The proactive role of the government and BGMEA (Bangladesh garment manufacturers and exporters association) can help the restoration of the generalised system of preferences (GSP) suspended by the US administration on June 27, 2013. Considering the working environment in readymade garments (RMG) factories and labour rights situation, the US administration suspended GSP for Bangladesh. In term of the volume of export of RMG to the US, the impact is not remarkable. But this has an extended impact on Bangladesh's exports to the European countries. The European Union (EU) countries also want that the interests of the workers and working condition in RMG sector should improve. Needless to mention that 90 per cent of RMG export goes to EU countries. The EU countries came forward to help technically and financially to improve the conditions in the RMG sector.
In spite of political turmoil in the country, export of RMG has been growing. According to latest statistics of Export Promotion Bureau, during the first half of the financial year 2013-14 (July-December) Bangladesh exported RMG worth of US $11932.2 million. The target for the same period was US $11,200 million. It is about 6.0 per cent higher than the target. It is also noteworthy that the export of RMG is about 20 per cent higher than the export of the same period of the previous financial year. Out of this, the woven products accounted for about US $ 5980 million followed by knitwear that accounted for US $ 5940 million. However, the expected growth in the export of other items except leather and leather products and ceramics could not be achieved. The exporters apprehend that due to disruption in production and shipment, the export target of RMG for the months of January and February may not be achieved.
In the meantime, minimum wage for the RMG workers has been declared. Many factories have taken initiative to implement the new wage structure. But many other factories are delaying implementation of minimum wage as they are not financially capable of meeting the expenditure. The safety measures in many factories could not also be undertaken.
The buyers of European countries extended their co-operation in the improvement of working condition in the RMG sector. The Rana Plaza tragedy of Savar, Dhaka where more than a thousand workers died, triggered criticism throughout the world. Against this backdrop, the European buyers formed an alliance, called Accord, on fire and building safety in Bangladesh, to assist the RMG sector of Bangladesh. This alliance declared to inspect 1,500 factories during eight months. A recent press report suggests that the alliance's inspection work was seriously hampered by the immediate past political unrest in Bangladesh. It became a challenge for conducting inspection during hartal (strikes) and blockades. During the period of political unrest, some European buyers, including H&M and Walmart, reduced their import orders apprehending delayed delivery. But other buyers are interested to buy RMG from Bangladesh.
Meanwhile, the RMG has been getting new destinations like India, China, Japan, South Korea, Malaysia, Russia, South Africa, Turkey, Brazil, Mexico, Australia and New Zealand. This is believed to be the outcome of the incentive package introduced by the government in 2008 to offset the impact of global financial crisis on the sector. The financial package implemented in 2009 encouraged the garment exporters to explore new destinations. The garment exporters received 5.0 per cent cash incentive in FY 2009-10, 4.0 per cent in FY 2010-11 and 2.0 per cent from 2011-12 for exporting to new destinations under this incentive package. The result is encouraging. In 2013, garment exports to new destinations other than the EU, US and Canada exceeded US $3.5 billion. In 2008, it was about US $800 million. All these clearly demonstrate the potentials and capabilities of Bangladesh's garment sector.
The sector will get further boost if some inadequacies are covered, the working environment in the factories improved and the interest and rights of workers are safeguarded. On February 05, the US ambassador had a meeting with the commerce minister. He told journalists after the meeting that Bangladesh should take further steps in order to restore GSP facilities. He also mentioned that the USA identified 16 points in the work plan as preconditions for the restoration of GSP. Bangladesh has taken up some steps but needs to undertake more to fulfill the conditions by April 15 next, the ambassador added.
The first meeting of Ticfa between the governments of the USA and Bangladesh is scheduled to be held in Dhaka on April 06, 2014. Both parties will discuss, among other issues, GSP, workplace safety and trade union rights of the workers.
For understandable reasons, the need for improving upon the existing workplace conditions and welfare aspects of the workers calls for urgency not just to regain preferential market access but, equally importantly, to repair the dented image of the country that may have serious consequences, if not addressed quickly and methodically.
The writer is an economist
and columnist.
chowdhuryjafar@ymail.com
© 2025 - All Rights with The Financial Express
