Development of Bangladeshi RMG Sector
Introduction
The Ready –Made Garments (RMG) sector has emerged as the biggest earner of foreign currency. The RMG sector has experienced an exponential growth since the 1980s. The sector contributes significantly to the GDP. It also provides employment to around 4.2 million Bangladeshis. An overwhelming number of workers in this sector are women. This has affected the social status of many women coming from low income families.
History
In the 1950s, labors in the Western World became highly organized; forming trade unions. This and other changes provided workers greater rights including higher pay; which resulted in higher cost of production. In order to control the level of imported RMG products from developing countries into developed countries, Multi Fibre Agreement (MFA) was made in 1974. The MFA agreement imposed an export rate 6 percent increase every year from a developing country to a developed country. In such restrictions, producers started searching for countries that were outside the umbrella of quotas and had cheap labor. This is when Bangladesh started receiving investment in the RMG sector. In the early 1980s, some Bangladeshis received free training from Korean Daewoo Company. After these workers came back to Bangladesh, many of them broke ties with the factory they were working for and started their own factories.
In the 1980s, there were only 50 factories employing only a few thousand people. Currently, there are 4490 manufacturing units. The RMG sector contributes around 76 percent to the total export earnings. In 2007 it earned $9.35 billion. This sector also contributes around 13 percent to the GDP, which was only around 3 percent in 1991. Of the estimated 4.2 million people employed in this sector, about 50 percent of them are women from rural areas. In 2000, the industry consisting of some 3000 factories employed directly more than 1.5 million workers of whom almost 80% were female. USA is the largest importer of Bangladeshi RMG products, followed by Germany, UK, France and other EU countries.

Policies regarding RMG sector * Bangladesh relied on tariffs and quantitative restrictions to protect domestic activities and raise revenue. Roughly 40% of its total tax revenue still comes from import taxes. * Despite the trade liberalization reforms initiated in 1990s, Bangladesh is still saddled with one of the least liberal trade policy regimes in the world. Although half of the country’s GDP comes from the service sector, liberalization of this sector leading to export of services is not satisfactory yet. * Future trade liberalization program is focusing on (a) reduction in the dispersion and average level of protection, (b) promotion of services export, (c) reduction of the reliance on limited number of goods through diversification of exports, (d) promotion of more efficient handling of custom and border procedures, and (e) a more efficient duty drawback system.
Advantages
* Many foreign investors are coming to Bangladesh to take advantage of the low labor cost. * They have now started using local accessories maintaining the required quality. Zippers, buttons, labels, hooks, hangers, elastic bands, thread, backboards, butterfly pins, clips, collar stays, collarbones and cartons are the major garment accessories produced in Bangladesh. * Bangladesh has also received trade preferences from India, China, South Korea and Malaysia. These imply that Bangladesh RMG sector is on way to achieving more successes. * The garment sector has provided 40 per cent of the country's industrial workforce most of which are from the rural areas. They did not have any opportunity to be part of the formal workforce. * Efficient and large amount of labor force.

Disadvantages * Since then labor unrest has been taking place in the sector almost every year. Most of the experts often think that labor unrest at garments is caused mainly by issues related to wage. The wages of the RMG workers in Bangladesh are the lowest in the world, even it is lower than any other sector in the country. * Apart from the wage hike issue, there may be some other causes for unrest in the garment sector which are rumors of deaths and beating, fear of job loss, fear of shutdown of the factories, arrears of salary, discrimination in grades, bad relations between workers and the mid-level management, provocation by the local influential people, problems of accommodation and increased house rent etc. * The government cannot escape its responsibility by merely announcing a minimum wage and letting the law enforcers go after the protesters. The successive governments in Bangladesh have failed to provide the required infrastructure and uninterrupted energy supply, making per unit production cost in Bangladesh more expensive than most of its competitors, if one isolates the wage cost effects. * The devastating fire in Ashulia garments factory is really a very sad incident and we hope that the government of Bangladesh will ensure friendly environment in all labor industries * The high energy cost and the poor infrastructure are neutralizing Bangladesh's cheap labor advantage.

Several studies have shown that Bangladesh has immense potentials for garment business in the coming years. The international buyers are shifting to Bangladesh with increased orders, as the cost of production in other competing countries including China has soared abnormally.
However, there is no dispute that the most vital role behind our RMG sector's success is played by cheap labor, which has given the Bangladesh garments sector an extra advantage to compete with its rivals. But the myth of cheap labor is nothing but a ploy to deprive the workers of their basic rights. This deprivation sparks severe labor unrest frequently in different factories of the country. All these problems should be resolved amicably without harming the sector's growth. The government should keep an eye on the business dynamics of RMG world-wide, and should take actions accordingly.