Prior to the final phase-out of the multi-fibre agreement (MFA) on January 01, 2005, doomsayers had predicted ominous consequences for Bangladesh apparels. But they proved wrong. Instead of going down, the industry started flourishing at a fast pace and today it is the second largest exporter of apparels in the global market after China.
To many, the rise of the Bangladesh apparel industry is more or less miraculous. But in the world of trade miracle does rarely happen for it is the procurement cost of a product that matters most.
Buyers would prefer a source if the latter maintains quality and offer competitive price for its goods. Bangladesh with its low labour cost emerged as an attractive source for the buyers, mainly coming from the USA and Europe.
That was not all. Yet another development--- rising labour costs in major apparel exporting countries --- in recent years proved to be a boon to Bangladesh RMG. Rising labour cost has forced China to concentrate primarily on high-end apparel items moving out from low-end products. In fact, the Bangladesh apparel industry got an added impetus during the past few years. In the process, the much-cherished social as well as economic transformation continued to be strengthened further.
But indications are there that the stage is almost set for a reversal of the trend. The first indication came when a devastating fire claimed at least 112 lives at Tazreen Fashion. The international buyers reacted negatively to the tragic accident and expressed their deep resentment at the poor workplace safety situation.
The apparel industry got a severe jolt when the Rana Plaza collapsed claiming lives of nearly 1,200 workers. International buyers as well as governments of major apparel importing countries in the west made known their annoyance over the poor workplace safety records in Bangladesh. The buyers also came under intense pressure from consumers at home on the issue of workers' safety in Bangladesh RMG industry. In such a situation, the buyers were supposed to leave Bangladesh and procure goods from other sources. But they did not. Rather the buyers from EU countries and North America came out with separate workplace safety plans and offered help, financial or otherwise, to the Bangladesh industry owners and the government to implement the same. The implementation of plans with the help the International Labour Organisation, Bangladesh University of Engineering and Technology (BUET) and relevant government agencies is now under progress.
The government and the local RMG industry owners appeared to be complacent that the problems that had surfaced following the Rana Plaza collapse could be successfully handled and the incident would not leave that much of an impact on export as had been feared initially. The export figures in the months following the tragic event also substantiated such a notion.
But the recent violence over workers' wages and poll-time government, possibly, has strained the patience of the buyers too much. Some of them might have said to themselves: enough is enough and it is time to say good bye to Bangladesh RMG industry.
A recent report published in the Economic Times of India has only confirmed the change of heart of the international buyers. The report said the US and the EU are diverting orders from Bangladesh to India to meet their apparel requirements for the upcoming summer season. "Indian apparel exporters are making most of the situation. They are scaling up operations and negotiating deals with foreign buyers so that they can enjoy a bigger pie of the overseas market", the report added.
The general secretary of the Confederation of Indian Textile Industry while talking to the Indian daily confirmed the diversion of apparel export orders from Bangladesh to India. Export of apparels from India during the April-October period of the current fiscal increased by 15.5 per cent, mainly at the cost of Bangladesh exports.
So, the RMG export benefit that India has started reaping over troubles, political or otherwise, in Bangladesh might strengthen the hands of those who preach the 'conspiracy theory' that the 'big neighbour' is behind all the apparel sector troubles.
However, it has become increasingly difficult for the preachers to sell the theory notwithstanding the fact that none has ever tried to find out the truth behind the alleged 'conspiracy' against Bangladesh apparel industry.
But going by the events that have been taking place in the apparel sector over the years, it can be safely concluded that neither the government nor the apparel industry has behaved rationally and played by the rules of the game. There is no denying that on many occasions the workers resorted to violence unnecessarily and irrationally. But the major part of the blame goes to the industry owners and the government. Unless and until compelled, they have never given the workers their due and ensured safe working conditions.
However, the rot that has started can be checked and the industry can go back to the old track of growth and prosperity once normalcy returns to the industrial belt and the country's politics. For now it might look difficult. But the situation would surely improve anytime soon.
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