Higher cost of fund, lack of buyers’ sharing, land scarcity major hurdles

The country's apparel makers identified on Monday higher cost of fund, absence of buyers' participation, and scarcity of suitable land for factory relocation as the impediments towards remediation of the non-compliant units.

They also held higher import duty on safety equipments, existing VAT rate, and lack of modern testing facilities responsible for the situation.  

They said these at the fifth session of the Dhaka Apparel Summit titled 'Remediation Financing for Transforming Bangladesh Garment Industry', held at Bangabandhu International Conference Centre in the city.

Executive director of Policy Research Institute (PRI) of Bangladesh Ahsan H Mansur moderated the session, while Rob Wayss, executive director of Accord, Muhammad A (Rumee) Ali, advisor to interim executive director of Brac, Shah A Sarwar, managing director of IFIC Bank Ltd, Sarah Labowitz, co-director of NY University Stern Center for Business and Human Rights, Olaf Schmidt, global sector head of IFC's Retail, Real Estate and Hotel Investment, Thomas A Nelson, vice-president of VF Global Product Procurement, and  BGMEA vice-president Md Shahidullah Azim, among others, spoke on the occasion.

A Rummee Ali suggested for a national policy, especially for the SMEs, to make finance available to garment factories, because it is not only the need of exporters but also important for million of workers.

Rob Wayss said they are continuing discussion to provide commercial and financial support by the lead brands for factory remediation.

  "We have approached 10 brands, and some of them are at final stage to approve fund in this regard," he added.

 Thomas A Nelson said VF has first issued fund for factory remediation, and is working with IFC and other organizations to facilitate the remediation.

Sarah Labowitz urged for forming a policy to decide how the factories that remain outside the inspection purview of Accord and Alliance will be remediated.

She also raised question on who would take responsibility of the units that are doing sub-contracting and how they would be regulated.

Shahidullah Azim said after the factory inspection some 1,000 units might need to be relocated. He suggested raising $2.0 billion for mobilizing a fund to relocate the factories and fix the safety problems.

Other speakers said risk sharing, bringing down the cost and tenure of loan are the major obstacles in financing, and stressed on multilateral dialogues to frame a way-out.

Apparel manufacturers demanded low-cost financing, withdrawal of import duty on safety equipments, and buyers' participation in the remedial work of garment factories.

    munni_fe@yahoo.com