RMG export at $50b by 2021

Setting a lofty target is not always much too ambitious, as is sometimes the case. On the other hand, it can be a challenge to practical wisdom. The unofficial target set at the $ 50 billion mark in RMG (ready made garments) exports by 2021 is not unrealistically lofty, given the potential and growth momentum of the sector over the years. But at the same time the setbacks triggered by the incidents of fire, factory collapse and labour unrest in the recent years have cast an ominous shadow on the sunshine this sector has been basking in for decades. It is not yet certain whether the shadow will linger on. In the event it does, performance of this sector may not rise up to the expectation.

Given that RMG is the key contributor to the country's economy, all quarters are aware of the imbroglio the sector currently finds itself in. But mere awareness does not help. There is the critical need to assess the realities--strengths as well as limitations--in order to present a roadmap for the sector to negotiate the rough waters in the days ahead. Most people agree that the situation prevailing now reflects numerous difficulties and challenges that might have a multiplier negative effect on both production and exports, if these are not addressed within the shortest possible time. While this sector, like other manufacturing sectors, faces difficulties from shortage of energy, skilled manpower and poor infrastructure, those that are equally challenging relate to labour situation, wage and workplace safety constraints compounded further by the demands of labour unions and rights group activists abroad.

In a workshop held recently in the capital on the prospects and challenges of the RMG sector, these were the key issues that dominated the discussions. Poor infrastructure was identified as the number one deterrent to maintain the sector's growth momentum at the moment. Although infrastructure is a broad concept cutting across a host of areas, the key constraints in this regard are viewed in terms of energy and the extremely time-consuming movement of cargo from factory sites to the ports. The impact of the shortage of electricity and gas has been found too costly to produce goods for export. The President of the BGMEA (Bangladesh Garment Manufacturers and Exporters Association) has been reported as saying that while it costs only Tk 6 to produce a kilowatt-hour electricity from government-run power plants, it costs Tk 16.7 from a diesel-run generator that currently caters to the energy requirements of most garment factories in the country. Beside the obvious effect of this on the cost of production, there have been cost escalations following the Tazreen fire and Rana Plaza collapse. Inspection of factories by Accord and Alliance -the EU and US based retailer groups respectably-- will require most factories to spend heftily to meet safety standard requirements.

Given that the basic infrastructure needs cannot be met overnight, efforts must be wholehearted to improve the situation as quickly as possible. As for the remediation of the faulty factories, coordinated efforts should be in place to supervise and monitor progress of work. These, along with other measures to reinforce the inherent dynamism of the sector can push things up, hopefully to expected levels.