RMG owners need to solve all issues to stay competitive

FE Team | Published: October 07, 2013 00:00:00 | Updated: February 01, 2018 00:00:00

Nizam Ahmed Bangladesh readymade garment (RMG) factory owners need to solve all contentious issues with their workers and make all the relevant factories compliant to remain competitive in the global trade in the coming years, industry sources said on Sunday. However, they said as the international brands have come up with separate pacts to help Bangladesh improve rights of workers and safety standards in the sector it could be possible to uplift the situation in the next few years. With depreciation of local currency against the US dollar in India and Pakistan, garment exports from Bangladesh may face further competition from the rivals, according to business analysts at the Bangladesh Garment Manufacturers and Exporters Association (BGMEA). India, Pakistan and Vietnam, the three arch rivals of Bangladesh have reportedly started getting some increase in orders over the last several months because of currency devaluation. But that has not dented export growth of RMG in Bangladesh which has absorbed repeated shocks from mishaps in the garment factories in recent times, according to the Export Promotion Bureau. "We are ready to implement a rational wage for the workers, to be announced by the government, and upgrade safety standards with the cooperation of international buyers," BGMEA President Mohammad Atiqul Islam told the FE. Bangladesh's RMG exports including knit and woven rose nearly 15 per cent to more than US$21.51 billion in the fiscal year (FY) 2012-13 against about $19.10 billion in the previous FY. The target for the current FY has been set at nearly $24.15 billion and the exports in the first two months have already reached $4.15 billion, up 17 per cent than the exports in the first two months of the previous FY. BGMEA President Atiqul Islam said to face the challenges from currency devaluation in India and Pakistan, a 30 per cent financial package in terms of dollar has become essential for the garment exporters of the country. He said due to depreciation of currency in India (27.7 per cent) and Pakistan (around 8.0 per cent) and appreciation of taka (some 8.5 per cent) against dollar, Bangladesh's RMG products are now 37 per cent costlier to the international buyers. So in price war, India and Pakistan may get some advantages against Bangladesh. "Under the circumstances, we need a 30 per cent dollar package that is a sort of 30 per cent of incentive to stay competitive in the international garment trade," Mr Islam added. As the rights of workers, their wages and the safety of factory building in the country have come under international focus following repeated deadly industrial disasters, including the latest, the collapse of Rana Plaza at Savar in April, that killed more than 1,130 workers, India, Pakistan and Vietnam are expecting rise in their RMG exports. India could emerge as the largest hub for sourcing of apparel and knitwear garments in the next five years, a top official of Apparel Export Promotion Council (AEPC) in India told the Economic Times newspaper in India. "With China showing more interest in engineering and IT sector and Bangladesh being looked at as a non-compliant country, global players, both in traditional and non-traditional markets are eyeing India's potential for outsourcing with great interest," AEPC Chairman A Shaktivel told reporters in Tirupur, garment hub in the South Indian state of Tamil Nadu. The AEPC chairman said India could emerge as the largest hub for sourcing of apparel and knitwear garments in another five years. Stating that India had been at a cost disadvantage compared to Bangladesh, Vietnam and others, he said this year was better as non-compliance issues in Bangladesh have resulted in increased orders to India. India, with its fairly high level of compliant garment export factories, has become an attractive sourcing destination and apparel exports in the first five months of this fiscal has shown a 14 per cent increase in Dollar terms, he said. With this growing trend, apparel exports can easily cross the targeted $17 billion export this fiscal, he said. Meanwhile, the All Pakistan Textile Mills Association (Aptma) Chairman Yasin Siddik told the Express Tribune published from Karachi that the country's (textile) exports could hit $15 billion in fiscal 2013-14 because of the approval of the Generalised System of Preferences Plus (GSP-plus) status from the European Union (EU) in January 2014 and sharp slide in the rupee against the dollar in recent months. Last year, Pakistan exported around $13 billion worth of textile products. Following the collapse of Rana Plaza, some 90 international buyers, mostly Europe-based brands, signed a legally binding pact titled "the Accord on Fire and Building Safety in Bangladesh (AFBSB)" to inspect and upgrade factories where serious safety problems are found. Meanwhile, buyers in the US and Canada signed another pact known as the Alliance for Bangladesh Worker Safety (ABWS) to develop a common safety standard for inspection by this month to determine which factories can be approved and which need upgrades.