Contribution of rmg sector in economic growth of BD

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1. ECO 501 Managerial Economics Section:2 2. 12/07/2014 CONTRIBUTION OF RMG SECTOR IN ECONOMIC GROWTH OF BANGLADESH 2 ID Name 13264078 Shahriar Rawshon (Team Leader)…
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  • 1. ECO 501 Managerial Economics Section:2
  • 2. 12/07/2014 CONTRIBUTION OF RMG SECTOR IN ECONOMIC GROWTH OF BANGLADESH 2 ID Name 13264078 Shahriar Rawshon (Team Leader) 13264069 Anik Mondal 13264070 Shahreen Shabnam 13364058 Umama Akter 13164023 Pallab Kanti Das
  • 3. Introduction Objective of the Study Limitation of the Study Methodology Contribution of RMG Sector in Economy Economic Growth Analysis of RMG Sector Present and Past Social Impacts of the RMG Sector 12/07/2014 CONTRIBUTION OF RMG SECTOR IN ECONOMIC GROWTH OF BANGLADESH 3
  • 4. Introduction 12/07/2014 CONTRIBUTION OF RMG SECTOR IN ECONOMIC GROWTH OF BANGLADESH 4
  • 5. To evaluate the economic impacts of RMG sector in Bangladesh in terms of GDP, GNP, National income and Total exports. To evaluate the social impacts of RMG sector in Bangladesh in terms of women empowerment, savings, child labor, population control and employment. 12/07/2014 CONTRIBUTION OF RMG SECTOR IN ECONOMIC GROWTH OF BANGLADESH 5
  • 6. The information gap between the different sources of statistical and historical data, Available data was poorly updated, Lack of cooperation on sourcing data from some important organizations. 12/07/2014 CONTRIBUTION OF RMG SECTOR IN ECONOMIC GROWTH OF BANGLADESH 6 A Number of Limitation
  • 7.  Secondary data analysis forms the basis of the report  Sources of secondary data:  Literature review  Case studies in other countries,  Journals,  Research articles,  Thesis papers,  Newspapers,  Online news and survey reports,  Different internship reports and  Books and articles from libraries. 12/07/2014 CONTRIBUTION OF RMG SECTOR IN ECONOMIC GROWTH OF BANGLADESH 7
  • 8. GDP: US$ 112 billion (FY 2011-12) Annual Average Growth Rate: 6.30 % (FY 2010-13) Point to point Inflation rate of 2012-13 is 6.78% Contribution of Manufacturing to GDP: 19.54% Foreign Direct Investment (FDI) in 2012 : $1.3 billion Sectoral Contribution of the Industry is 32.0 % (GDP Share 30.4%( FY 2009-13) Export Growth is 10.7% in FY 2013 (July-May) Foreign Exchange Reserve Growth: 47% (FY 2013) 12/07/2014 CONTRIBUTION OF RMG SECTOR IN ECONOMIC GROWTH OF BANGLADESH 8
  • 9. Agriculture Manufacturing and industry • RMG and Textiles • Small and Medium Enterprises • Export Power and Energy Sector 12/07/2014 CONTRIBUTION OF RMG SECTOR IN ECONOMIC GROWTH OF BANGLADESH 9
  • 10. GDP Growth by sector 12/07/2014 CONTRIBUTION OF RMG SECTOR IN ECONOMIC GROWTH OF BANGLADESH 10
  • 11. 75.65% 4.22% 2.60% 2.19% 1.77% 1.21% 0.72% 0.06% 11.56% Major Products Export From Bangladesh And Contribution to GDP RMG Frozen Food Jute Goods Leather Chemical Products Raw Jute Agri Products Tea Others 12/07/2014 CONTRIBUTION OF RMG SECTOR IN ECONOMIC GROWTH OF BANGLADESH 11
  • 12. Fiscal Year 2007 -08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 Export as % of NI 9.6% 9.8% 9.1% - - - - 12/07/2014 CONTRIBUTION OF RMG SECTOR IN ECONOMIC GROWTH OF BANGLADESH 12 0.00% 2.00% 4.00% 6.00% 8.00% 10.00% 12.00% 2007 -08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 Export as % of NI Export as % of NI
  • 13.  Export Earnings  Major Player in the Exports  Helping Industrialization  Employment Generation  Women Empowerment  Contribution to the GDP  Growth of Backward and Forward Linkage Industries 12/07/2014 CONTRIBUTION OF RMG SECTOR IN ECONOMIC GROWTH OF BANGLADESH 13
  • 14.  15% cash subsidy of the fabric cost .  Establishment of new textile/RMG mill in the private sector  Joint ventures with the existing textile/RMG mill  Public sector textile mills that are being privatized  Indirect investment through financial services and/or leasing  Introducing back to back LC  Warehouse facilities 12/07/2014 CONTRIBUTION OF RMG SECTOR IN ECONOMIC GROWTH OF BANGLADESH 14
  • 15. 0 10,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000 90,000 2007 2008 2009 2010 2011 2012 2013 22,193 10,730 9,200 26,566 26,174 14839 81667 Textiles and Apparels Textiles and Apparels 12/07/2014 CONTRIBUTION OF RMG SECTOR IN ECONOMIC GROWTH OF BANGLADESH 15 Source: DIPP
  • 16.  The sector contributes 38% industrial value addition.  Earns around 78% of total export earnings.  Employs around 4.5 million workforce of which majority is women  Generates huge cliental base for Banking, Insurance, Shipping,  Transport, Hotel, Cosmetics, Toiletries and related other economic activities.  Provides indirect employment to 0.80 million workforces in accessories industries related to garments.  Provides 0.2 million job to waste recycle industry related to RMG sub- sector.  Contributes 10.50% to GDP through RMG sub-sector. 12/07/2014 CONTRIBUTION OF RMG SECTOR IN ECONOMIC GROWTH OF BANGLADESH 16
  • 17. 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 EXPORT OF RMG (IN MILLION US$) 9211.23 10699.8 12347.77 12496.72 17914.46 19089.69 21515.73 TOTAL EXPORT OF BANGLADESH (IN MILLION US$) 12177.86 14110.8 15565.19 16204.65 22924.38 24287.66 27018.26 0 5000 10000 15000 20000 25000 30000 Value Comparative Statement on Export Of RMG And Total Export Of Bangladesh 12/07/2014 CONTRIBUTION OF RMG SECTOR IN ECONOMIC GROWTH OF BANGLADESH 17 Source: Data Source Export Promotion Bureau Compiled by BGMEA
  • 18. Figure : Comparative Statement on Export Growth Of RMG In Bangladesh 12/07/2014 CONTRIBUTION OF RMG SECTOR IN ECONOMIC GROWTH OF BANGLADESH 18 0 75.64 75.83 79.33 77.12 78.15 78.6 79.63 % OF RMG'S TO TOTAL EXPORT 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13
  • 19. Total Apparel Export In Mn.UD$ Total Apparel Export In Mn.Dz 9211.23 10699.8 12347.77 12496.72 17914.46 19089.73 21515.73 0 5000 10000 15000 20000 25000 TOTAL APPAREL EXPORT IN MN.US$ WOVEN TOTAL APPAREL EXPORT IN MN.US$ KNIT TOTAL APPAREL EXPORT IN MN.US$ TOTAL 0 200 400 600 800 1000 1200 1400 1600 2006-2007 2007-2008 2008-2009 2009-2010 2010-2011 2011-2012 2012-2013 332.62 389.03 460.51 465.5 1345.4 1276.7 1487.11 TOTAL APPAREL EXPORT IN MN.DZ WOVEN TOTAL APPAREL EXPORT IN MN.DZ KNIT TOTAL APPAREL EXPORT IN MN.DZ TOTAL 12/07/2014 CONTRIBUTION OF RMG SECTOR IN ECONOMIC GROWTH OF BANGLADESH 19 Source:DataSourceExportPromotionBureauCompiledby BGMEA
  • 20. 12/07/2014 CONTRIBUTION OF RMG SECTOR IN ECONOMIC GROWTH OF BANGLADESH 20 0 10 20 30 40 50 60 70 80 2010-11 2011-12 2012-13 2010-11 2011-12 2012-13 2010-11 2011-12 2012-13 Woven Knit Total EU % of World 42.81 46.31 46.87 72.87 73.04 70.55 58.72 59.59 58.4 % of USA 41.58 36.61 35.02 11.8 10.69 10.8 25.82 23.73 23.22 % of Canada 5.48 4.93 4.69 4.57 4.24 4.41 4.99 4.58 4.56 Growthinworld EXPORT growth to the World Source: EPB, Compiled by: RDTI Cell, BGMEA
  • 21. 12/07/2014 CONTRIBUTION OF RMG SECTOR IN ECONOMIC GROWTH OF BANGLADESH 21 2010-11 2011-12 2012-13 2010-11 2011-12 2012-13 2010-11 2011-12 2012-13 Woven Knit Total EU Growth% 23.18 16.35 0.27 6.67 8.13 10.45 USA Growth% 0.27 9.96 -9.39 11.53 -2.07 10.31 Canada Growth% 2.44 9.57 -7.18 14.97 -2.21 12.05 -15 -10 -5 0 5 10 15 20 25 Growth% EXPORT Growth Trend Source: EPB, Compiled by: RDTI Cell, BGMEA
  • 22. 12/07/2014 CONTRIBUTION OF RMG SECTOR IN ECONOMIC GROWTH OF BANGLADESH 22 13.88 14.96 0.05 10.43 6.56 12.71 0 2 4 6 8 10 12 14 16 2010-11 2011-12 2012-13 2010-11 2011-12 2012-13 2010-11 2011-12 2012-13 Woven Knit Total Total % Growth % Growth Source: EPB, Compiled by: RDTI Cell, BGMEA
  • 23. 11,575.85 12,571.46 5,407.08 5,872.12 0.00 2,000.004,000.006,000.008,000.0010,000.0012,000.0014,000.00 Knitwear Woven Performance over Target of RMG in 2013-2014 Performance Over Target 2013-14 (Jul-Dec) Target (million USD) 2013-14 0 1000 2000 3000 4000 5000 6000 7000 8000 2011-12 2012-13 6928.69 7306.28 Value FY Year Region wise Export Performance FY 2011-12 & 2012-13 EU USA & Canada European Free Trade Association Latin American Integration Association Emerging Markets Others 12/07/2014 CONTRIBUTION OF RMG SECTOR IN ECONOMIC GROWTH OF BANGLADESH 23 Source: Export Promotion Bureau, Bangladesh
  • 24. Women Empowerment Savings Child Labor Population Control Employment 12/07/2014 CONTRIBUTION OF RMG SECTOR IN ECONOMIC GROWTH OF BANGLADESH 24
  • 25. 12/07/2014 CONTRIBUTION OF RMG SECTOR IN ECONOMIC GROWTH OF BANGLADESH 25 Bangladesh India Pakistan Nepal Sri Lanka 90% 34% 10% 15% 87% 76% 13% 60% 38% 52% Female Contrbution in South Asia Percent of Female Percentage of Total Export
  • 26. Regular earning Workers investments on family pension schemes etc. create savings. 15 years and above had their own bank accounts. A higher proportion of workers (30 percent) had bank accounts in the EPZ. Women are on average better savers than men. Women save about 7.6 percent of their otherwise small income. 12/07/2014 CONTRIBUTION OF RMG SECTOR IN ECONOMIC GROWTH OF BANGLADESH 26
  • 27. In 2000 a second MOU was signed between BGMEA and ILO focused •A fact-finding survey to determine the extent of child labor in the garment industry; •The establishment of an education program; •The establishment of a monitoring and verification system; •The provision of income compensation in the farm of a monthly stipend of Tk. 300, the equivalent of (at that time) US$ 7 ILO 2005 baseline survey on child labor in hazardous situations found •The one sector where legal restrictions on use of child labor showed to be successfully forced was the Ready-made Garment industry, while around 532,000 child laborers were working in hazardous situations in other industries. 12/07/2014 CONTRIBUTION OF RMG SECTOR IN ECONOMIC GROWTH OF BANGLADESH 27
  • 28. Employment opportunities especially for women created positive impact on family planning and population control in the country. Independent working-women are getting more conscious about the advantage of a small family. Working adolescent girls tend to avoid early marriage. The mean age at marriage for girls working in RMG factories tend to be higher than the national average. 12/07/2014 CONTRIBUTION OF RMG SECTOR IN ECONOMIC GROWTH OF BANGLADESH 28
  • 29. 12/07/2014 CONTRIBUTION OF RMG SECTOR IN ECONOMIC GROWTH OF BANGLADESH 29 Source: Bangladesh Garment Manufacturers and Exporters Association (BGMEA) 2.2 2.4 2.8 3.5 3.6 3.6 2005-06 4220 Factory 2006-07 4490 Factory 2007-08 4743Factory 2008-09 4925 Factory 2009-10 5063 Factory 2010-11 5150 Factory Employment (in million workers) Employment (in million workers)
  • 30. Conclusion 12/07/2014 CONTRIBUTION OF RMG SECTOR IN ECONOMIC GROWTH OF BANGLADESH 30
  • 31. 12/07/2014 CONTRIBUTION OF RMG SECTOR IN ECONOMIC GROWTH OF BANGLADESH 31
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