brief analysis on the state of Bangladesh's industrial sector. For Mr. Rehan Ahmed's class

1. BRAC UNIVERSITY
Industrial Sector of Bangladesh
This is a research paper on the Industrial Sector of Bangladesh
Mr. Rehan Ahmed
Facilitator
DEV 101
Sec 08
3/29/2012
Samiya Yesmin 11304043 Rubayet Rehan 11222035 Lamisa Manzoor 11304072
Protiti Khan 11304018 Rafid Feisal 11236003 D.M. Ashiquzzam 11236004

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Industrial Sector of Bangladesh
Table of Contents
I. Introduction 3
II. Objectives 3
III. Methodology 3
IV. History of the Industrial Sector 4
V.
Developments in the past
four decades
5
VI.
Millennium Development Goals
and the Industrial Sector
9
VII.
Challenges faced by the Industrial
Sector
11
VIII. Recommendation 13
IX. Conclusion 13
X. References 14

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I. Introduction
We were assigned this group work on the industrial sector of Bangladesh. We were to find facts,
study and analyse the data we could find regarding this topic. We have found out how the industrial
sector was before the liberation war from Pakistan in 1947 and how after the war we faced a lot of
challenges and grew up to be what we are now. This research paper assignment has given us a very
practical insight of the current situation of economical growth related to industrial developments in
Bangladesh.
II. Methodology
We used secondary source research method to do our investigation. All highly reliable sources
were used to gather the data. References of our sources are given at the end of the research paper.
III. Objectives
We did this research with a few objectives in mind. And throughout the study these objectives
helped remind us, our goals. They are:
1. To find out about the history of industrial growth in Bangladesh.
2. To find and analyse data about the current situation of the industrial sector.
3. To find out future goals and vision.
4. To find out the challenges faced and how to overcome them
And below, you can read about all our findings and analysis regarding them.

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IV. History of the Industrial Sector
In 1947, the Indian subcontinent was divided into two parts. One was India and the other one was
Pakistan. Pakistan had two parts. One was West Pakistan and the other one was East Pakistan, which is
now known as Bangladesh. The government of then West Pakistan dominated the people of this country in
different sectors. In the economic sector, the discrimination was the most. Most of the industries of
Pakistan were in this country. However, the profit from them was taken to West Pakistan. The progress in
jute manufacturing started in that period.
Jute manufacturing sector is one of the oldest traditional manufacturing sectors of Bangladesh,
which emerged in erstwhile East Pakistan in the early 1950s. During the1960s and 1970s major share of
the manufacturing sector in national income and manufacturing employment was accounted for by this
sector. Exports of jute and jute goods were the two most important sources of foreign exchange of
Pakistan during the 1960s. The East were subjugated, as all the revenue went to West Pakistan.
In 1971, with the liberation war of 9 months, Bangladesh became independent. As after the war,
the country was left in dire states, the industrial development was very slow. However, Ready Made
Garments (RMG) started during this period. And in this sector, Bangladesh could lay claim to
considerable success. Today garment export is the main source of foreign exchange earnings. Its success
was not necessarily influenced by government policy but essentially by outside forces. It originated in the
1970s when the investors of other South East Asian nations ventured to set up garment factories in
Bangladesh and to work around the export quotas imposed on their native countries by the United States.
In the 1980s, the Pharmaceutical Sector made advancement in Bangladesh. It is one of the most
developed hi tech sector which is contributing in the country's economy. After the circulation of Drug
Control Ordinance - 1982, its development accelerated. During the 80s, other sectors like tea
manufacturing, leather factories etc also gained importance. In 1990s, sectors like ship breaking, steel,
cement and cold storage goods etc developed and gained momentum. From 2000 to 2012, many industries
started their journey successfully, and contributed to the economic growth of Bangladesh. Among them
are- electronics, glass, aluminium, plastic, cycle, and ceramic etc. industries. To sum up the whole thing,
we can say that after 1971, Bangladesh is slowly and steadily turning its attention to develop its economy,
through industrial development, moving away from the agricultural sector.

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V. Developments in the past Four decades
Ready-made garments sector
The ready-made garments industry in Bangladesh (RMG) contains many small to medium garment
factories, both registered and unregistered, that produce garments providing to foreign buying houses. The
export finance from this industry is one of the three major sources of economic growth in Bangladesh.
Ready-made garments had proved to be a successful sector in Bangladesh. The industry initiated in the
late 1970s, expanded heavily in the 1980s and boomed in the 1990s. (Amusing Ocean, 2011). The foreign
trade of RMG from Bangladesh has shown rapid rates of growth over the last decade, currently making
Bangladesh the twelfth largest exporter of garments and it has contributed to about 77% of Bangladesh’s
foreign exchange earnings (Guidebook for European Investors in Bangladesh, 2001, pg.13).
Number OF factories 4000
Number of labour force 3.5 million
Profitability 12.45 billion
Export earnings 76%
Contribution to GDP 10%
Presently there are about 4000 factories for RMG in Bangladesh. The market size of RMG is huge, as can
be seen in the table above. The growth rate is estimated as 21.60% annually. (Amusing Ocean, 2011).
Bangladesh is the second largest garments exporter with a $20 billion industry. Our share is 4.5% in
worldwide garments export. According to the Export Promotion Bureau (EPB), the contribution of RMG
goods to national export had increased by 1.02% in the fiscal year 2010-2011. During this period, the
contribution of RMG, mainly woven and knitwear, to national export was 78.14% or $17.91 billion
whereas it was 77.12% or $12.50 billion in fiscal year 2009-2010. (The Star, 2011).
Bangladesh has now become a significant RMG supplier to North America and Europe. The textiles have
improved in quality to meet their standards, while still being affordable. The industry has created
sufficient jobs in various support industries, as well as creating job opportunities for women. The
relatively cheap cost of labour in Bangladesh, cheaper technology and machines used and the fact that

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women labour are willing to work at fewer wages than men in this sector has enabled massive growth and
development in this industry.
The industry plays a significant role in terms of employment generation. Approximately 2 million workers
are directly and above 10 million inhabitants are indirectly associated with RMG industry. Not only is the
economic contribution apparent, but the expansion of RMG has introduced more than 1.12 million women
to the work force. RMG’s contribution in terms of GDP is also highly commendable; it has reached 13%
of GDP in present days, which was formerly only 3% in 1991. Ever since, the industry has helped in
social development, women empowerment and poverty alleviation (Amusing Ocean, 2011).
Source: Compiled from various sources (Bakht, Z. 2001, Export Promotion Bureau, Ministry of Commerce and
Bangladesh Bank data).
0
10
20
30
40
50
60
70
80
1970-1980 1980-1990 1990-2010
%offoreignexchangeearnings
Years
The graph shows the growth and decline of the respective
industries in Bangladesh:
RMG Food Industry Handicrafts Jute Goods Pharmaceuticals

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Food Industry
One of the other flourishing industry in Bangladesh, is the food industry. It consists of processed, frozen
and manufactured foods, which are exported abroad. One of the biggest components of this industry is the
export of frozen fishes and shrimps, which is now renowned worldwide. From the 70s-80s this industry
contributed to 5.6% of Bangladesh’s foreign exchange earnings, later in 80s-90s in grew to 8.3% and has
doubled to 16.42% in the last decade. This industry shows a lot of promise with its exponential growth.
Handicrafts
Over the last four decades one of the major growths was in the industry of handicrafts. The fashion
industry of Bangladesh is based on handicrafts. Aarong being one of the pioneers in handicrafts has also
contributed to the popularity of hand made products and also to its export. During 70’s and 80’s the export
of handicrafts was 8.2%. This increased during 90’s to 17.8%. and now it has reached to 29.4%
Jute
One of the largest industries that had once belonged to Bangladesh alone was the jute industry. Jute being
a natural, environment friendly, renewable and bio-degradable fibre has always been in demand all over
the world. This industry was set up in 1971 and it had flourished rapidly. Jute was a major export material
and had brought a lot of foreign currency into our economy even during that period of time with the help
of the erstwhile government of that time. After the liberation war, that particular assistance was lost as the
government was giving more effort for the rehabilitation of the country. That was when the decline had
initiated but the jute industry tackled the situation well by making new policies and still ensured profit.
Then in the 80’s some of the jute industries were privatized which led to further decline even though more
policies were imposed. In the context of recent years, export of jute has fallen drastically due to fall in
production and inefficient marketing system. We can consider it to be extinct if compared to the amount
of profit that they had once contributed with what they provide now. India had taken over the market of
jute with better quality products and better marketing manoeuvres. In conclusion we can say that the jute

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industry should be re-vitalized if possible and the government should take urgent initiatives for that
purpose as soon as possible. (Rab, 2011, The daily star, pg 7).
Pharmaceutical Industry
Pharmaceutical sector is one of the most advanced industries of Bangladesh. The Drug Control Ordinance,
1982 was one of the major factors resulting in the acceleration of this sector. This ordinance helped
organize the pharmaceutical sector and reach an international level of acceptance. The professional
knowledge and innovative ideas of the people working under this sector is one of the important
contributions for its success. It is because of the rapid development of this sector that it is now providing
97% of the local medicine requirement. Not only is it fulfilling the requirements locally but also
internationally, including the European markets (Wikipedia, 2012). It is the second largest industry
contributing to the foreign exchange earning of Bangladesh (Eskayef, 2012). There are two organizations,
one government, which is the Directorate of Drug Administration and another one semi-government,
Pharmacy Council of Bangladesh which controls the practice of pharmacy in Bangladesh. From the graph
above, we can see the fast growing economical contribution this industry has.

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VI. Millennium Development Goals and the Industrial Sector
The Millennium Development goals (MDGs) are eight international development goals that all the
193 United Nations member states and at least 23 international countries, including Bangladesh, have
agreed to achieve by the year 2015.
The goals are as follows:
Eradicate extreme poverty and hunger
Achieve universal primary education
Promote gender equality and empower women
Reduce child morality
Improve maternal health
Combat HIV/AIDS, malaria and other diseases
Ensure environmental sustainability
Develop global partnership or development
The industrial sector of Bangladesh has come a long way since the last four decades. The economic
growth and GDP per capita has increased a lot due to the industrial sector of Bangladesh. The main
contributors are jute, ready -made garments (RMG), tobacco, pharmaceuticals, ship building and ship
breaking, food, shrimp and fisheries industries. Increased employment opportunities offered by these
industries helps to achieve goal number one which is eradication poverty and hunger.
Ready-made Garments Industry (RMG)
The garments industry plays a vital role for the industrial sector of Bangladesh. Most of the export
revenue comes from this industry. It has also helped us in achieving the Millennium Development
Goals, such as goal one and three. This sector employs directly and indirectly a large number of
people. In 1999, the number was 1.4 million, further 200,000 were employed indirectly. 80% of the
workers are female which has led to empowerment of women.
Jute Industry

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In the first two decades jute mills played a major role in the industry of Bangladesh. There was a
high demand for Bangladeshi jute around the world during the 70s and 80s. Adamjee jute mill was the
biggest among them all. These industries employed a number of people. So if we relate it with goal
number one of the MDG it helped to reduce poverty by employing people. However, in the 90s when
the demand for jute started to fall, most of the mills were shut down including Adamjee. The closure
of the mills acted as an obstacle in achieving the MDGs due to the unemployment.
Pharmaceuticals Industry
The pharmaceutical industry started booming from 1982 and till now it plays a crucial role for the
industrial sector. If we relate it with the MDGs it has helped to achieve goal number one, three, four,
five and six. The industry employs a significant number of people, a large portion of which are
women, thus also resulting into women empowerment. Additionally, this industry produces almost all
the medicines required in Bangladesh at a cheaper cost, therefore improving the health sector by
combating diseases, reducing infant and maternal mortality rate.
Tobacco Industry
Bangladesh now not only produces tobacco but also locally manufactures cigarettes. This industry
also employs a lot of people which helps us to achieve goal number one of the MDG. But on the other
hand, it acts as a drawback as well, because smoking is injurious for our health.
Food, Shrimp and Fisheries Industries
This industry helps us to eradicate poverty and hunger by direct means which is goal one of the
MDG.
Ship-building and breaking Industry
The upcoming industry of Bangladesh is ship- building and ship breaking industry. It also helps us
to achieve goal one by employing people.
The industries are helping us to achieve the MDGs in a number of ways as mentioned above. They
have also been working towards ensuring environmental sustainability by reducing pollution and using
environmental friendly equipment, such as ETP.

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VII. Challenges faced by the Industrial Sector
The challenges the industry sector of Bangladesh is facing are numerous and handling some of
them should be set as a priority. Challenges are faced by various sectors such the garment industry,
shrimp and fisheries, tobacco and so on.
Shrimp industry: Salim (2008) mentions that the shrimp industry of Bangladesh has got several
challenges. The main concern about this particular industry is the working environment i.e. where the
shrimp is being produced and also the environmental impacts as well. Thus, higher ethical standards are
demanded. According to “The True Cost of Shrimp”, published by a US based NGO- the Solidarity
Centre- the labour conditions are indecent and not appropriate. Another problem which this industry
faces is that most of the shrimps are not resistant to diseases and this eventually leads to a decline in the
yield. Another concern is the sustainability of shrimp production.
Pharmaceutical industry: The major challenge faced by this particular blooming industry is that
the demand of foreign medication is higher than the local ones. Oversee markets are quite
overpowering and thus people tend to buy foreign medicines. In Bangladesh we don't have any
recognized government organisation or contractual research organisation like universities or private
institutions to conduct bioequivalence study or clinical trials. Hence, this does not allow our
pharmaceutical products to be recognized abroad.
Tobacco industry: The main challenge the tobacco industry faces is the awareness of the health
impacts of cigarette smoking. This eventually leads to a decline in demand of tobacco and cigarettes.
After planting a large amount of tobacco plants in a particular area the top soil gets damaged. As a
result, many people get reluctant to grow tobacco and this creates a problem for the tobacco industry as
it causes a decline in tobacco production.

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RMG sector: The main challenge this sector faces is the labour unrest and poor infrastructure
which is related to lack of electricity.
Let us now consider the challenges faced by the industry sector in general.
Corruption: The most vital drawback of our country is corruption. If one has to establish a new
industry or firm then he or she has to pay the government officials a certain amount of money just to
initiate construction. Once completed, the bribe needs to continue otherwise the officials would hamper
the whole production process and thus result in closing of that firm. This is a major problem because a
huge capital is required to start a business. Paying bribes also causes a fall in the owner’s profit.
Labour: There is a lack of trained workers in this country. Thus, there is a decline in the
efficiency of the company. This is because most of the people of our country are illiterate. The
companies also need to provide training (apprenticeship) to these labourers and hence quite an amount
of money and time is spent on them. This challenge is faced by every company or firm in Bangladesh.
Political instability: This is a major hindrance towards the advancement of the industry sector
of Bangladesh. Frequent strikes result in disruption of daily business. . This hampers the smooth
running of industries, they are unable to procure raw materials in time hence their production and even
transportation is delayed. The politicians only think about themselves. As such, our industry cannot
progress and compete with the outside world.
Shortage of electricity: without power industrial units cannot operate properly. In order to
continue production, factories opt for own power generation which is expensive.

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VIII. Recommendation
Industry sector is one of the major sectors for income source in Bangladesh. There were lots of
flaws in this sector but Bangladesh could come up with phenomenal results for the enrolment of people
and to come out Bangladesh from poverty though this Industry sector. Government had taken lots of
steps for building up the Industry sector; they even thought to build up a city only for the industries, so
that the people can easily get into the job site easily. Even after the tremendous and drastic growth of
Bangladesh in different fields of industries Bangladesh is still witnessing some deficiency which is
proving as an obstacle for the further growth of Bangladesh industries. Those include non-
professionally trained employees, corruption, and of course poor governance such as lack of
accountability, transparency, predictability and proper public participation. Apart from that due to the
overtime spend on garment industries people are not socializing and hence creating a rift amongst the
known people. If these all problems could be solved through our participation then Bangladesh could
become one of the leading industrialized countries. So we all have to be aware of taking every step to
build this sector and to help us for our betterment to increase the GDP in order to achieve MDG.
IX. Conclusion
Bangladesh is a river based country. The culture and the language they bear is one significant
among the world. The evolution they are bringing among the world is phenomenal. The industrial
sector in Bangladesh is a huge contributor for the country’s economic growth and is also becoming a
role model for the world. The labour cost in our country is one of the least in the world. That is why
maximum companies have given us offer to make their products and in this way we are increasing our
GDP growth. We all have to work hard and let our Bangladesh to make beautiful in every aspect. And
this research paper assignment has given us a very practical insight of the current situation of
economical growth related to industrial developments in Bangladesh. And has made us very proud to
call it our country.

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X. References
1. http:// www.infor bd.com/Bangladesh/industry
2. National Policy Forum, Dhaka: 20-22 August, 2001
3. http://boi.gov.bd/about-bangladesh
4. Moazzem, K.G., Rahman, Tariqur and Sobhan, Abdus (2009), “Jute Manufacturing
Sector of Bangladesh”, Centre for Policy Dialogue
5. Bangladesh Board of Statistics