GARMENTS INDUSTRY IN BANGLADESH

An Industry Overview

In the 1960s, Bangladesh was one of the poorest countries in the world. No major industries were developed in Bangladesh, when it was known as East Pakistan, due to the discriminatory attitude and policies of the government of the then West Pakistan. After the liberation war in 1971, rebuilding the country with limited resources was the biggest challenge. When the “Jute Industry” was losing its golden days, the RMG sector started to take its place.

In the 1960s, the industry started with REAZ GARMENTS (a tailoring shop) to serve the domestic needs. There were only nine export-oriented garment manufacturing industries in 1978, which earned only $ 1 million. Four such small and pioneering garments were Reaz Garments, Paris Garments, Jewel Garments, and Boishakhi Garments. Later in 70s, Late Nurul Quader Khan sent 130 trainees to South Korea, where they learned how to produce ready-made garments. With those trainees, he set up the first factory, “Desh Garments”  in Chittagong, to produce garments for export.

In 1980, Youngone and Trexim formed a company named Younone Bangladesh, which exported its first consignment of padded and non-padded jackets to Sweden in dec 1980.

Since the early 2000s, the industry has experienced significant ebbs and flows, particularly in export-oriented sectors. On one hand, the industry began to lead national exports; on the other, it faced major incidents such as the Rana Plaza disaster. This tragedy resulted in the shutdown of many industrial units due to heightened compliance and safety requirements.

According to BGMEA, over 4,000 factories are serving major brands. Other studies show over 7,000 to 8,000 factories, with many subcontractors unregistered.

The total number of LEED-certified garment factories in Bangladesh is 248. Among them, 105 factories have achieved Platinum certification, while 129 factories have earned Gold certification, highlighting Bangladesh’s strong position in global sustainable industrial development. Of the top 100 highest-rated LEED-certified factories worldwide, 68 are located in Bangladesh.

GROWTH

During the early days, the country had no real infrastructure for textile production, and virtually all raw materials like yarns, fabrics, and accessories were imported. The Multi-Fibre Arrangement (MFA) in the 1970s, which limited exports from established Asian countries, pushed buyers to outsource from developing nations like Bangladesh.  Bangladesh was primarily focused on “Cut-Make-Trim” (CMT) operations for export. Under the Multi-Fibre Arrangement (MFA), Bangladesh benefited from quota-free access to Western markets, especially the U.S. and Europe, giving it a competitive edge over other nations. One of the main reasons for Bangladesh’s success and growth in the apparel market is price competitiveness. Bangladesh is one of the lowest price offering countries in both the USA and the European Union-27 countries.

Labor Cost in Bangladesh 2008 and 2025

Country	US USD/ Hour/2008	US USD/ Hour/2025
Bangladesh	0.22	0.55
Cambodia	0.33	1.00
Vietnam	0.38	1.10-1.20
India	0.51	0.80
China	0.55-1.08	3.50 – 4.00
Turkey	2.44	4-5

The sector became a massive foreign exchange earner, pivotal for Bangladesh’s economy and a key driver of GDP. The sector has grown exponentially from negligible earnings in the early 1980s (around $31.57 million in 1983-84) to becoming the nation’s economic powerhouse, reaching over $47 billion in annual exports by 2023, dominating total exports (over 80%), and establishing Bangladesh as the world’s second-largest apparel exporter, driving significant GDP growth, employment (especially for women), and poverty reduction over the past four decades.

Year	Export of RMG (FROM BGMEA WEBSITE)	Growth from Previous Year
2008-09	12347.77	–
2009-10	12496.72	1.20%
2010-11	17914.46	43.35%
2011-12	19089.73	6.56%
2012-13	21515.73	12.70%
2013-14	24491.88	13.83%
2014-15	25491.40	4.08%
2015-16	28094.16	10.21%
2016-17	28149.84	0.20%
2017-18	30614.76	8.75%
2018-19	34133.27	11.49%
2019-20	27949.19	-18.11%
2020-21	31456.73	12.55%
2021-22	42613.15	35.46%
2022-23	38142.10	-10.49%
2023-24	36151.31	-5.21%
2024-25	39346.97	8.83%

Due to the enormous contribution of the RMG sector to the economy, the Bangladesh government has initiated several support measures specifically targeting this sector. Government plays an important role in the expansion of the RMG sector by providing various policy supports from time to time, including bonded warehouse facilities, duty drawback incentive, cash compensation scheme, and the facility of procuring raw materials.

GSP (Generalized System of Preferences)

Bangladesh benefits from the Generalized System of Preferences (GSP) facilities provided by various countries and regions. Bangladesh, as a Least Developed Country (LDC), is enjoying duty-free market access or reduced tariff rate facilities to export to various developed and developing countries in the world.

Bangladesh enjoys GSP facilities from the EU, which includes 28 member countries. Additionally, under the “Everything but Arms” (EBA) scheme, the EU grants duty-free access for products from 50 least-developed countries, including Bangladesh.

Apart from the EU, Bangladesh receives GSP facilities from other countries as well. These include Australia, Belarus, Canada, Liechtenstein, Japan, New Zealand, Norway, the Russian Federation, Switzerland, and Turkey.

Although Bangladesh currently benefits from the GSP scheme, it will phase out by 2026 when Bangladesh graduates from the Least Developed Country (LDC) status. After that, Bangladesh could be entitled to the GSP Plus, subject to certain conditions.

In 2013, the US scrapped the GSP facility for Bangladesh, citing serious weakness in labour rights and poor workplace safety. RMG sector now faces a significantly increased tariff when exporting to the United States. As of August 2025, 36.5% tariff has been imposed on Bangladeshi garments. Bangladesh’s ready-made garment exports to the United States fell by nearly 11% year-on-year in October as higher tariffs imposed by the Trump administration reduced consumer demand and disrupted buying patterns in the world’s largest apparel market.

Challenges ahead of LDC Graduation

Bangladesh is scheduled to graduate from the United Nations’ Least Developed Country (LDC) category on November 24, 2026, having met the three graduation criteria—Gross National Income (GNI) per capita, Human Assets Index (HAI), and Economic and Environmental Vulnerability Index (EVI).

The greatest risk associated with LDC graduation is the loss of trade preferences. Bangladesh’s exports are highly dependent on preferential market access. The RMG sector, which accounts for 85 percent of exports, relies heavily on DFQF access to several developed country markets, including the EU, Canada, Australia, and Japan. RMG products also enjoy duty-free access in some developing countries on a limited scale. In fact, Bangladesh was among the few LDCs that reaped the most benefits from preferential market access offered by developed countries.

The RMG sector requires special attention to overcome these challenges. To protect this industry, steps must be taken to enhance competitiveness through technology upgrades, skill development, and product diversification. The government and industry stakeholders should collaborate to counter falling export prices and rising production costs. Bangladesh has made limited progress in areas such as trade logistics, energy supply, and customs efficiency. Business costs remain high, and planned economic zones are not yet fully operational. Besides, Bangladesh has not diversified its exports significantly beyond garments. Despite having huge export potential, sectors such as pharmaceuticals, leather, and ICT remain underdeveloped. Graduation without diversification could expose the economy to concentrated risks.

These infrastructure and policy bottlenecks must be addressed urgently. The government should create a task force to fast-track projects that impact export competitiveness, including power generation, transportation networks, and port facilities.

KNIT AND WOVEN GARMENTS STATISTICS

Bangladesh’s Apparel Export to the World. Value in Million USD (Fiscal Year Basis)

Year	Woven	Knit	Total RMG
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	9486.39	19089.73
2012-2013	11039.85	10475.88	21515.73
2013-2014	12442.07	12049.81	24491.88
2014-2015	13064.61	12426.79	25491.40
2015-2016	14738.74	13355.42	28094.16
2016-2017	14392.59	13757.25	28149.84
2017-2018	15426.25	15188.51	30614.76
2018-2019	17244.73	16888.54	34133.27
2019-2020	14041.19	13908.00	27949.19
2020-2021	14496.70	16960.03	31456.73
2021-2022	19398.84	23214.32	42613.16
2022-2023	17817.93	20324.16	38142.09
2023-2024	16869.16	19282.15	36151.31
2024-2025	18187.89	21159.08	39346.97

Main Apparel Items Exported From Bangladesh. Value in Million USD (Fiscal Year Basis)

Year	Trousers	T-Shirts & Knitted shirts	Shirts & Blouses	Underwear
2015-16	10167.31	6892.80	3076.36	1172.74
2016-17	9943.09	6650.51	2918.97	1328.50
2017-18	10833.83	7153.84	2927.34	1410.70
2018-19	11754.86	7902.27	3190.23	1640.36
2019-20	9362.64	6273.77	2449.65	1358.72
2020-21	10681.52	7239.74	2048.40	1789.70
2021-22	14507.50	9857.54	2765.91	2343.56
2022-23	12412.33	8730.67	3185.49	2012.09
2023-24	11926.81	7734.13	2932.87	2048.45
2024-25	12982.48	8547.52	3044.12	2179.53

Export Processing Zones

The Bangladesh Export Processing Zones Authority (BEPZA), established under the BEPZA Act, 1980, is the pioneer investment promotion agency mandated to create, develop, operate, manage, and control Export Processing Zones (EPZs). The first was launched in Chittagong in 1983. Its model was straightforward but transformative: acquire land, fence it off, guarantee electricity, water, and transport, and provide investors with a single-window administrative authority. Over time, BEPZA expanded to eight zones, stretching from Dhaka to Mongla. By the mid-2010s, these export processing zones had attracted over 3.5 billion dollars in cumulative investment, generated tens of billions in exports, and created more than 420,000 jobs.

List of Export Processing Zones (EPZ) in Bangladesh

Title of the Zone	Location	Profile of Zone Area
Chittagong EPZEstablished: 1983	South Halishahar. 5.50 Km from Chittagong City	Zone area: 255.41 Acres. Number of industrial plots: 190 Plot Size: 2000 sqm Avg.Plot Tariff: US $ 1.25 / sqm/year
Dhaka EPZEstablished: 1993	Savar. 35 Km from Dhaka City	Zone area: 356.22 acres. Number of industrial plots: 451. Plot Size: 2000 sqm Avg.Tariff for Plot: US $ 2.20 /sqm/year.
Comilla EPZEstablished: 2000	Comilla old Airport area. 167 Km from Chittagong port, 97 Km from Dhaka.	Zone area: 267.46 acres. Number of industrial plots: 238, Plot Size: 2000 sqm, Avg.Plot Tariff: US $ 2.20 / sqm/year
Mongla EPZEstablished: 1999	Mongla port area, Bagerhat. 210 Km from Dhaka	Zone area: 309 Acres. Number of industrial plots: 290 Plot Size: 2000 sqm Avg.Plot Tariff: US $ 1.25 / sqm/year
Ishwardi EPZEstablished: 2001	Pakshi, Pabna. 220 km from Dhaka	Zone area: 209.06 acres. Number of industrial plots: 255 Plot Size: 2000 sqm.Plot Tariff: US $ 2.20 / sqm/year
Uttara EPZEstablished: 2001	Shongalshi, Nilphamari. 409 Km from Dhaka	Zone area: 209.06 acres. Number of industrial plots: 255 Plot Size: 2000 sqm.Plot Tariff: US $ 2.20 / sqm/year
Karnaphuli EPZEstablished: 2006	Adamjee Nagar, Shiddirgonj, Narayanganj. 15 km from Dhaka City	Zone area: 209.06 acres. Number of industrial plots: 255 Plot Size: 2000 sqm.Plot Tariff: US $ 2.20 / sqm / year
Adamjee EPZEstablished: 2006	Adamjee Nagar, Shiddirgonj, Narayanganj. 15 Km form Dhaka City	North Potenga, Chittagong. 10 Km Chittagong City, 6 Km from Chittagong Port

The Government offers numerous incentives for setting up factories in EPZs. The major Fiscal and non-fiscal incentives are listed below:

FISCAL

• Tax Exemption
• Relief from double taxation, subject to a bilateral agreement.
• Complete exemption from dividend tax for the tax holiday period for foreign nationals.
• Duty-free import of machinery, equipment, and raw materials.
• Duty-free import of materials for the construction of factory buildings in the zones.
• Duty-free export of goods produced in the zones.
• Full repatriation of profit, capital, & establishment.

NON-FISCAL

• All foreign investments are secured by the Foreign Private Investment (Promotion and Protection) Act of 1980.
• No ceiling on the extent of foreign investment.
• 100% foreign ownership is permissible.
• Overseas Investment Corporation (OIC) insurance and finance program facilities are available.
• Security and safeguards under the provision of the Multilateral Investment Guarantee Agency (MIGA)
• Offshore banking facilities
• Foreign currency loan from abroad under the direct automatic route (OBU facilities).
• Local and international banking facilities are also wide-open.
• No UD (Utilization Declaration), IRC (Import Registration Certificate), ERC (Export Registration Certificate), & renewal of bond license is required.
• 100% backward linkage raw materials and accessories are allowed to be sold for export-oriented industries inside and outside EPZs.
• Import and Export on CIVI/CMP/CMT basis are allowed.
• Imports from the Domestic Tariff Area (DTA) and 10% export to DTA are permitted.
• Freedom from national import policy restrictions.
• Import of raw materials is also allowed on a Documentary Acceptance (DA) basis.
• Advantages of opening back-to-back LC for certain types of industries for import or raw materials.
• Sub-contracting within EPZ is allowed.
• No permission required for expansion of the project or product diversification.
• Repairing and maintenance of machinery and capital equipment from the domestic tariff are allowed.
• Foreigners employed in the zones enjoy equal rights similar to those of Bangladesh nationals.
• The law forbids the formation of any labor union in the zones. Strike within the zones is prohibited.

The Bangladesh Economic Zones Authority (BEZA) is currently in the process of establishing numerous economic zones (EZs) across Bangladesh with the ambitious long-term goal of developing 100 zones by 2030–2041 to generate 10 million jobs and boost annual exports by $40 billion.  BEZA’s site selection strategy has emphasized non-arable or low-yielding land. Mirsarai Economic Zone, spread over 7,716 acres in Chattogram, sits near a planned deep-sea port, ensuring connectivity while avoiding prime farmland. Sirajganj Economic Zone, with 1,041 acres in the Rajshahi division, targets a historically neglected region using land less suited for high-yield agriculture. Bhola and Jamalpur zones utilise chars and riverine lands, converting flood-prone or under-productive areas into industrial hubs.

As of late 2024/early 2025, the interim government has shifted focus toward prioritizing five key zones to ensure rapid industrialization.

1. National Special Economic Zone: Located in Mirsarai, Chattogram, this is the flagship, largest project, spanning over 33,000 acres across Mirsarai, Sitakunda, and Sonagazi.
2. Sylhet Economic Zone: Located in Moulvibazar.
3. Jamalpur Economic Zone: Located in Jamalpur.
4. Maheshkhali Economic Zone: Located in Cox’s Bazar.
5. Japanese Economic Zone (Bangladesh Special Economic Zone): Located in Araihazar, Narayanganj, which is ready to welcome investors. 

CONCLUSION

So far, the garment industry has performed well in overcoming major challenges, particularly in complying with global safety and sustainability standards, while remaining competitive in the global marketplace. The increasing number of LEED-certified factories, along with consistent year-on-year growth, clearly demonstrates the industry’s resilience and success.

At this stage, industry owners, together with government policymakers, need to identify effective strategies to sustain this growth in the absence of trade preferences. Although the government appears to be pursuing bilateral trade agreements with major importing countries, these efforts may not be sufficient. Other least developed countries are likely to continue enjoying preferential trade treatment and tariff advantages, which could place the industry at a competitive disadvantage.