Mehdi Mahbub CEO & Chief Consultant, Best Sourcing Founder, RMG Bangladesh GLOBAL TRENDS IN THE GARMENT SECTOR AND OPPORTUNITIES FOR BANGLADESH

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1 GLOBAL TRENDS IN THE GARMENT SECTOR AND OPPORTUNITIES FOR BANGLADESH TECHNOLOGICAL CHANGES AND INNOVATIONS IN THE WORLD BANGLADESH READYMADE GARMENT INDUSTRY, the 2 nd largest apparel exporter of the world: Success Achieved by Smart Usage of Manpower with Technological Changes & Innovations Mehdi Mahbub CEO & Chief Consultant, Best Sourcing Founder, RMG Bangladesh

2 Readymade Garment (RMG) Industry of Bangladesh The RMG industry acts as a catalyst for the development of Bangladesh. The "Made in Bangladesh" tag has also brought glory for the country, making it a prestigious brand across the globe. Bangladesh, which was once termed by cynics a "bottomless basket" has now become a "basket full of wonders." The country with its limited resources has been maintaining 6% annual average GDP growth rate and has brought about remarkable social and human development. The industry that has been making crucial contribution to rebuilding the country and its economy is none other than the RMG industry which is now the single largest export earner for Bangladesh. The sector accounts for 82% of total export earnings of the country.

3 TIMELINE RMG industry started its journey with $10,000 exports made by 1200 workers Export reached $116 million million workers and 384 factories - Export hit $2.2 billion Eliminated Child Labor through Earn & Learn program -Rise of purpose built compliant factories Export $6.4 billion - MFA Quota phased out which was predicted to have severe consequence Export $12.5 billion - Ranked 2nd largest RMG exporting country despite global recession Export $21.52 billion - Rana Plaza & Tazreen accidents erupted the issue of workplace safety Export $28 billion - 10-years of MFA phase out. Export quadrupled employment 4.4 million. - Major progress in safety & workers rights, usage of world class technology Vision has been set at $50 billion exports - Workplace safety, environmental sustainability, & excellence in product & market diversification envisioned

4 SNAPSHOT: TEXTILE & CLOTHING INDUSTRY IN BANGLADESH Number of Clothing Factories 3800 around Investment $11 billion around Exports to around 130 countries 4.4 Million workers 394 spinning & 777 textile mills 99% accessories made locally Export $28 billion

5 NUMBER OF RMG FACTORIES AND EMPLOYMENT YEAR NUMBER OF GARMENT FACTORIES EMPLOYMENT , , , ,

6 COMPARATIVE STATEMENT ON EXPORT OF RMG AND TOTAL EXPORT OF BANGLADESH (VALUE IN MILLION US$) YEAR EXPORT OF RMG TOTAL EXPORT OF % OF RMG S TO TOTAL BANGLADESH EXPORT , , , , , , , ,

7 VALUE OF TOTAL APPAREL EXPORT CALENDAR YEAR BASIS (VALUE IN MILLION US$) YEAR WOVEN KNIT TOTAL , , , , , , , , , , , , , , , , , , , ,445.02

8 World TOP cotton importer (Season Beginning August 1) (1000 MT) World TOP cotton importer (Season Beginning August 1) (1000 MT) 2016/17 Oct 2015/ / / /13 Bangladesh 1,372 1,350 1,176 1,154 1,089 Vietnam 1, China ,804 3,075 4,426 Turkey Indonesia Pakistan India Other 1,962 1,872 1,864 2,069 2,201

9 World TOP cotton Exporter (Season Beginning August 1) (1000 MT) World TOP cotton Exporter (Season Beginning August 1) (1000 MT) 2016/17 Oct 2015/ / / /13 United States 2,613 1,993 2,449 2,293 2,836 Australia ,056 1,343 India 849 1, ,016 1,690 Brazil Uzbekistan Burkina Faso Mali Other 1,638 1,796 2,004 2,013 2,166

10 Bangladesh, World s Largest Cotton Importer, Expands Share of World Trade 2016/17 TRADE OUTLOOK Major Importers: Bangladesh is up 400,000 bales to 6.3 million on higher domestic use. India is raised 500,000 bales to 1.5 million on very strong early-season imports. Indonesia is up 100,000 bales to 2.9 million on higher domestic use. Major Exporters: The United States is raised 500,000 bales to 12.0 million on stronger global import demand. Brazil is cut 500,000 bales to 2.9 million on a smaller crop. Australia is raised 800,000 bales to 4.2 million on a significantly larger crop. Benin is up 100,000 bales to 700,000 due to larger carry-in stocks. Mali is increased 100,000 bales to 1.2 million on a larger crop.

11 Fashion and textile industry To drive new innovations, technologies Technology to play a pivotal role- Smart fabrics, interactive fabrics, 3D printed fashion and many other innovations have opened up a whole collection of possibilities that will have a huge impact on the world of fashion as we know it. Innovations in sustainability to trend in Innovations in sustainability reducing water and energy consumption, which are vital developments for the benefit of the environment and saving costs. Emergence of technical textiles to grow robust- Technical textile has become a major segment globally because of several advantages like functional requirement, health and safety, cost effectiveness, durability, high strength etc. Spinning sector to see smaller order sizes- Spinning industry witnessed a trend of smaller order sizes which is likely to continue in The combination of high demand and decreasing raw material costs has also provided spinners with the opportunity to enhance margins. Orders are relatively small, at least for most specialty spinners, and the variety of yarns spun is on the rise. Crowdfunding, the new buzzword in fashion- Crowdfunding is enabling new fashion startups to fight against the industry norm of manufacturing in Asia, bringing production closer to home thanks to lower minimum orders, willing local manufacturers and the trend of unique, customized clothing. Inking and coloring the efficient way- The market is going to see a very meaningful innovation in software applications, helping colour to be accurate and improving efficiency in the printing process to save customers time and money. Industry 4.0, the concept of interconnected production chains with the potential for cloud or mobile- based management - speaks to the evolution path of technological innovation that textile professionals need.

12 ASIA EMERGING GLOBAL TEXTILE & CLOTHING HUB Share of Asia and rest of the world (ROW) in global clothing exports, measured in US$ Rest of the World (ROW), 59.08% ASIA, 40.92% ROW, 37.59% ASIA, 62.41% Africa

13 Main key factors which has great influence on RMG sector of Bangladesh Vast labor force. Skilled human resources. Technological upgrades. Government supports for textile and clothing. Special economic/export processing zones. Environment & Sustainable technology based industry Incentive for use of local inputs. Duty advantage for the import of Material/Machines & tax free export. Income tax reduction. And international supports like GSP, GSP+, duty free access.

14 Strengths vs. Weaknesses of Bangladesh Garments Industry Strengths Competitive clothing sector thanks to low-cost labor force Substantial remittances from emigrant workers, located mainly in the Gulf states International aid helps cover financing needs Moderate level of national debt Favorable demographics: 45% of Bangladeshis are under 15 Weaknesses Economy vulnerable to changes in global competition in the textile sector Very low per capita income Recurring political and social tensions Shortcomings in terms of business climate, especially regarding infrastructure Recurring natural disasters (cyclones, severe flooding) which result in significant damage and loss of harvests

15 $50b RMG Export Target by 2021 Investment in technology To use technology that improves productivity through process improvement, product innovation and new worker skills and helps serve the customer more efficiently. Manpower resource, technology is the only way to reach the goal by minimizing the production cost and maximizing the profit. Bangladesh Garment Industry is the life blood of the country s economy. Use of technology in Bangladesh garment industry is at a nascent stage; a full-blown intervention of technology down to unit or operator level to increase efficiency from production to distribution level. To reduce material wastage by using effective concepts of fabric utilization and streamline cutting room processes. Investment in equipment and new technology will enable output per worker to increase and raise productivity and profitability. The country s many RMG factories failed to reap the benefit of advanced technology because of the backdated technology use.

16 Leadership in Energy and Environmental Design (LEED) WORLD S TOP RATED LEED CERTIFIED INDUSTRIAL ESTABLISHMENTS ARE IN BANGLADESH GLOBAL AWARD WINNER GREEN LANDSCAPING APPAREL FACTORY AT DHAKA A PLATINUM LEED CERTIFIED WASHING FACTORY AT DHAKA A PLATINUM LEED CERTIFIED WOVEN FACTORY AT DHAKA 150 more factories in LEED certification pipeline 33 LEED certified factories World s highest rated knitwear, woven, washing and Denim mills

17 GREEN factory of Bangladesh Garment Industry

18 Thank You Visit RMG Bangladesh Contact: