Accelerating export growth in RMG sector

The projected export earnings target of US$34.20-billion from the readymade garments (RMG) sector for the upcoming fiscal year (FY) 2014-15 is unlikely to be achieved. Major stakeholders think that an 11 per cent rise in the earnings over the current fiscal year's export target of $30.50 billion is an upbeat forecast and there is little logic behind such a rosy projection.
 During last one year, especially after the Rana Plaza collapse, about 200 factories were closed due to various reasons including political violence, failure to meet compliance requirements and ongoing factory assessment. Many more factories may be closed due to the ongoing inspection programmes of the global brands and the government.
Overseas orders are not increasing and buyers are no longer placing orders in units located in shared or rented buildings. The prices of products are not also increasing. Meanwhile, production cost has gone up significantly following the recent wage hike of the workers and additional costs to meet safety requirements. The inspection programmes of three initiatives -- Accord, Alliance and Bangladesh University of Engineering and Technology (BUET) -- will end in December this year. A large number of factories need to be relocated and the reforms would take at least two years.
Experts say that once improvements take place, there will be good results. But before that, the target for the next fiscal might not be achieved. Besides, the incentive packages provided to export sectors are not responsive enough to overcome the impact of the Euro Zone economic crisis. The overall infrastructure of the country has not been developed to meet the required demand, they say.
In the meantime, the ongoing inspection programme by the global brands and the government is pushing the garments sector to a near-crisis situation. The leaders of the Accord, an initiative of more than 150 global apparel companies, brands, retailers and trade unions, and the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), are yet to resolve their differences over the prevailing garment-factory assessment programmes -- posing a blow to the workplace safety initiatives.
Among the major disagreements, the Accord has been trying to include BGMEA representatives in its Advisory Board, while BGMEA leaders are still firm in their position on not joining the Advisory Board as they believe it is not an effective decision-making body. Two sides sat for several times but could not come up with any solution. The subsequent meetings discussed the burning issues, including the payment of workers during the suspension or closure of any garment factory, duplication of inspections, required concrete strength, and funds required for the remediation and its timeframe, and factory inspection report sharing.
And there are allegations that the factories that have been assessed are yet to get any remedial fund as promised by the Accord. Though both Accord and Alliance have agreed to align their programmes and activities with the National Action Plan, they are yet to reach a consensus on the timeline for remediation works such as installation of sprinklers and fire-doors.
Regarding the required concrete strength, Alliance and BUET have agreed on the 2100-pound per square inch (PSI) for brick-made buildings, while Accord's engineers are setting their measurement at 1750 PSI.  This is one of the factors that have increased the number of factory closures.
Following the disagreement over the issue of concrete strength, an official review committee has stopped visiting garment units identified as risky by the Accord. BGMEA also requested the Accord to follow a single harmonised training curriculum aiming to convey similar messages to the workers.
On the other hand, the government is in a dilemma over making its inspection reports on RMG factories public as it wants to scrutinise the necessary legal and procedural aspects. But Accord has already made some of their assessment reports public on their respective websites. It is also in the process of uploading more reports in the coming days. But any report of factory assessment carried out by the BUET on behalf of the government and the International Labour Organisation (ILO) is yet to be made public though different rights groups are demanding publication of  the reports.
Recently, the Human Rights Watch has called upon the government to disclose the findings of ongoing apparel factory safety inspections carried out by the government and other groups to help the workers know actual conditions of their workplaces. In July 2013, Bangladesh, the EU, and the ILO agreed to a compact on labour rights and factory safety which were later joined by the US government, to create a publicly accessible database listing all RMG and knitwear factories, as a platform for reporting labour, fire and building safety inspections.
The database is set to include information on factories and their locations, their owners, the results of inspections regarding complaints of anti-union discrimination and unfair labour practices, fines and sanctions administered, as well as remedial actions taken, if any, subject to relevant national legislation.
However, there are disagreements over the requirements of concrete strength in the buildings for safety assessment programmes. Local experts and those appointed by the western retailers failed to reach a consensus on the issue. Following the row between the local and foreign experts, the official review committee stopped visiting the RMG factories that were identified as risky ones, especially by the Accord inspection teams.
Earlier, a consensus reached at 2050 pound per square inch (PSI) for brick-made structure and 2370 PSI for stone-made ones. But the decision is pending whether this measurement would be considered for buildings built before 2005 or not. During the safety assessment, the BUET considered the concrete strength of a building at 2,100 and 2400 pound per square inch for brick- and stone-made structure respectively. But Accord considered the concrete strength at 1,700 PSI for brick-made structure and at 2,000 PSI for stone-made ones.
The official review committee began re-assessing the manufacturing units following the western retailers' findings of serious structural flaws. Unanimous decision is required for suspending production at any garment unit or declaring any factory shut. The issue is yet to be settled.
However, all such thorny issues need to be resolved for the accelerated growth of the country's RMG sector. The government and the stakeholders should work in unison to settle the differences between them at the earliest.
szkhan@dhaka.net