Bangladesh RMG industry has been leading the world

Wpfreeware 6:49 AM Agro Products Sectors

Bangladesh RMG Industry Overview

"A global hub for garments manufacturing and sourcing"

With the highest number of green garment factories in the world, the Bangladesh RMG industry has been leading the world in sustainable garment manufacturing.

Renowned for its strong manufacturing capabilities and thriving ecosystem, the Bangladesh RMG industry has gone from strength to strength and has become a global hub for apparel sourcing. At present, the industry consists of over four thousand factories. RMG exports from Bangladesh includes a wide variety of knitwear & woven garments products such as shirts, trousers, T Shirt, denim, jackets, sweaters, etc.

Growing at an annual rate of 7%, RMG exports from Bangladesh more than doubled between 2011 and 2019. As of December 2020, total exports around stood at USD 27.4 billion, capturing a market share of 6.30% out of the global apparel export market of $435 billion. While the industry suffered a temporary setback due to covid19, demand has started to recover and normalize again.

Today, Bangladesh leads the world in green garment manufacturing with 150 LEED (Leadership in Environmental and Energy in Design) certified factories in the country and another 500 waiting to obtain the LEED certification from United States Green Building Council (USGBC). Currently, nine of the top 10 green garment factories and 40 of the top 100 are located in Bangladesh. Bangladesh’s RMG sector has now transformed into a highly transparent and compliant industry regarding factory safety and value-chain responsibility after initiatives such as the Accord on Fire and Building Safety in Bangladesh, the Alliance for Bangladesh Worker Safety, and the RMG Sustainability Council were successfully undertaken.

16% Contribution to GDP
4000+ Factories
6%+ Share of global export in 2020
150 LEED certified green garment factories
USD32 billion Export in 2020-21
7% Industry CAGR 2011-2019
81% Contribution to export
4000000+ Employment generated
100+ nternational clothing brands manufactured
65% Value addition Q1, FY 21
58% Women participation in the workforce
3rd Largest exporter of RMG products in the world in 2020
Exports to more than 150 countries
Home to the highest number of green garment factories in the world.
Leading in compliance and factory safety
Designated as high priority sector by the government

As an established hub for global apparel sourcing, the RMG industry is seen as one of the most promising sectors for investment.

Established Ecosystem

Around 1,430 textile mills are present in Bangladesh which includes 796 woven fabric manufacturers with a capacity to produce 3,850 million meters of fabric per annum. In addition, Bangladesh has 240 dying, printing and finishing mills, which manufacturers 3,170 million meters of fabric per annum.

Favorable trade benefits

Bangladesh enjoys duty free access in 52 countries which includes the EU, Australia, New Zealand, Norway, Switzerland, Japan, Iceland, South Korea, Canada, Chile, India (46 RMG products), Turkey, China. Bangladesh is also a member of regional blocs SAPTA, SAFTA, APTA, BIMSTEC.

Eco friendly factories

At present, six out of the top 10 eco-friendly platinum LEED (Leadership in Energy and Environmental Design) certified factories worldwide are located in Bangladesh. In addition to having the highest number of LEED-certified factories, Bangladesh is also home to the highest-rated LEED Platinum denim factory, knitting factory, washing plant, and textile mill in the world.

Qualified workforce

Abundance of young and qualified labor force With over 110 million of the population aged below 40 and 75 million of the population aged below 24, Bangladesh has an abundance labor force.

Availability of customized educational programs for textile industry At present, there are 37 public and private universities and colleges along with 6 government textile institutes producing textile graduates and diploma engineers every year for the industry, in addition to several polytechnic institutes and private institutes in the country.

Getaway to South, Southeast Asia and East Asia

Market Access to growing consumer markets: Bangladesh is located between South and Southeast Asia making it an entryway to both these markets of over 3 billion people. Neighbors India and China are within easy distance of Bangladesh.

Well-connected to major ports in Asia Well connected to land and sea ports in several states in India and located within easy distance from ports in China.

Several government Infrastructure projects underway to improve land and port connectivity: Several projects are underway to improve the existing land and sea routes such as the Dhaka-Chattagram route, development of Payra and Matarbari deep-sea ports.

Safe & compliant factories

All factories maintain international safety and compliance, and assessed in accordance with BSCI, WRAP, SMETA, ICS, Higg index, GTW, RTM, Join Life, ZDHC, Blue Sign, ISO, OCS, GOTS, Oekotex.

Established & trusted sourcing destination

More than 100 international clothing brands have been directly sourcing from Bangladesh over the years with exports reaching to more than 150 countries around the world.

Diversified garment product

In order to diversify the products, manufactured by the industry, the government of Bangladesh welcomes investment in manufacturing more diversified apparel items.

Artificial/Man Made fiber

The readymade apparel industry constantly caters to changing trends in fashion. Over the years, there has been a noticeable increase in use of artificial fibres such as polyester, viscose, tencel in apparels owing to its lower price, functionality and durability. To keep up with the consumer demand, Bangladesh readymade garments manufacturers have also started to increase manufacturing garments made of manmade fabrics. This increasing demand for artificial fibres presents a great investment opportunity for textile producers to set up factories in the country and cater to demand for fabrics made from artificial manmade fibers. The government is also providing additional incentives to encourage investment in man made fibre.

Fiscal Incentives

RMG factories with green building certification will pay income tax at a special rate of 10%

RMG factories without green building certification will pay income tax at a special rate of 12% Under bonded warehousing facility , 100% export oriented RMG factories can import raw materials duty free at international price.

Reduced rate of TDS or withholding tax (Tax Deducted at Source): From Export earnings tax will be deducted at 0.5% rate, which is generally 1.0%.

Firms established between July 1, 2019 and June 30, 2024 are eligible for phased or partial tax exemption from 5 up to 10 years.

Eligible sub sector

Artificial or man-made fiber.

Condition

Paid-up capital of not less than BDT 2 million on the date of beginning of commercial production.

30% of the exempted has to be reinvested in the same or other industrial undertakings within one year.

Others.

Export/Cash Incentives

For export oriented RMG factories instead of Customs Bond or Duty Drawback Facility, 4% 50% cash incentive is available against the export amount.
Export oriented home textiles, terry towel and RMG manufacturing small and medium enterprises will get additional 4% cash incentives.
If a manufacturer can produce a new item or can export to a new destination (Excluding USA, Canada and EU countries) will get another 4% incentives as expansion support.
An exporter will get additional 2% with existing 4% cash incentives, total 6% for exporting RMG products to Eurozone.
Apart from the above-mentioned export incentives, RMG manufacturers will get additional 1% special cash incentive for exporting their products.