Apparel owners decry higher lending rates

FE Team | Published: October 09, 2007 00:00:00 | Updated: February 01, 2018 00:00:00

FE Report
As apparel industry leaders deplored the dent in the country's image because of labour unrest, trade union bosses said violation of workers' rights would not help boost the sector's image abroad.
The sector's top leaders Tuesday also made a fervent appeal to the government to cut back on bank interest rate to help them ride out the storm of the global competition.
"It's true cheap labour made us stronger, but frequent workers' unrest is also hurting our image abroad," President of Bangladesh Garments Manufacturers and Exporters Association (BGMEA) Anwarul Alam Chowdhury Parvez told a CPD-sponsored dialogue Tuesday.

"The poor image of the country stemming from the labour unrest and political uncertainly in late last year also resulted in a considerable drop in export order, leaving China and Vietnam to take the advantage," Chowdhury said.
In response to the BGMEA chief's observation, a veteran trade union leader said non-compliance of social issues would certainly undermine the industry's overall image abroad, particularly to the buyers' community.
"If you don't raise labour standard in your factories, you can't expect a bright image of the sector," president of Bangladesh Institute of Labour Studies Nazrul Islam Khan said.
Centre for Policy Dialogue (CPD), a civil society think tank, in collaboration with the SouthAsia Enterprise Development Facility (SEDF) organised the dialogue on "Bangladesh's apparel sector in post-MFA period: A benchmarking study" at a city hotel, with its outgoing executive director Debapriya Bhattachariya in the chair.
Khondkar Golam Moazzem, a research fellow at CPD, presented the key findings of the study report that focused on ongoing restructuring of the apparel sector.
Sticking to his point, Parvez warned if labour unrest in RMG units continues, it will be "damaging" for the sector as a whole.
He also vented his anger at higher interest rate, saying it is eroding the competitiveness of local apparel entrepreneurs.
"How can we be competitive with 16 per cent interest rate, where the same is less than 5.0 per cent in China and Pakistan?" he posed the question.
The BGMEA chief, however, defended the industry group's initiative to follow the minimum wage guideline.
Giving statistics, Chowdhury said out of 2800 factories, around 97 per cent is currently providing workers with the minimum wages.
"Only 65 factories are not able to pay minimum wages. If they cannot follow the September 30 deadline, they must close down," he said.
Terming social compliance "a critical tool," finance adviser Mirza Azizul Islam said unless entrepreneurs adhere to the best practices, it will be difficult to maintain the share in the fiercely competitive global apparel market.
"The issue of compliance should be ensured by all parties. The government is monitoring the issue and playing the role of an intermediary in this respect," he told the dialogue.
Citing various steps taken to help revamp the RMG sector, the finance chief said the proposed garments village is under consideration.
In addition, he added, at least four training institutes dedicated to the textiles sector would be set up to help develop efficiency of workers.
President of Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) Fazlul Huq said the apparel industry, after a slide in orders, is set to bounce back, posting 20 per cent growth from October onwards.
"It's true that exports (ready made garments) fell by 24 per cent last month. But the industry is set to bounce back from October onwards," Huq told the audience, including owners, trade union leaders and experts.
Playing down the so-called "China-phobia", the industry veteran noted that that other players, notably India, Pakistan, Vietnam and Cambodia might rather undercut Bangladesh's competitiveness in the global market.
Huq even singled out Cambodia as the "biggest threat" to Bangladesh in the near future.
Supporting his argument, he pointed out that factories of the South East Asian nation were owned by Chinese investors who set up industrial units to capitalise on trade preferences offered by the European Union.
In response to a stream of criticism by labour leaders, Huq said although all factories are not "five star", owners at least deserve to get plaudits from workers for increasing wages, despite a fall in both prices and productivity.
Another FE report adds: The Association of Bankers, Bangladesh (ABB) Monday assured the leaders of the apparel sector of considering their plea for providing soft loan to help clear arrear wages and eid bonus of workers.
"ABB assured us of their due consideration to our request for providing soft loan before the eid vacation," Anwar Ul Alam Chowdhury Parvez, president of Bangladesh Garment Manufacturers and Exporters Association (BGMEA) told the FE Monday.
He said the bankers who attended the meeting were convinced that the readymade garments (RMG) sector would continue to grow in the coming days.
Some banks have already started procedures to provide soft loan to the apparel unit owners, the BGMEA president said.
Expressing satisfaction over the bankers' assurance, he said the soft loan facility would help the cash-starved apparel owners to tide over their temporary financial crisis and pay wages and eid bonus to their workers.
"This will also help us to honour the government's request for clearing all arrears wages of workers by October 11," the BGMEA president further said.
Nine ABB members attended the meeting.