Mending the Seams of RMG

Share on facebook
Facebook
Share on twitter
Twitter
Share on pinterest
Pinterest
Share on linkedin
LinkedIn

The leaders of the apparel sectors have set a goal of $50 billion in foreign currency as an earning target from exports in the next five years. The industry sees this as a challenge that is achievable with hard work.
In order to reach the target, the country has to focus on some specific key issues. These include factory streamlining, developing infrastructure, attracting investment, boosting productivity while ensuring political stability. The apparel export is currently growing at a rate of 10%. This growth should be at least 11% to reach the target of $50 billion by 2021 that was set by the BGMEA in 2014.

By Monira Munni

Monira Munni-02

According to the official date, the country has earned $28.09 billion from RMG (knit and woven) exports in FY 2015-16, a figure that was $12.49 billion just five years ago. The data has indicated that the nation’s contribution to total foreign currency earnings also increased to 82.04% in the last fiscal year which was only 77% six years ago. Out of the $28.09 billion income in the last year, the knitwear sector fetched $13.35 billion, while woven items brought $14.73 billion. These export earnings from knitwear and woven were $6.48 billion and $6.01 billion respectively during FY 2009-10. Despite being the second largest producer of garment items in the world, Bangladesh accounts for only 5.90% of the global clothing market, according to industry experts.Monira Munni-03
Immediately after the Rana Plaza building collapse, which killed more than 1,100 workers of which most were women, the western retailers formed two platforms – Accord and Alliance. Accord is a platform of more than 220 signatories that mainly consists of EU based apparel buyers, retailers and trade unions. They have assessed structural, fire and electrical integrity in some 1,600 garment factories. Alliance is based in North American apparel companies and has inspected approximately 700 units. Of the listed factories with flaws identified by Accord, 63% have been fixed while 54% of the ones listed by Alliance have done the same.
Some 1,500 units were inspected by a government-International Labour Organization (ILO) joint project, under the National Action Plan but the progress is very poor. A recent Department of Inspection for Factories and Establishments (DIFE) report showed that only 16% of the structural, 10% of the fire and 14% of the electrical flaws in some 219 amber marked factories have been fixed though inspections were only completed in the past year.
There are more 800 factories that are not affiliated with any of the two apparel apex bodies—Bangladesh Garment Manufacturers and Exporters Association (BGMEA) and Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA). No inspection has been carried out in those units, though they are involved in garments export trade and the majority of them do sub-contracting.
Monira Munni-04
To ensure workplace safety, all the factories need to be assessed, the Sustainability Compact partners pressed for this. Funding is a crucial issue for the required remediation. According to a recent ILO-IFC joint study, it was revealed that about $929 million has been required so far in order to fix the identified flaws in the country’s RMG factories assessed by the three initiatives.
According to industry leaders, there are a number of advancements that are imperative. Better roads and more efficient port operations are vital for the future development of the sector and its export performance. The existing infrastructure needs to be maintained and prevented from quick depreciating and the current model of ‘build, neglect and then rehabilitate’ has to be revamped, according to the Bangladesh RMG Roadmap.
A minimum level of investment in infrastructure is needed to get the productivity effects. The organization has suggested that the regulatory framework needs to be corrected, making the institutions responsible for infrastructure services decentralized, accountable and sustainable both operationally and financially.
Monira Munni-05According to experts, Bangladesh would have to make the investment it has made over the last 35-40 years; a formidable task that would require a capital-intensive investment to achieve the same output. Bangladesh would have to invest $100-125 billion in the sector at the country’s current capital output ratio of 4.5. The BGMEA considered if it would be able to make this amount of investment without foreign direct investment. More importantly, the standards that are being applied in Bangladesh should be applied globally. If it is ensured, the cost of production in Vietnam, Myanmar and Cambodia will also go up. As a result, Bangladesh will be able to remain a competitor.
The sector’s insiders alleged that the country has no long-term energy policy. Primary textile millers alleged that they are not getting any new connection though a good number of factories have set up machinery. Unfortunately, they could initiate production due to gas connection. Moreover, the government proposed a 130% hike in gas prices for captive power generation.
The textile sector, particularly the spinning sub-sector has grown because of the support from the government, as gas prices were comparatively low in the country which encouraged the millers to set up new spinning mills and expand. However, the proposed hike might have a severe negative impact on the sector that supplies raw materials for nearly 90% to the knitwear sector and 40% of the woven segment.
The Bangladesh Textile Mills Association leaders feared that if the proposed hike were implemented, the country would lose it competitiveness in the global market. Collectively the textile and garment industry consume 5% of the total gas production. Nevertheless, they contribute significantly to the creation of jobs, earning foreign currency and the GDP. They have sought a long-term energy policy to help the entrepreneurs to plan their investment.
The industry also believes that immediate attention needs to be given with respect to the increasing requirement and use of fresh water across the industries including the garments sector. The Roadmap suggested ensuring the use of Effluent Treatment Plant (ETP) by all RMG industries equipped with the latest technology, use of cost-efficient and energy-efficient green technologies for the growth of the sector.
Investment in education is required in order to generate more engineers, young entrepreneurs and other skilled professionals including accountants and health and safety specialists. According to experts, foreigners are coming to work in Bangladesh as skilled manpower due to the lack of local ‘skilled workers’ and taking $4 billion away every year.
The gap in capacity development needs to be narrowed down through training the owners, supervisors, managers, and workers. If the four million garment workers can be trained properly and have the experience of dealing with safety issues, it would vastly progress the industry. Some $21.71 billion out of $28.09 billion came from the five major items: shirts, t-shirts, trousers, jackets, and sweaters. This exemplifies that there is a need for a further boost in the product diversification.
Export earnings are also confined in traditional markets in EU, US, and Canada that account for 61.06%, 20.02% and 3.55% of total shipments respectively. Earnings in non-traditional markets increased to $4.31 billion in last fiscal year from $3.58 billion in 2013-14.
Experts have recommended that the BGMEA provide numerical statistics on how much additional power, gas, land and the number of skilled workers and mid-level managers they would need to reach the target in order to aid the government in its decisions regarding the industry.
Labor leaders, however, said labor rights must be guaranteed for the sustainable development of the industry. The living conditions of the workers and their wage have to be improved. In addition, trade union rights and freedom of association have to be ensured. They have postulated that without ensuring the well-being of the workers, the sector will not be sustainable. Ultimately, industrial relations between the workers and the owners have to improve.

The writer can be reached at munni_fe@yahoo.com.

Share:

Share on facebook
Facebook
Share on twitter
Twitter
Share on pinterest
Pinterest
Share on linkedin
LinkedIn
On Key

Related Posts

THE TELEPHOTO REVOLUTION

From professional-grade telephoto lenses to advanced AI features, the vivo X200 redefines mobile photography in collaboration with ZEISS.   In the realm of flagship smartphones,

THE POWER OF INNOVATION

Duke, CEO of vivo Bangladesh, highlights how the company’s leading technological innovations and committed CSR initiatives are empowering individuals digitally and enriching lives.   As

TECH STARS

Since 2007, Star Tech Ltd. has been a trusted name in Bangladesh, renowned for exceptional customer service and a user-friendly online shopping experience. Managing Director

ORGANIC GROWTH FOR BUSINESS SUCCESS

Md. Faruk Khan, Co-founder and CEO of Khan IT, adjunct faculty at United International University & National University, and SEO instructor at 10 Minute School

THE GREEN BLUEPRINT

Dr. Mohammad Sujauddin, an Associate Professor and Chair of the Department of Environmental Science and Management at North South University and an expert in Industrial

Leave a Reply

Your email address will not be published.