Sunday, November 12, 2017
History of
textile production in Bangladesh
Post-1971
From 1947 to 1971 the textile industry, like most industries
in East Pakistan, were largely owned by West Pakistanis. During that period, in
the 1960s, local Bengali entrepreneurs had set up their own large textile and
jute factories. Following its separation from East Pakistan the newly formed
Bangladesh lost access to both capital and technical expertise.[17]
Until the liberation of Bangladesh in 1971, the textile
sector was primarily part of the process of import substitution
industrialization (ISI) to replace imports. After the liberation, Bangladesh
adopted export-oriented industrialization (EOI) by focusing on the textile and
clothing industry, particularly the readymade garment (RMG) sector. Immediately
after the founding of Bangladesh (1971),[18] tea and jute were the most
export-oriented sectors. But with the constant threat of flooding, declining
jute fiber prices and a significant decrease in world demand, the contribution
of the jute sector to the country’s economy deteriorated.[19]
In 1972 the newly formed government of Sheikh Mujibur Rahman
who was also the head of the Awami League, enacted the Bangladesh Industrial
Enterprises (Nationalization) Order, taking over privately owned textile
factories and creating a state-owned enterprise (SOE) called Bangladesh Textile
Mills Corporation (BTMC). President Rahman promoted democracy and a socialist
form of capitalism. The BTMC never managed to match the pre-1971 output and in
every year after the 1975–1976 fiscal year, lost money. Until the early 1980s
the state owned almost all spinning mills in Bangladesh and 85 percent the
textile industry's assets (not including small businesses).[17] Under the 1982
New Industrial Policy (NPI) a large number of these assets including jute mills
and textile mills were privatized and returned to their original owners.[20]
In the devastating famine in 1974, one million people died,
mainly of starvation caused in part by the flooding of the Brahmaputra river in
1974, and a steep rise in the price of rice. Partly in response to the economic
and political repercussions of the famine, the Bangladeshi government shifted
public policy away from its concentration on a socialist economy, and began to
denationalize, disinvest and reduce the role of the public sector in the
textile industry while encouraging private sector participation. The 1974 New
Investment Policy restored the rights to both private and foreign
investors.[20] Bangladesh's development model switched from a state-sponsored
capitalist mode of industrial development with mainly state-owned enterprises
(SOE) to private sector-led industrial growth.[20]
Post-liberation war, Bangladesh continued to focus on the
agricultural sector to feed its rural and poor masses. Even in 1978, there were
only nine "export-oriented" garment manufacturing units. That same
year the first direct export of garments, 10,000 shirts to a Parisian firm, was
shipped from a Bangladeshi firm.[21] The Bangladeshi government began to
realize potential for the industry to flourish and offered development stimulus
such as "duty-free import machinery and raw materials, bonded warehouse
facilities and cash incentives."[22]
