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Asia Today ISSN 1861-4604 Sunday, January 21, 2018

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Bangladesh’s garment exporters eye $50b revenues by 2021

Bangladesh will have to go for product diversification and innovation

Share on Facebook November 10, 2014, Reporter : BNN/ Daily Star, Reader : 400

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Garment exporters are aiming to bring in US$50 billion a year by 2021, provided that safety concerns would be eliminated, weak infrastructure improved and labour unrest gone.

The sector, considered the lifeline of the economy, has grown in the last few decades, as far as "backward linkage" is concerned, but falls short on "forward linkage", said Atiqul Islam, president of Bangladesh Garment Manufacturers and Exporters Association (BGMEA).

"Bangladesh will have to go for product diversification and innovation," he said.

Quoting a McKinsey report, the BGMEA chief said the country would have to develop skilled human resources, ensure adequate power supply, develop ports, improve work conditions and ensure healthy politics to take the garment sector to new heights.

"If we can overcome these problems, we will be able to do anything," he said.

The garment makers were speaking at "Roundtable on Export Challenges and the Way Forward" organised by The Daily Star yesterday.

Bangladesh would have to upgrade the existing ports and set up a deep sea port so that two-way flow of containers could be handled and it is needed to earn $50 billion a year from garment exports, which is now $24 billion a year, said Mohammad Hatem, a former senior vice-president of Bangladesh Knitwear Manufacturers and Exporters Association.

MA Jabbar, managing director of DBL Group, said social safety net, workers' rights and health insurance, and environmental sustainability were going to be key issues in the garment sector in the coming years.
The garment sector already knows what it would take to become safe and sound structurally and environmentally, he said at the roundtable held at The Daily Star Centre.
"Everything is there, but they are not implemented properly, although many reports have been published on the issues facing the sector, and there is also no follow up to see how much we have progressed," said the entrepreneur.
A number of speakers urged the government to make available the cash incentive facility for all exporters and make the process of getting it less cumbersome.
"We are facing hassles to get the cash incentive facility," said Hatem.
Saiful Islam, managing director of Picard Bangladesh, a leather products exporter, said Bangladesh was still reeling from the reputation crisis following the disasters in the garment and industrial sector.
"Because of the negative image, we are facing challenges in the international market … ."
He said the business community needs to take some effective measures to address concerns linked to occupational health and safety, and building code.
"Had we taken any measure on the issue, the retailers and brand groups under the banner of accords and alliances would not have come to Bangladesh. This is a failure on our part.
"When we talk about the occupational health and safety, it is a question of mind-set … whether we want to keep our buildings and factories safe and sound. It is not a question of money."
The issue of living wage, which is based on the basic needs of workers rather than set by minimum wage, now being debated in the EU as well as the United Nations, also came up during the discussion.
Atiqul said during a meeting in Berlin recently, he was told that the living wage was estimated to be $219 for Bangladeshi garment workers.
"Many buyers have personally told me that they are against living wages. Everyone should keep in mind that the industry remains sustainable," he said.
The BGMEA chief said after fire, building safety and environmental sustainability, the next issue would be the living wage.
He said many factories were not getting direct business from buyers, which was also a major challenge for the growth of the industry.
He said there were at least 10,000 buyers' agents in Bangladesh when the number of active garment factories was 3,200.
The BGMEA boss was backed by Reazuddin Al-Mamoon, managing director of Epyllion Group, who questioned how money would be mobilised if the country went for the living wage.
He said buyers talk about paying the workers' wages by the fifth day of a month but they (buyers) were also using their 90 days' deferred payment option.
He said exporters would have to bargain more from buyers if they wanted to have the living wage system in place.
Mamoon also pointed at the tendency among international buyers to obtain the cheapest price from Bangladeshi manufacturers.
Saiful of Picard Bangladesh said although the garment sector was implementing the minimum wage for its workers, improvements do not stop there.
"We hear that that is not good enough … . But we are bypassing the living wage issue out of fear. There is nothing to fear."
Abdullah Al-Mahmud, managing director of Mahin Group, said new factories were not being set up and existing ones have put on hold their expansion plans because of a lack of adequate supply of gas and electricity.
He called upon the government for support to keep the sector stable.
Luthful Bari, a director of Meghna Group, one of the biggest conglomerates, and the owning company of bicycle exporter Uniglory, said although Bangladesh was the fifth largest bicycle exporter to Europe, it was only catering for two percent of the global market worth $46 billion.
"But the sector offers tremendous growth potential and many people are interested in it."
Luthful said his company was not being able to export beyond Europe in markets like America and the Middle East because of the lack of cash incentive facility.
Mamoon said maintaining a disciplined workforce has become the major challenge for the country, as public order is breached every now and then.
He also said skilled workforce was needed to run the sector.
David Hasanat, managing director of Viyellatex Group, said Bangladesh was still doing business over "leftovers". "We need to take a bite at the overall business."
"Although we are the cheapest in producing garment, we are being able to drive the business at the top end," he said, adding that Bangladesh also needs to fix its perennial infrastructure problems, including electricity and gas crises.
Atiqul also said an effective one-stop service should be set up, replacing the one under the Board of Investment, so that all exporters' problems could be solved.
Saiful of Picard also said the EU was mulls tagging some conditions following the Rana Plaza and Tazreen disasters under a bill on “responsible textile”.
"There are discussions over the issue. We need to know whether our government and professional trade bodies are aware of the issue and whether we can resort to economic diplomacy before the bill, if it exists, is placed."
Atiqul said the BGMEA was also taking the issue of responsible textile seriously. "At the same time, buyers also need to do ethical buying as part of the responsible textile."
Atiqul expressed concern about external NGOs organising workers for trade unions. "These trade unions will destroy the industry."
Hatem said they were not against trade unions but the problem is the workers don't have any knowledge about how the labour organisations work.

 

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