Prodigy or Phantasm?

Bangladesh's shining light: Jute and textile industries

Bangladesh is a country that has been through a lot in the past few decades. After gaining independence from Pakistan in 1971, the country became embroiled in a state of economic instability. This resulted in food scarcity, and the health sector was utterly devastated. Approximately 90% of the population lived in poverty. It was thought that the country would have a bleak future in the next 50 years. Then, what suddenly changed the whole scenario of the country? Is it a miraculous occurrence? No, the jute and textile industries have come to the rescue.

Let us talk about two main sectors of Bangladesh:

• Jute Industries

• Textile Industries

The jute and textile industries have flourished, providing employment for millions of people and helping to lift the country out of poverty. As a result, Bangladesh is now one of the fastest-growing economies in the world, and its prospects for the future are much brighter than they were just a few years ago.

Jute industries in Bangladesh

After independence, the government nationalized 67 jute mills left behind by West Pakistan and placed them under the Bangladesh Jute Mills Corporation (BJMC). The BJMC was given absolute authority over jute prices, purchasing, sales, and exports. As a result of government support and protection, the jute industry flourished in Bangladesh.

However, in the early 1980s, the industries were hit by a significant financial crisis, resulting in the depreciation of the BDT currency, which harmed the business. As a result, exports dropped dramatically, and the government began denationalizing the jute mills. There were a total of 82 state-owned industries, with 35 of them being denationalized. The government focused on privatizing jute mills in 1983. It encouraged many private businesses, and they began investing in jute mills. The industry had once again begun to earn a profit that could be sustained. More than two hundred jute mills are currently operating in the non-public sector.

Jute products for a sustainable world

The use of eco-friendly products is becoming increasingly popular worldwide. Bangladesh's manufacturers and exporters are now concentrating on a broader range of jute goods like canvas, boxes, papers, handicrafts, decorations, carpets, shopping bags, and so on. The government has taken steps against using, selling, and producing polythene. The government is also encouraging local manufacturers to produce more jute products to meet global demand.

Jute - a significant part of Bangladesh’s GDP

Despite severe challenges, at various times, the jute industry has played a significant part in the state economy. Jute shares 0.26% of GDP and 1.4% of GDP in agribusiness. In FY 17–18, Bangladesh earned $1.02 billion from this section. For FY 18-19, export earnings totaled US $816.3 million. Export sales of jute and jute merchandise increased by 8.10% to $882.35 million in FY 19-20. During the fiscal year, the jute sector developed faster than other export sectors, notwithstanding the pandemic. The export of jute increased by 31%. By 2024, the market will be worth roughly $3.4 billion. However, the current year's drop in raw jute production concerns the industry. There is enough evidence that farmers are not obtaining fair rates for their jute, which has resulted in a lack of interest in the crop. Therefore, the government should provide financial assistance to jute farmers to keep the production line smooth.

Textile industries in Bangladesh

The "textile industry" comes into action as another source of income. When our primary source of income, the jute industry, began to have financial difficulties and make losses in the 1980s, Ready Made Garments (RMG) stepped in and took its place. The journey started in the early 1980s, and the person who started the "revolution" was the late Nurool Quader Khan. He had a vision, believed in himself, and always wanted to do something to aid the nation.

The pioneer of the Bangladeshi textile industry

Nurool Quader Khan was a pioneer in the Bangladeshi textile industry. In 1978, he dispatched approximately 130 apprentices to Daewoo in South Korea to obtain training. With the assistance of Daewoo, he established Bangladesh's first export-oriented ready-made garment factory after completing his training. At the same time, other private companies were influenced by it and came forward to establish some of the first textile industries. As a result of Khan's efforts, the Bangladeshi textile industry has grown significantly in recent years, becoming the country's most important economic sector.

EPZ - a pathway to success for Bangladesh

Since then, the textile industry did not have to look backward. The industries continued to expand at a rapid pace. The government started acquiring land for the EPZ (Export Processing Zone). In 1983, the country's first-ever EPZ, "Chattagram EPZ," was formed and paved the way for international investment. The Chattagram EPZ was a pioneer in facilitating international investment in Bangladesh's textile industry. The EPZ provided a platform for foreign investors to establish factories and create jobs in the country. Among the countries that directly invested in the EPZ were Denmark, the USA, Hong Kong, Taiwan, and Sri Lanka. The EPZ was instrumental in helping Bangladesh's textile industry grow and expand rapidly.

In recent years, the government has continued to support the industry by acquiring land for new EPZs. In 1993, "Dhaka EPZ" was formed, drawing international and domestic investment. It was a favorite destination for investors as it was near Dhaka, and the facilities and other factors were far superior to the rest of the country. The growth of Dhaka EPZ and Chattagram EPZ encouraged the government to acquire more land for EPZ. In 2003, Ishwardi EPZ was formed. In 2006, Adamjee EPZ was formed. The place was once known for jute industries, but due to a drop in export revenue, the government shut down almost all jute industries.

BEPZA | Bangladesh Export Processing Zones Authority 

BEPZA is the Bangladesh Export Processing Zones Authority. It administers and manages the country's export processing zones (EPZs). BEPZA was established in 1980 under the BEPZA Act, and its primary objective is to promote and facilitate investment in EPZs. BEPZA provides a range of services to investors, including investment promotion, project facilitation, sectoral coordination, and infrastructural development. BEPZA has been instrumental in attracting foreign investment and promoting exports from the EPZs, and it continues to play a key role in the country's economic development.

Bangladesh's booming textile industry

Bangladesh's textile industry is a major contributor to the country's economy. In addition, the industry employs around 4.4 million people, with female employees accounting for more than half of the workforce. The industry also significantly impacts poverty reduction, with employment growth in this sector helping to lower poverty rates. The textile industry's contribution to the economy is expected to grow.

The tragic past of the textile sector in Bangladesh

However, some horrific occurrences tipped Bangladesh's image worldwide behind the beautiful and successful textile sector. Firstly, workers went on strike in 2008 because they were being paid less despite the industrial sector having a huge profit margin. They were only making around $95 a month at the time. It was highlighted on BBC and CNN. The availability of low-cost labor encouraged the expansion of the sectors, but it went unnoticed. The government subsequently intervened, establishing a minimum wage and requiring all business owners to maintain a labor-friendly environment.

Second, the industry has experienced some significant mishaps. On November 24, 2012, a devastating fire at "Tazreen Fashion" killed over 100 workers, followed by the world's most extraordinary collapse, the fall of "Rana Plaza," which killed over 1200 workers and the general public. Concerns about worker safety and rights have arisen due to these two incidents. A boycott of "MADE IN BANGLADESH" has been called by Human Rights Watch and other organizations.

Bangladesh's textile industry on the rise

It was a wake-up call for Bangladesh's textile industry. The Ready-Made Garments Sustainability Council (RMGSC), which includes unions, brands, and factory owners, was established as an independent entity. H&M, Inditex, Hugo Boss, and Adidas are among the companies that have signed the agreements, and they have conducted inspections around the country, expelling unsafe factories from supplying products. The graph below indicates a reduction in the number of garment factories in Bangladesh.

Despite numerous challenges, the textile industry has risen swiftly and to a greater extent. Apparel exports have risen dramatically in the last three decades, from USD 868 million in 1990-91 to USD 34.13 billion in FY 2019-20. 80% of all exports are from this country. It accounts for 12% of the country's GDP.

Meanwhile, due to the pandemic, the sector's growth slowed between April 19 and June 21, although it recovered in October FY21. The growth is marked by around 36.47% earning $3.56 billion out of $4.72 billion of total exports during the month, which overshot the target. The last four months of FY 21-22 also marked a growth of 20.78% compared to the same quarter of the previous fiscal year.

Green textile manufacturing in Bangladesh

As the world becomes increasingly aware of the need to protect the environment, many industries are scrambling to adopt green practices. Bangladesh's textile industry has taken the lead in this green industrialization, with 14 of the top 27 environmentally friendly manufacturers located in the country, according to the US Green Building Council (USGBC). These industries have also been given the "LEED Green Factory Award" by the USGBC. Bangladesh's green industrialization is good for the environment and provides a competitive advantage for the country's textile industry. As more and more consumers become conscious of environmental issues, they are likely to seek out products that have been manufactured in a green and sustainable manner. By investing in green industrialization, Bangladesh is positioning itself as a leader in the global textile market.

Bangladesh is the fastest-growing economy.

Bangladesh has come a long way in recent years, emerging as one of the world's fastest-expanding economies. Bangladesh now has a GDP of $409 billion, ranking 37th in nominal terms. The country's success is primarily due to its thriving textile and jute industries, which have served as a springboard for other industries such as pharmaceuticals, leather, and plastics. With Bangladesh's products increasingly in demand globally, these industries are poised to make even greater contributions to GDP growth in the years ahead. Together, they offer a bright outlook for Bangladesh's economic future.