2. The first RMG factories

The production of ready-made garments for export began in Bangladesh in 1978. Apart from Reaz Garments, the very first exporter of garments, these producers started as joint ventures with companies from newly industrializing East Asian countries, especially from Hong Kong and South Korea. These joint ventures were intended primarily to skirt the quotas restricting the amounts of garments East Asian producers could export to North America and the European Union under the so-called Multi-Fibre Agreement that the General Agreement on Trade and Tariffs (GAAT) had introduced in 1974. Since wages in Bangladesh then ranked lowest among the Asian countries still outside the purview of this agreement, it became a favorable destiny for outsourcing production.

Most ready-made garment factories were neither established with direct foreign involvement, nor by businessmen or industrialists, but by retired civil servants, army officers or others from the urban middle class without any or only little experience in the business or in garment production. They could afford to do because they were provided with foreign orders by foreign as well as local ‘buying houses’, and the production of shirts and t-shirts – which RMG industries in Bangladesh produced then – was based on only relatively simple technical operations in ‘cutting trimming making’, because the machinery for that was relatively cheaply available and because they could accommodate in rented floors in residential complexes in the cities of Chottogram and Dhaka and did not require larger integrated factory complexes.