Who Can Export Garments from Bangladesh? Legal & Practical Guide

Introduction

Exporting garments from Bangladesh is an exciting opportunity, but many beginners find it confusing where to start. Bangladesh is one of the world’s largest garment exporters, making it a prime market to enter — yet success depends on understanding who can start exporting and meeting the essential legal and practical requirements.

Whether you are a local entrepreneur, a factory owner, or simply curious about garment exports, this comprehensive guide will clarify the eligibility criteria and outline the key steps you must take. We’ll share real-life examples of exporters like Mohammad Rahman and Noor Hossain, who started from scratch and grew their businesses globally.

By the end, you’ll feel confident about how to begin your export journey from Bangladesh.

Who Is Eligible to Export Garments from Bangladesh?

1. Legally Register Your Business

Before exporting, your business must be registered with the Bangladesh government. This legal recognition is mandatory to obtain licences, join industry bodies, and open export bank accounts.

Common Business Registration Types:

Sole Proprietorship: Simple and quick to register but offers no personal liability protection.
Partnership: Involves two or more partners sharing profits and liabilities.
Private Limited Company: The most popular choice for garment exporters. It limits personal liability and facilitates investment and growth.
Public Limited Company: Suitable for larger firms with public shareholding.
Export Oriented Unit (EOU): Registered units focused solely on export with tax benefits and government support.

Example:
Mohammad Rahman, a budding entrepreneur from Dhaka, chose to register his company as a private limited company. This gave him credibility with international buyers and ensured his personal assets were protected.

2. Become a Member of BGMEA or BKMEA

The Bangladesh Garment Manufacturers and Exporters Association (BGMEA) and Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) are the main trade bodies supporting garment exporters.

BGMEA: For woven garment exporters.
BKMEA: For knitwear exporters.

Joining these organisations is not just mandatory but very beneficial. They provide vital services including export training, compliance updates, market access, dispute resolution, and networking.

Example:
Noor Hossain, owner of a knitwear factory in Chittagong, joined BKMEA early. This membership gave him access to training sessions on labour law compliance and connected him with European buyers — boosting his orders by 30% in the first year.

Beginner Tip:
Become a member as soon as you register your business — it’s your gateway to industry support and credibility.

3. Obtain an Export Registration Certificate (ERC)

An ERC is a legal permit issued by the Ministry of Commerce authorising your company to export goods internationally. Without this, you cannot export legally.

To apply for an ERC, you need:

Proof of business registration.
BGMEA or BKMEA membership certificate.
Factory details or sourcing arrangements.
Relevant application fees.

The process usually takes 2–3 weeks when your documents are in order.

Example:
Mohammad Rahman applied for and received his ERC shortly after joining BGMEA, which allowed him to start negotiating contracts with foreign buyers confidently.

4. Open a Foreign Currency Bank Account

To receive payments from overseas buyers, your business must open a foreign currency account with an authorised dealer bank recognised by Bangladesh Bank.

This account facilitates:

Letters of Credit (LC) payments.
Telegraphic Transfers (TT).
Foreign currency management and repatriation.

Example:
Noor Hossain opened a foreign currency account at a major bank with a dedicated export desk. The bank’s export specialists guided him through payment terms and helped him understand exchange rate management.

Beginner Tip:
Select banks experienced in trade finance for garment exports — their guidance reduces payment delays and risks.

Legal and Regulatory Essentials for Exporters

Register for Tax and VAT

Garment exporters must obtain a Tax Identification Number (TIN) and register for Value Added Tax (VAT), even though exported goods are zero-rated for VAT (meaning no VAT is charged on exports).

VAT registration allows you to claim refunds on VAT paid for local inputs such as fabrics, trims, and equipment — helping improve cash flow.

Example:
Mohammad Rahman diligently registered for VAT, enabling him to recover VAT on his fabric purchases, reducing costs by several thousand pounds annually.

Obtain an Import-Export Code (IEC)

An IEC is issued by the Chief Controller of Imports and Exports and is mandatory for customs clearance. It helps track and regulate export activities.

Example:
Noor Hossain includes his IEC on all shipment documents, ensuring smoother customs clearance and avoiding unnecessary delays.

Labour and Environmental Compliance

International buyers demand factories comply with social, labour, and environmental standards.

You must:

Follow the Bangladesh Labour Act 2006 (minimum wages, working hours, worker safety).
Maintain fire safety and workplace hygiene as per BGMEA and government requirements.
Manage waste and pollution responsibly.
Prepare for audits by social compliance standards like WRAP, BSCI, and SEDEX.

Example:
After a BGMEA inspection recommended improvements, Mohammad Rahman invested in fire safety upgrades. This compliance helped him secure a major UK buyer that prioritised safe working conditions.

Practical Requirements to Start Exporting

Own or Source From Factories

You need a reliable supply of garments:

Own a compliant factory with the required labour, safety, and quality standards.
Or act as a buying agent sourcing garments from factories that meet buyer standards.

Example:
Noor Hossain owns a knitwear factory but also collaborates with two other certified factories to fulfil large orders. He visits these suppliers regularly to monitor quality and compliance.

Set Up Quality Control Systems

Consistent product quality is essential to avoid returns and maintain buyer trust.

Best practices include:

Multiple inspections at raw material, in-process, and final stages.
Trained quality control personnel with clear checklists.
Detailed records of quality issues and corrective measures.

Example:
Mohammad Rahman’s QC team rejects garments with stitching faults and immediately informs production supervisors to prevent repeat issues. This proactive approach reduces complaints and builds buyer confidence.

Know Your Export Documentation

Understanding and preparing the correct export documents prevents shipment delays:

Commercial Invoice: Details the price, quantity, and description of goods.
Packing List: Specifies carton contents and weights.
Bill of Lading / Airway Bill: The contract with the shipping company.
Certificate of Origin: Confirms products are made in Bangladesh.
Letter of Credit: A payment guarantee from the buyer’s bank.

Example:
Noor Hossain created standardised templates for all export documents and introduced a double-check system, which eliminated costly customs issues caused by missing information.

Build Strong Logistics and Shipping Partnerships

Reliable logistics ensure your products reach buyers on time:

Freight forwarders book cargo space and handle customs clearance.
Customs brokers expedite document handling.
Shipping companies provide fixed schedules.

Example:
Mohammad Rahman’s freight forwarder arranged monthly shipments to Europe, reducing storage costs and ensuring consistent delivery schedules.

Understanding Export Payment Methods

Letters of Credit (LC)

An LC is a bank guarantee that protects both buyers and exporters. Payment is secured once shipment terms are fulfilled.

Telegraphic Transfer (TT)

A direct bank transfer post-shipment. It’s faster but riskier than LCs for new exporters.

Advance Payment

Buyer pays upfront. This reduces risk but is uncommon for established buyers.

Example:
Noor Hossain prefers LCs for new buyers to ensure payment security and uses TT for repeat buyers after building trust.

Export Incentives and Government Support

The Bangladeshi government encourages garment exports with:

Cash incentives (typically 2–4% of FOB export value).
Duty drawbacks on imported raw materials.
Bonded warehouse facilities to reduce customs duties.

Example:
Mohammad Rahman claimed export cash incentives which helped fund new equipment, increasing factory productivity.

Common Challenges for New Exporters

Complex regulations and frequent updates.
Managing cash flow between production and payment receipt.
Meeting international quality and social compliance expectations.
Fierce competition with other garment exporters.
Rising demands for environmental sustainability and transparency.

Beginner Tip:

Start small, learn from each shipment, and build capacity gradually.

Bangladesh’s Competitive Advantages

Skilled workforce with competitive labour costs.
Government support with export-friendly policies.
Robust supply chain and garment manufacturing infrastructure.
Growing reputation for ethical and sustainable production.

Frequently Asked Questions (FAQs)

Can foreigners start export businesses in Bangladesh?
Yes, foreign investors can set up joint ventures or wholly-owned companies after legal registration.

Do I need to own a factory?
No. You can be a buying agent sourcing from compliant factories.

How long does it take to get an ERC?
Typically 2–3 weeks if documents are complete.

Is there a minimum capital requirement?
No official minimum, but adequate funds are essential for operations and compliance.

Conclusion

Starting a garment export business in Bangladesh is achievable with the right preparation. Register your business, join BGMEA or BKMEA, obtain your Export Registration Certificate, open a foreign currency bank account, comply with tax and labour laws, set up quality control and logistics systems, and understand export payment methods.

Exporters like Mohammad Rahman and Noor Hossain started exactly where you are today. With patience, planning, and persistence, you too can build a successful garment export business and reach buyers worldwide.

Key Takeaways

Register your business and join BGMEA/BKMEA early.
Obtain your Export Registration Certificate (ERC) promptly.
Open a foreign currency account to handle international payments.
Comply fully with tax, labour, and environmental laws.
Implement strong quality control systems.
Develop reliable logistics and shipping partnerships.
Understand export documentation and payment terms.
Use government incentives to boost profitability.

Who Can Start Exporting Garments from Bangladesh? Essential Requirements