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International Monetary Fund. Asia and Pacific Dept

’s important to highlight that occupations in the RMG industry vary in their risk of being automated, with weaving and knitting machine operators having higher risk of automation than patternmakers. 4 Bangladesh is more vulnerable to automation than other south Asian economies given the greater role manufacturing plays in the economy. Employment by Occupation in Bangladesh (In percent of total employment) Sources: Labor Force Surveys of Bangladesh, Bhutan, India, Maldives, Nepal, and Sril Lanka. 5. Understanding the impact of automation on the manufacturing

International Monetary Fund

I. T he R eady -M ade G arment I ndustry in B angladesh : A n U pdate 1 A. Introduction 1. Bangladesh’s RMG industry grew out of the quota system associated with the MFA of 1974–94 . The industry was established by foreign investors who set up garment and accessories factories in Bangladesh’s EPZs during the mid-1980s to access Bangladesh’s abundant supply of low-cost labor and take advantage of its quota share under the MFA. The RMG sector has grown tremendously over the past 20 years, generating associated increases in employment that contribute

International Monetary Fund. Asia and Pacific Dept

supplementary duties, to increase competitiveness in non-RMG industries . Some of the tax benefits for the RMG industry, such as duty exemption for imported inputs, should also be extended to non-RMG sectors. In addition, many import-substitute products are shielded from competition with supplementary duties imposed on imported goods. This leads to higher profitability from domestic sales than from exports through the price differentials between the domestic and international markets. These barriers must be scaled down to expand export production. 13. Efforts in investing

International Monetary Fund. Asia and Pacific Dept

, diversion of orders from the rest of Asia, faster reopening of economic activities at home, and policy support to the ready-made garment (RMG) industry. The underlying pace of domestic activity is also mirrored in strong growth (26 percent) in imports of capital machinery imports so far (up to November 2021) and robust growth in VAT collection (15.2 percent). After remaining strong in FY21, overseas remittances slowed down during the current fiscal year as many Bangladeshi migrants lost their jobs and many returning migrants couldn’t travel back due to international

Mr. Montfort Mlachila and Yongzheng Yang

typical trajectories of quota growth under the ATC are shown in the right panel below. Sources: Adapted from IMF (2002). II. T extile and C lothing I ndustry in B angladesh The RMG industry has been the main source of growth in exports and formal employment in Bangladesh, although its direct contribution to GDP, at about 5 percent, is relatively small ( Table 1 ). 5 The industry plays a key role in employment and in the provision of income to the poor, directly employing about 1.8 million people, or about 40 percent of manufacturing sector

Mr. Montfort Mlachila and Yongzheng Yang
This paper evaluates the effects on the Bangladeshi economy of phasing out textile and clothing (T&C) quotas currently maintained by industrial countries. The planned abolition of the quotas under the Agreement on Textiles and Clothing in 2005 will alter the competitiveness of various exporting countries. Bangladesh relies heavily on textile and clothing exports and is potentially very vulnerable to this change in competitiveness. Based on assessments of quota restrictiveness and export similarity, and an analysis of its supply constraints, the paper concludes that Bangladesh could face significant pressure on its balance of payments, output, and employment when the quotas are eliminated.
International Monetary Fund. Asia and Pacific Dept

direct outcome of the global Multifibre Arrangement (MFA) regime, as well conducive policies undertaken by the government to ensure global competitiveness of the industry. It was extremely good policy foresight that allowed the RMG industry not to be subjected to high tariffs, in terms of intermediate inputs and raw materials that have to be imported on upfront payment of duties. The RMG sector operates within a “free trade” enclave in that all imported inputs come in under a bonded system duty free. Had this not been the case, RMG exports would not have reached the

International Monetary Fund
This Selected Issues paper on Bangladesh underlies the export performance of readymade garment industry and inflation dynamics. Bangladesh has demonstrated that it is highly competitive in the world’s major garment markets. Inflation inertia, monetary factors, and exchange rate fluctuations are the main determinants of inflation in Bangladesh. Despite adoption of numerous tax policy measures during the past few years, policies implemented by the Bangladesh authorities have not been fully successful in lifting the revenue ratio to a level warranted by developmental objectives.
International Monetary Fund

reforming the highly protective trade regime. It is therefore recommended that future PRS documents develop a medium-term trade reform strategy focusing on nondiscriminatory trade liberalization. In this context, the fiscal strategy would also need to take into account the revenue implications of lower tariffs resulting from further trade reform. The staffs are of the opinion that the NSAPR has not adequately addressed the challenge faced by the RMG industry in the post-MFA era. There is little discussion of existing policy distortions that undermine the sector