The textile and clothing industry in Bangladesh has contributed greatly to the country's economic development and to its status as one of Asia's fastest growing economies.It constitutes by far the most important industrial activity in the country,and it fulfils a vital role as a source of foreign exchange and as an employer.In 2017/18 it provided direct employment for 5.9 mn people,of whom 1.9 mn were in the textile industry and 4.0 mn in clothing.Textile and clothing exports were worth US$31.85 bn in 2017/18,which represented 88.0% of the country's overall exports.Clothing exports alone accounted for 96.1% of the 2017/18 figure for textiles and clothing and in 2017 Bangladesh was the world's second largest clothing exporter.The industry's development has been aided by policies pursued by successive governments aimed at encouraging foreign direct investment(FDI)and allowing private enterprise to take the leading role.Governments have also aimed to promote a business-friendly environment and not impose any barriers to trade and development.The industry benefits in addition from a number of other advantages,including: cheap labour;a vertically integrated supply chain;duty-free access to the Australian,Canadian and EU import markets;preferential duty rates in a number of other major import markets;and strong investor support from a number of major clothing brands,including Gap,H&M,Levi's and Zara,as demonstrated by the initiatives that were established and the subsequent work which has been carried out to improve building safety in the country following the Rana Plaza tragedy in April 2013. The industry has set an ambitious export target of US$50 bnfor the country's 2020/21 financial year in clothing alone.However,in order to reach this target,the industry will have to overcome a number of hurdles-such as ensuring occupational safety and regulatory compliance,and establishing and protecting labour rights.At the same time,a number of other factors could also affect export growth,including: unreliable gas and electricity supplies;inefficient transportation routes and port services;changes in market demand;currency fluctuations;tightening margins;and an over-reliance on foreign expertise.Looking further ahead,Bangladesh is set to graduate from its current status as a least developed country(LDC)to become a middle income country in 2021.If this were to occur,in 2024-following a three-year transition period-imports into a number of major markets from the country would become subject to additional tariffs averaging 6.7%.This could,in turn,result in an annual loss in export earnings of US$2.7 bn.
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