“An analysis of the Export Performance of Bangladesh:

A Study Based on the Export Processing Zones”

Submitted By:

Samia Ibrahim

Submitted to:

Dr.Syed Manzur Quader

Date of Submission: 16th April, 2015

Letter of Transmittal

April 16th 2015

Dr. Manzur Kader

Assistant Professor

Chittagong Independent University

Subject: Submission of Term Paper on “An analysis of the Export Performance of Bangladesh:

A Study Based on the Export Processing Zones”

Dear Sir,

This is a great pleasure for me to submit my term paper on “An analysis of the Export

Performance of Bangladesh” as a requirement for our completion of MBA 510 course. This has

been a great source of learning and helped me a lot to achieve practical knowledge.

I have put my best effort in making this paper and tried to make this report informative, practical,

and relevant. I hope and believe that this report will satisfy your requirements and expectations.

However, I would like to express my sincere gratitude to you for your kind guidance,

cooperation and suggestions in preparing this paper which will definitely help me in future

endeavors. It would be my immense pleasure if you find this report informative.

I shall be happy to provide any further query and clarification regarding this report.

Yours Sincerely,

Samia Ibrahim

Acknowledgement

First of all I am grateful to Almighty ALLAH.

I would like to thank our honorable faculty member Dr. Manzur Quader for being so kind,

cooperative, and supportive the entire time. I am grateful to him for his valuable suggestions and

time that he has spent in guiding me. The past few months have been a wonderful experience for

me, full of challenges and satisfaction. This has obviously been a great source of learning for me.

Without his support it would not have been possible for me to complete our paper on time.

Executive Summary

The Export Processing Zones of Bangladesh has been playing a important role in the economy of

the Bangladesh. After the Establishment in the year 1983 the EPZs has contributed effectively in

attracting foreign investments and export performance. This study intends to explore the export

performance of Bangladesh and the impact of EPZs on the export sector. It attempts to examine

the performance of RMG export of Bangladesh. This study focuses on Total Investments in

EPZS, Total exports, Contribution in national export, Export diversification, Destination of the

products. The data’s were being collected from various official websites.

Table of Contents

1.0 Introduction................................................................................................................................1

1.1 Purpose of study:...................................................................................................................2

2.0 Literature Review......................................................................................................................2

3.0 Research Methodology..............................................................................................................3

3.1 Research Design:...................................................................................................................3

3.2 Data Sources:.........................................................................................................................4

3.3 Limitations.............................................................................................................................4

4.0 Findings and Analysis................................................................................................................4

4.1 Export processing zones of Bangladesh:...............................................................................4

4.2 Mode of Investments in EPZs:..............................................................................................5

4.3 RMG sector of Bangladesh:...................................................................................................6

4.4 Total Investment in EPZS:.....................................................................................................7

4.5 Contribution of EPZs in National Export:.............................................................................8

4.6 Export Diversification.........................................................................................................10

4.7 Export Earning By Different Sector:...................................................................................13

4.8 Major Exported Products:....................................................................................................14

4.9 Cumulative Performance of Export Processing Zones:.......................................................14

4.10 Total Export Earnings of EPZs..........................................................................................15

4.11 Destination of the Products................................................................................................17

4.12 Contribution of RMG Sector in National Export:.............................................................20

4.13 Value of Total Apparel Export:.........................................................................................22

4.14 Growth of Major exported Products of RMG sector:........................................................23

4.15 Major Destinations of RMG Export..................................................................................25

5.0 Conclusion:..............................................................................................................................27

References...................................................................................................................................28

1.0 Introduction

Since Independence Bangladesh has made remarkable economic progress. After 1971 export

promotion became a major concern for Bangladesh because export is a tool which can boost up

the economic progress of a country. In order to make this tool work a number of steps have been

taken over the years to attract foreign direct investments and facilitate industrialization process

of Bangladesh. But adequate inflow of FDI was needed to promote exports. In order to provide

similar treatment to domestic and foreign investors the Foreign Private Investment Act (1980)

was enacted. In order to attract FDI it was required to develop infrastructure and other structural

reforms. Since the country wide development of infrastructure would be expensive and

implementation of economic and structural reforms would require time, establishment of EPZ’s

was viewed as an important strategic tool for expediting the process of industrialization in the

country (Mondal 2003).

In 1980 government enacted the BEPZA Act which later instituted the government organ

Bangladesh Export processing zone Authority and now responsible for creating and operating the

Export Processing Zones of Bangladesh. Since the establishment of EPZs Bangladesh has

achieved phenomenal export success through them. The Country started the EPZ program in

1983 with the creation of Chittagong EPZ. Encouraged by the tremendous success of Chittagong

EPZ government has established seven more zones.

These eight EPZs are now making a critical contribution to Bangladesh’s economic growth by

inviting investments in manufacturing, infrastructure and power supply sector. These EPZs have

been key to the rapid rise of exports over the last 20 years. Since the establishment of EPZ’s the

average growth of export has been 23% and by 2010 export has reached USD 2.9b by 2010.

The Effectiveness of EPZ’s are under threat because of lack of power supply, limited gas

connections, frequent hikes in power tariffs and higher operating costs etc. If these problems are

not tackled effectively then the growth of exports through EPZs will be hindered.

1

1.1 Purpose of study:

In this paper we have outlined some objectives which mainly focus on the export performance of

Bangladesh

The objectives of the study are:

a. To analyze the export performance of Bangladesh Export Processing zones.

b. To analyze export diversification

c. To Analyze export performance of RMG sector of Bangladesh

2.0 Literature Review

An Export processing zone is a trade policy instrument which can be used to attract foreign

direct investment (FDI) to a host country. EPZ is a Special economic Zone where the

government provides facilities and incentives to attract foreign investors. EPZ can be defined as

“An industrial estate that specializes in manufacturing for export. It offers firms free trade

conditions and a liberal regulatory environment.” (World Bank, 1992: 7).

The aim of EPZs is to promote non-traditional manufacturing exports from the host country

because of increased multinational company inward investment. The investments should lead to

production, exports and employment from EPZs. There are also hoped to be important

demonstration effects, which should help to develop domestic industry’s international

competitiveness (Furby, 2005).

A backward linkage is one of the indirect effects from the EPZs. These will occur when EPZs

Companies buy inputs from companies in the host country (Furby, 2005). These effects help the

host country to produce their own raw materials, design their machinery and gain critical tactics

to achieve higher output. EPZs Company output can be sold on the domestic market (Tantri,

2011).

If the host country government allows the sale of EPZs company products on the domestic

markets, this can act as a forward linkage. The sale of EPZ production in the domestic market

2

produces more competition which promotes efficiency. Local firms are forced to make higher

quality products and meet stricter delivery routines to be competitive with MNC (James, 2009).

The idea of EPZs developed from the older concepts of industrial parks and free trade areas that

appeared in the late 1950s and early 1960s (Madani, 1999). Export processing originally meant

that the zone sold its products on international markets but over the time host country

governments have softened the rules and regulations. So that now some proportion of EPZ

products are allowed to be sold in host country domestic market (ILO, 2008).

EPZs have been shown to be one of the vital instruments in developing a country’s economy

over the last few decades (OECD, 2007; ILO, 2011; UNCTAD, 2009; WEPZA, 2012; World

Bank, year).When Bangladesh experienced severe economic problems after independence, EPZs

played an important role in response to employment, exports and investment; particularly after

1990 (OECD, 2007, BEPZA, 2008-09).

EPZs are an important attraction for potential investors, who require that the host country have a

well-organized policy mechanism, with good incentives, such as tax-free status and strong

security (Kenkesu, 2003a). The infrastructures, training education and university, these each

element stimulate EPZs acts very smoothly and that brings EPZs success (Madani, 1999). EPZs

require good transport links, which includes easy access to roads, railways, air and seaports

(Tantri, 2011). Without proper road access, railway, air and seaport these zones cannot be

lucrative for foreign investors (Magnus, et al 2000).

3.0 Research Methodology

3.1 Research Design:

This research paper is a compilation of research works undertaken by various researchers. The

data used in this study are compiled from various sources which includes journals, previous

studies and websites. The data have been extracted, systemized, investigated and interpreted in

this paper with proper reasoning, clarification and explanation.

3

3.2 Data Sources:

All the relevant data regarding the study were collected from the following sources:

The Board of Investment (BOI)

Bangladesh Export processing Zones Authority (BEPZA)

The Ministry of Commerce (MOC) of Bangladesh

Bangladesh Bureau of Statistics

Bangladesh Export Statistics

Bangladesh Export Promotion Bureau

3.3 Limitations

Lack of time was a limitation.

Limited availability and access to data was also a limitation.

Personal barriers such as inability to understand certain terms created some problems.

4.0 Findings and Analysis

4.1 Export processing zones of Bangladesh:

EPZs are economic areas where various goods can be manufactured, imported and even

reshipped with reduced duties and minimal intervention by customs officials. EPZs were

established in Bangladesh after 1980 in order to attract foreign direct and capital investments.

Since then EPZs have played an important role in the economy by increasing investments,

exports and creating employment opportunities.

EPZs have now become an essential part of the country’s economy. Government has established

eight EPZs to attract potential investors. In 1983 the first EPZ of the country was established in

Chittagong. Later the success of this EPZ inspired government to set up the second one in Dhaka

in 1993 and by 2005 there were eight EPZs all together.

4

Figure 1: EPZs of Bangladesh

Name of EPZ Year of establishment Location

Chittagong EPZ 1983 Halishohor,Chittagong

Dhaka EPZ 1993 Ashullia,Dhaka

Mongla EPZ 1999 Mongla,Bagerhat

Comilla EPZ 2000 Comilla Town

Ishwardi EPZ 2001 Pabna

Uttara EPZ 2001 Nilphamari

Adamjee EPZ 2006 Siddirgonj,Narayangonj

Kamaphuli EPZ 2006 Potenga, Chiitagong

Table 1: EPZs of Bangladesh

4.2 Mode of Investments in EPZs:

Depending on the source of investment Industries in the Bangladesh EPZ fall into three

categories:

Types A: 100% foreign investment, including investment made by the Bangladeshis

living in the abroad.

5

Type B: Joint venture from the foreign investor and the Bangladeshi entrepreneur living

in the country.

Type C: 100% investment made by the Bangladeshi entrepreneurs living in the country.

Type AType BType C

Figure 2: Type of Industries in EPZs

4.3 RMG sector of Bangladesh:

Bangladesh is the second largest exporter of readymade garment products trailing China

according to the McKinsey report (2011). In recent years RMG sector has emerged as the biggest

source of Country’s foreign currency. Since the establishment of RMG industry in 1970 the

growth of export level was steady but after 1990s it has experienced exponential growth and

grew by more than 15 percent per annum on an average. Now the RMG sector of Bangladesh

has become a top global exporter.

Today RMG has become the largest export industry of our country and the foreign exchange

earnings have been increasing at double-digit rates from year to year. It’s a multi- billion dollar

manufacturing industry and contributes 75% of total export.

Flexible labor market laws, availability of raw materials, price competitiveness are some of the

reasons behind the success of RMG sector. But poor infrastructure, political instability, poor

transportations system etc are slowing down the growth of this potential industry.

6

4.4 Total Investment in EPZS:

Foreign Direct Investment has increased in the EPZs during the last few years despite worldwide

recession. The actual investment in EPZs grew by 41% according to official statistics. Till now

the total investment in EPZs are 3057.11 million.

Year Investment (US$m) Year Investment (US$m)

1994-1995 35.93 2004-2005 118.52

1995-1996 30.58 2005-2006 112.89

1996-1997 53.90 2006-2007 152.37

1997-1998 68.83 2007-2008 302.19

1998-1999 71.61 2008-2009 148.03

1999-2000 34.98 2009-2010 221.99

2000-2001 48.41 2010-2011 313.23

2001-2002 55.61 2011-2012 339.26

2002-2003 102.63 2012-2013 328.53

2003-2004 115.04 2013-2014 402.58

Total 617.52 Total 2439.59

Table 2: Total Investment

Source: Bangladesh Export Processing Zones

7

1994-95

1995-96

1996-97

1997-98

1998-99

1999-00

2000-01

2001-02

2002-03

2003-04

2004-05

2005-06

2006-07

2007-08

2008-09

2009-10

2010-11

2011-12

2012-2013

2013-20140

50

100

150

200

250

300

350

400

450

Figure 3: Total Investment in EPZs

Figure 3 above shows the total investment of EPZs from 1994 to 2014. We can see an upward

trend in the investment volume over the years. The total investment in BEPZAs has grown very

fast after 1994. After 2000 the trend went sharply upward. Over the years, the EPZs have seen a

positive growth in investment. The rising investments are the result of increasing number of

export processing zones. BEPZA has been attracting more and more investors in the Individual

EPZs.

4.5 Contribution of EPZs in National Export:

In April- June 2012 Bangladesh total exports were $5669mn, of which BEPZs contributed

$921mn (Bangladesh Bank, 2012). According to BEPZA, in the total export earning of the

country, the share of EPZs increased from 16.51% in 2000-2001 to a spectacular rate of 17.37%

in 2013-14.

Year Total export of Bangladesh

(m US$)

Total export of EPZ (m

US$)

% of BEPZA

8

contribution (m US$)

2000-01 6467 1068 16.51

2001-02 5986 1077 18.00

2002-03 6548 1200 18.33

2003-04 7603 1354 17.80

2004-05 8654 1548 17.88

2004-05 10587 1836 17.34

2006-07 12178 2069 17.00

2007-08 14113 2430 17.22

2008-09 15800 2722 17.23

2009-10 16200 2823 17.42

2010-11 21456 3697 17.23

2011-12 27475 3728 17.25

2012-13 31524 3798 17.30

2013-14 33587 3937 17.37

Table 3: BEPZA’s contribution towards total national Export

Source: Bangladesh Bureau of Statistics

The EPZs have exported goods worth of US$ 33287 million up to June, 2014 and it was US$

18271 million till June 2010. During the last 4 years the export volume increased to about US$

15160 million.

9

2000-01

2001-02

2002-03

2003-04

2004-05

2004-05

2006-07

2007-08

2008-09

2009-10

2010-11

2011-12

2012-13

2013-140

5000

10000

15000

20000

25000

30000

35000

40000

Total Export of Bangladesh (US$m)

Total Export of EPZs (US$m)

Figure: 4: BEPZA’s contribution towards total national Export

The Figure 3 shows that with the increase of export the contribution of EPZs to the total national

export is increasing every year. The export Performance of the EPZs is much more impressive

than that of the country as a whole because it shows that the annual rate of growth of export

earnings of the EPZs has been more than six times higher than the total national export earnings

of Bangladesh.

4.6 Export Diversification

Initially the export base was set on primary commodities like raw jute, tea, fish, agricultural

products etc. because the economy of Bangladesh is mostly agro-based. Before the establishment

of RMG sector, Jute and Jute products dominated the export sector by making up to 70 % of

exports in early 80’s. But with the constant development of economy the focus has now shifted

on the manufacturing commodities.

10

The diversification of the country’s export started with the development of RMG sector. 90% of

EPZs exports are now represented by the RMG and textile cluster. Other than these at present

Bangladesh is exporting 27 manufactured commodity products to almost 200 countries.

During 2007-08, Out of the total export earnings of US dollar 22934.23 million the share of

primary commodities stood at US dollar 1395.93 million and the manufactured products at US

dollar 21538.3 million.

Product Names 1982-

1983

1987-

1988

1992-

1993

1997-

1998

2002-

2003

2007-

2008

Agricultural

Products

.713 3.865 7.016 14.528 19.094 39.137

Raw Jute 133.841 96.933 109.813 80.534 74.326 107.767

Tea 9.688 45.270 46.757 38.953 41.143 47.467

Frozen Food 3.061 19.448 72.054 139.651 165.340 293.836

Crude Fertilizer .201 .391 .399 .066 1.623 .072

Animal Casings .011 .118 .191 .117 .092 .154

Others .678 1.686 3.090 2.465 7.502 4.597

Total 148.193 177.711 239.32 276.908 309.12 493.03

Table 4: Export Volume of Primary Commodities (US$m)

Source: Bangladesh Export Statistics

Product Names 1982-83 1987-88 1992-193 1997-98 2002-03 2007-08

Leather 16.182 45.378 58.456 147.170 147.906 190.260

RMG 31.57 433.921 1240.48 2843.327 3598.205 4912.09

Jute Goods 179.257 249.006 319.692 302.415 292.370 281.425

Chemical Products 1.06 3.231 11.680 26.527 55.005 74.176

Petroleum by

Products

5.95 11.656 30.833 11.975 36.806 10.927

11

Handicrafts .039 1.761 2.479 3.756 5.431 5.995

Paper & Allied Products

3.054 8.668 4.682 11.873 2.631 .042

Engineering

Products

- .161 2.492 2.809 17.512 19.643

Others .024 6.274 1.037 2.620 25.300 159.967

Total 237.136 760.056 1671.83 3352.47 4181.17 5654.525

Table 5: Export Volume of Manufactured Commodities (US$m)

Source: Bangladesh Export Statistics

1982-83 1987-88 1992-93 1997-98 2002-03 2007-080

1000

2000

3000

4000

5000

6000

7000

148.193 177.711239.320000000001276.907999999999309.12 493.03237.136

760.056

1671.83

3352.47

4181.17

5654.525

Manufactured

Primary

Figure 5: Export Growth of Primary & Manufacturing Commodities

In figure 5 we can see a significant shift from the primary commodity centric export to

manufacture centric. Compared to the manufactured commodities the growth rate of Primary

commodities declined although the absolute quantity of export increased over the years. The rate

of growth was much lower than the manufactured products. This happened due to dominance of

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the nontraditional commodities against the traditional commodities. This structural shift in the

export sector is the result of the faster growth in the RMG sector of the country

4.7 Export Earning By Different Sector:

EPZ enterprises derives highest dividend in terms of their investment. During 2009-2010 fiscal,

average export performance of enterprises stands around 1.84 times of their actual investment.

PRODUCT UNIT

INVESTMENT

(US$ m)

EXPORT

US$

GARMENTS 58 343.461 1016.64

TEXTILE 28 305.245 476.18

TERRY TOWEL 16 39.886 57.83

KNIT & OTHER TEXTILE 25 124.268 213.41

GARMENTS ACCS. 32 142.008 201.65

CAPS 6 42.421 112.42

TENT 5 23.869 59.67

ELEC & ELECTRONICS 16 54.359 52.18

FOOTWARE & LEATHER 12 57.830 54.94

PLASTIC GOODS 14 22.052 15.88

PAPER PRODUCT 2 0.837 0.94

ROPE 2 6.134 5.64

MISCELLANEOUS 23 36.524 12.78

Gr. Total 264 1262.16 2322.63

Table 6: Export Earning by Different Sector

Source: Board of Investment, Bangladesh

EPZ’s enterprises produce different products. The overall production has a huge impact on

economy of the country. Each & every sector contributes in the national income by bringing a

large amount of foreign currency in Bangladesh.

13

4.8 Major Exported Products:

Currently Bangladesh’s major export items are garment products, leather, jute and jute related

products, frozen foods, chemical etc. In 2010-11 the export performance of the country raised to

US$ 22 million. The contribution of major exportable commodities in export is shown below:

46.53

28.25

5.133.24

2.781.59

1.050.21

11.22 Woven GarmentsKnitwearFrozen FoodJute ProductsLeatherChemical ProductsRaw JuteTeaOther

Figure 6: Bangladesh Export by Major Products (2010-11)

Source: Export Promotion Bureau, Bangladesh

4.9 Cumulative Performance of Export Processing Zones:

The following table reveals that the total numbers of industries in EPZs rose up to 497, among

them 329 are currently operating their business and 168 are under implementation. Half of these

are located in CEPZ and DEPZ. The cumulative investment in EPZs is USD 2117.69 and export

is USD 25434.89.

14

Export Processing

Zones

Industries

Investment

(US$ in m.)

Export

(US$ in m.)

In

operation

(no.)

Under

Implementatio

n (no)

Chittagong EPZ 161 15 858.48 13178.79

Dhaka EPZ 98 6 785.93 10969.99

Comilla EPZ 20 23 136.57 563.95

Mongla EPZ 8 8 5.14 74.52

Uttara EPZ 6 1 16.73 9.08

Ishwardi EPZ 7 19 49.89 41.35

Adamjee EPZ 15 36 129.68 353.25

Karnaphuli EPZ 14 60 135.29 243.96

Total 329 168 2117.69 25434.89

Table-7: Zone-wise performance (up to June 2011)

Source: BEPZA

The collective investment in CEPZ and DEPZ is US$ 1644.41 million while the total investment

of all the eight EPZS is US$ 2117.69 million. This reflects that investors are more interested in

CEPZ & DEPZ because of greater facilities and infrastructure.

4.10 Total Export Earnings of EPZs

During the past 24 years, the total export of the EPZs has amounted to US$18,914.74m. The

following table shows the export receipts by the EPZ enterprises since 1988-89.

15

Year Export (US$ in m.) Year Export (US$ in m.)

1988-89 16 2000-01 883

1989-90 34 2001-02 867

1990-91 48 2002-03 929

1991-92 68 2003-04 1027

1992-93 110 2004-05 1180

1993-94 103 2005-06 1362

1994-95 205 2006-07 1516

1995-96 278 2007-08 1732

1996-97 370 2008-09 1900

1997-98 539 2009-10 2150

1998-99 606 2010-11 2801

1999-00 725 2011-12 3426

Total 3102 Total 19773

Table 8: Year Wise Cumulative Export

Source: Bangladesh Export Processing Zone Authority

The export earnings were worth US$ 19773 million in last 12 years and per year it was

increasing. But this Figure was only US$ 3102 million in previous 12 years.

16

1988-89

1989-90

1990-91

1991-92

1992-93

1993-94

1994-95

1995-96

1996-97

1997-98

1998-99

1999-00

2000-01

2001-02

2002-03

2003-04

2004-05

2005-06

2006-07

2007-08

2008-09

2009-10

2010-11

2011-120

500

1000

1500

2000

2500

3000

3500

4000

Figure 7: Total Export of BEPZ’s

Figure 6 above shows the total export of EPZs from 1988 to 2012. We can see an upward trend

in the export volume over the years. The export expanded because the success of the individual

EPZs export Encourage the government to increase the number of BEPZs. These two factors

expanded the total export. When there was only one EPZ the rate of increase in export was very

slow, with the establishment of more and more EPZS the volume rose sharply.

4.11 Destination of the Products

Bangladesh has achieved tremendous success in export sector by exporting goods all over the

world. This is the result of higher quality and lower price of the products. It seems that

Bangladesh has been doubling its exports every six years and expanding its destinations.

The following table represents the regional export market share of Bangladesh

17

Destinations Market Share

European Union 52.3%

American Region 33.3%

Asian Region 8.8%

Middle East 2.5%

African Region 0.6%

Oceania Region 0.3%

East European Region 0.3%

Other 1.8%

Table 9: Regional Export Market Share

Source: Bangladesh Export Processing Zone Authority

Bangladesh is dependent of export earnings from EU and USA. The EU and North America have

been important markets for Bangladesh and it is likely to remain so for many years to come.

Europe, Asia and America are very necessary for Bangladesh. Because Europe and America

together hold over 85 percent of the country's exports market share, Asia holds about 8 percent

of the share. The market share of rest of the world is only 5.5 percent.

Australia, Norway, Japan, Canada, France, Italy, UK, Germany, Spain has also become billion

dollar export destinations of Bangladesh.

Bangladesh is now exporting to almost 200 countries. The following table will give you an idea

of Country-Wise export of commodities from Bangladesh.

18

Countries Froze

n

Food

Agri. Chemical

Products

Leather Raw

Jute

Jute

Goods

Knitwea

r

Woven

Garme

nts

Others 2012-2013

Afghanistan 3268 84 4 217 3573

Albania 914 92 3 1009

Algeria 133 4697 887 348 108 6173

Andora 18 0 18

Angola 2423 639 156 3218

Anguilla 9 0 9

Argentina 718 1175 3320 1555 6768

Armenia 305 10 0 315

Australia 475 1316 4 95 684 3343 2959 1324 2753 12953

Austria 1197 423 459 58 2926 2306 7809 15120

Azerbaijan 35 60 34 129

Bahamas 28 28

Bahrain 361 3166 26 507 303 30 4393

Belarus 537 6 3083 339 11 8 3984

Belgium 795 1781 478 2452 3171 2486 4263 15426

Belize 103 334 42 560 1039

Benin 138 6 603 113 108 968

Bhutan 2 944 215 223 433 1817

Bolivia 52 40 289 381

Bosnia 76 223 299

Brazil 973 16 1096 1421 1153 565 7442 12666

Brunei 87 204 26 20 1 35 373

Bulgaria 278 7255 298 641 921 204 363 9960

Burkino

Faso

45 18 43 106

Burundi 21 277 298

Cambodia 9 1371 453 278 9 67 1545 3732

Cameroon 28 2 1738 1 1769

Canada 1 2413 7 1 4 213 3 2642

China 4 66 3 19 3 59 23 177

Denmark 3 149 2 154

France 7 37 1 7 334 5 391

Germany 4 6 1 1 28 893 27 960

19

USA 4 6 1 6 21 1024 33 1095

UK 15 1 1 10 514 12 553

Table 10: Country-Wise export of commodities by broad description from Bangladesh

during the period July-June, 2012-2013 (Value in ‘000’US$)

4.12 Contribution of RMG Sector in National Export:

The contribution of RMG sector in Bangladesh’s total export can hardly be ignored. The

following table reveals the total export of RMG from the initial stage till 2014 and its

contribution to the total national export.

YEAR

EXPORT OF

RMG

(IN MILLION

US$)

TOTAL EXPORT

OF BANGLADESH

(IN MILLION US$)

% OF RMG’S TO

TOTAL EXPORT

1983-84 31.57 811.00 3.89

1984-85 116.2 934.43 12.44

1985-86 131.48 819.21 16.05

1986-87 298.67 1076.61 27.74

1987-88 433.92 1231.2 35.24

1988-89 471.09 1291.56 36.47

1989-90 624.16 1923.70 32.45

1990-91 866.82 1717.55 50.47

1991-92 1182.57 1993.90 59.31

1992-93 1445.02 2382.89 60.64

1993-94 1555.79 2533.90 61.40

1994-95 2228.35 3472.56 64.17

1995-96 2547.13 3882.42 65.61

1996-97 3001.25 4418.28 67.93

1997-98 3781.94 5161.20 73.28

20

1998-99 4019.98 5312.86 75.67

1999-00 4349.41 5752.20 75.61

2000-01 4859.83 6467.30 75.14

2001-02 4583.75 5986.09 76.57

2002-03 4912.09 6548.44 75.01

2003-04 5686.09 7602.99 74.79

2004-05 6417.67 8654.52 74.15

2005-06 7900.80 10526.16 75.06

2006-07 9211.23 12177.86 75.64

2007-08 10699.80 14110.80 75.83

2008-09 12347.77 15565.19 79.33

2009-10 12496.72 16204.65 77.12

2010-11 17914.46 22924.38 78.15

2011-12 19089.69 24287.66 78.60

2012-13 21515.73 27027.36 79.61

2013-14 24491.88 30186.62 81.13

Table 11: Comparative Statement On Export Of Rmg And Total Export Of

Bangladesh

Data Source Export Promotion Bureau Compiled by BGMEA

The following graph can give clear view of growth in RMG export for the last 31 years.

21

198198

198198

199199

199199

199200

200200

200200

201201

0

5000

10000

15000

20000

25000

30000

35000

Export Of RMG(in Million US$)Total Export Of Bangladesh(in Million US$)

Figure 8: Comparative Statement on Export of RMG and Total Export of Bangladesh

The RMG sector enjoys a continuous growth from the beginning of the industry but the initial

level was tough. From this chart we can see that RMG export is the main contributor in the

country’s total export because both have increased almost at the same pace. It can be viewed that

in the total export earning of the country, the share of RMG increased from 3.89 percent in 1983-

1984 to a spectacular rate of 81.13 percent in 2013-14.

4.13 Value of Total Apparel Export:

The export oriented RMG industry of Bangladesh has witnessed remarkable growth after 1990.

Year Export (US$ in m.) Year Export (US$ in m.)

1992-1993 1445.02 2003-2004 5686.09

1993-1994 1555.79 2004-2005 6417.67

1994-1995 2228.35 2005-2006 7900.80

1995-1996 2547.13 2006-2007 9211.23

1996-1997 3001.25 2007-2008 10699.80

1997-1998 3781.94 2008-2009 12347.77

1998-1999 4019.98 2009-2010 12496.72

22

1999-2000 4349.41 2010-2011 17914.46

2000-2001 4859.83 2011-2012 19089.69

2001-2002 4583.75 2012-2013 21515.73

2002-2003 4912.09 2013-2014 24491.88

Total 41309.95 Total 147771.84

Table 12: Value of Total Apparel Export

Source: Bangladesh Export Promotion Bureau

The table shows that the export earnings of RMG sector were increasing per year. From 1992 to

2003 the export earnings were worth US$ 41309 million. After 2003 it experienced a rapid

growth and the total earnings till 2014 were 147771.84.

23

1992-1993

1994-1995

1996-1997

1998-1999

2000-2001

2002-2003

2004-2005

2006-2007

2008-2009

2010-2011

2012-20130

5000

10000

15000

20000

25000

Figure 9: Value of Total Apparel Export

Figure 8 above shows the total export of RMG from 1992 to 2013. We can see an upward trend

in the export earnings over the years. The export rate has grown very fast after 2000. After 2005

the trend went sharply upward. Over the years, the RMG sector has seen a positive growth in

export earnings. The rising trend is the result of increasing number of export processing zones.

4.14 Growth of Major exported Products of RMG sector:

Bangladesh manufactures and exports two major kinds of garment products. They are woven

garment and knit garment in the form of shirts, trousers, t- shirts, sweater, jacket etc. The

following table represents the total export of Woven and Knit Products since 1992 to 2014.

24

Year WOVEN KNIT TOTAL1992-1993 1240.48 204.54 1445.02

1993-1994 1291.65 264.14 1555.79

1994-1995 1835.09 393.26 2228.35

1995-1996 1948.81 598.32 2547.13

1996-1997 2237.95 763.30 3001.25

1997-1998 2844.43 937.51 3781.94

1998-1999 2984.96 1035.02 4019.98

1999-2000 3081.19 1268.22 4349.41

2000-2001 3364.32 1495.51 4859.83

2001-2002 3124.82 1458.93 4583.75

2002-2003 3258.27 1653.82 4912.09

2003-2004 3538.07 2148.02 5686.09

2004-2005 3598.20 2819.47 6417.67

2005-2006 4083.82 3816.98 7900.80

2006-2007 4657.63 4553.60 9211.23

2007-2008 5167.28 5532.52 10699.80

2008-2009 5918.51 6429.26 12347.77

2009-2010 6013.43 6483.29 12496.72

2010-2011 8432.40 9482.06 17914.46

2011-2012 9603.34 9486.35 19089.69

2012-2013 11039.85 10475.88 21515.73

2013-2014 12442.07 12049.81 24491.88

Table 13: Growth of Major Export Products

Source: Bangladesh Export Promotion Bureau

25

1992-...

1994-...

1996-...

1998-...

2000-...

2002-...

2004-...

2006-...

2008-...

2010-...

2012-...0

2000

4000

6000

8000

10000

12000

14000

WovenKnit

Figure 10: Growth of Major Export Products

The share of the knit garment products in the export sector has been increasing since 1990s but

Woven garment products have always dominated the export earnings of Bangladesh. In 2011 -

2012 the knit garment exceeded woven garment by a very short margin. But the trend again

reverted in 2012-2013.

4.15 Major Destinations of RMG Export

Bangladesh Currently exports products worth of nearly 5 billion US$ per year to 200 countries.

Woven garments are exported to 132 countries and Knit garments and Knit garments are

exported to 148 countries. The major buyer countries include USA, Canada, UK, France,

Netherlands, Spain and Belgium. In the US market Bangladesh has secured the position of 6 th

largest supplier.

26

Country 2009-10 2010-11 2011-2012 2012-2013 2013-2014

Germany 1282.77 2022.05 2039.97 2168.13 2573.70

UK 725.74 990.98 1103.30 1259.84 1335.25

USA 891.61 1119.04 1013.95 1130.90 1197.85

France 692.00 999.71 855.18 892.45 964.27

Spain 384.55 595.92 660.73 702.90 856.28

Italy 379.04 525.17 571.46 554.94 731.91

Canada 283.86 432.92 401.82 461.97 445.10

Netherland 528.57 591.07 325.28 246.77 385.48

Belgium 155.79 299.74 320.46 317.19 440.63

Denmark 178.24 256.32 318.72 375.62 450.71

Table 14: Country Wise Export of RMG products

Source: Export Promotion Bureau, Bangladesh, Complied by Research & Development Cell

Wal-Mart, Target, GAP, Levi’s, K-Mart, Zara, Mark and Spencer, Tesco, Carrefour are some of

the Major buyers of our RMG products.

Regions Market Share

EU 49.77

USA 33.67

Others 16.57

Table 15: Regional Export Market ShareSource: Export Promotion Bureau

European countries and USA are the biggest buyers of Bangladesh. They together hold 83.44

percent of RMG export market share while other countries have only 16.57 percent of the total

market share.

27

5.0 Conclusion:

Bangladesh has become a favorite destination for foreign investors because of various reasons.

Bangladesh has developed its economy by registering constant economic growth, infratracture

development and technological progress.

EPZs have played a vital role in the development of the country. The EPZs of Bangladesh offer a

sound investment environment for investors. Bangladesh is committed to attract foreign investors

and this is why the government is trying to give more and more facilities and incentives in the

economic zones. The government is also planning to create new zones in the coming year to

serve the interests of the foreign investors and increase the export earnings of the country.

Bangladesh has shown a positive growth in exports despite the global financial crisis. The EPZs

have helped the country to achieve positive recovery during the credit crisis in Euro Zone which

is the main export destination.

Issues like poor infrastructure, shortage of power supply, political instability are some of the

obstacles that are creating problems for Bangladesh export industry. But still the overall export

performance of EPZs is satisfactory.

Bangladesh has got huge potential in respect of natural resources, skilled manpower and

investment friendly atmosphere. Government and local investors should come forward to find

new markets in order to expand the export industry.

28

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