available at: https://bkmea.com/about-us/bangladesh-knitwear-industry/market-research/
[Accessed 19 July 2021].

BKMEA, n.d. Strength of Knitwear Sector of Bangladesh. [Online]

Available at: https://bkmea.com/about-us/bangladesh-knitwear-industry/strength/
[Accessed 17 July 2021].

CEIC, 2021. Bangladesh Exports: USD: Quarterly: Knitwear Products. [Online]

Available at: https://www.ceicdata.com/en/bangladesh/trade-statistics-exports-by-commodity-
usd/exports-usd-quarterly-knitwear-products
[Accessed 18 July 2021].

Cookson, F., 2020. The future of the Bangladesh garment industry. [Online]
Available at: https://www.dhakatribune.com/opinion/op-ed/2020/05/18/the-future-of-the-bangladesh-
garment-industry
[Accessed 18 July 2021].

Hossain, M., Kabir, R. & Latifee, E., 2019. Export Competitiveness of Bangladesh Readymade Garments
Sector: Challenges and Prospects. International Journal of Research in Business and Social Science,
Volume 8, pp. 45-63.

16
ORDNUR, 2019. Knitwear RMG Sector Contribution, Export and SWOT Analysis of Bangladesh. [Online]
Available at: https://ordnur.com/apparel/knitwear-rmg-sector-contribution-export-and-swot-analysis-
of-bangladesh/
[Accessed 19 July 2021].

Rakib, M. & Adnan, A., 2015. Challenges of Ready-Made Garments Sector in Bangladesh: Ways to
Overcome. BUFT Journal, Volume 3, pp. 77-90.

Razzaque, M. & Rahman, J., 2019. Bangladesh’s Apparel Exports to the EU: Adapting to Competitiveness
Challenges Following Graduation from Least Developed Country Status. [Online]
Available at:
https://www.researchgate.net/publication/333092701_Bangladesh's_Apparel_Exports_to_the_EU_Ada
pting_to_Competitiveness_Challenges_Following_Graduation_from_Least_Developed_Country_Status
[Accessed 21 July 2021].

Report, Star Business, 2021. Exports slip slightly. [Online]

Available at: https://www.thedailystar.net/business/news/exports-slip-slightly-2023169
[Accessed 17 July 2021].

SSRN, 2019. The Procedure of Cash Incentive and Its Role in the RMG Sector in Bangladesh: Evidence
from Bangladesh. [Online]
Available at: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3334383
[Accessed 21 July 2021].

Textile Today, 2019. Knitwear exports scenario of Bangladesh. [Online]

Available at: https://www.textiletoday.com.bd/knitwear-exports-scenario-bangladesh/
[Accessed 18 July 2021].

Textile Today, 2019. Knitwear exports scenario of Bangladesh. [Online]

Available at: https://www.textiletoday.com.bd/knitwear-exports-scenario-bangladesh/
[Accessed 18 July 2021].

The Lawyers & Jurists, 2020. SCOPE OF KNITWEAR GARMENTS IN BANGLADESH UNTIL 2020. [Online]
Available at: https://www.lawyersnjurists.com/article/scope-knitwear-garments-bangladesh-2020/
[Accessed 18 July 2021].

Uddin, M., 2019. What does the future hold for our apparel industry?. [Online]
Available at: https://www.thedailystar.net/opinion/economics/news/what-does-the-future-hold-our-
apparel-industry-1794034
[Accessed 18 July 2021].

17
18