Arresting decline in the RMG sector
Saturday, 1 September 2007
THE country's pivotal readymade garments (RMG) industry is faced with a serious regression as have been assessed by the ones involved in it. Growth in this sector has been without a pause for years, may be with some variations or ups or downs in the rate of that growth. But on the whole, the growth was recorded to be steady. Specially, growth was particularly impressive in fiscal 2004-5 and fiscal 2005-6 when weathering the expected difficulties of the Post-Multi-Fibre Arrangement (PMFA) era, this country's RMG exports only surged forward. For example, according to reports, growth in the woven items was 13.50 per cent and in the knit items, some 35.38 per cent in fiscal 2004-5. Although the growth dropped a little in the following year, the same was not alarming. But in a remarkable downswing and for the first time in years, growth in both sub-sectors of the RMG declined badly in fiscal 2006-7. In the woven sub-sector this growth rate was only 0.16 per cent while in the knit sector it was a negative one at 6.03 per cent.
The slowdown in RMG exports from Bangladesh has been attributed to several factors. The one that is discussed the most is one of consumer buying dropping in the United States and the pattern of placing orders changing due to weather changes and the consequent unpredictability in the importing countries. But hard watchers of the scene point to other worrisome developments. They say that less orders are being placed with Bangladeshi exporters and this has a crucial link with the uncertain situation that buyers perceive as existing in the RMG sector in Bangladesh. They point to unprecedented rioting in garments industries in Bangladesh for eight weeks last fiscal when 400 factories which were socially compliant, were damaged in the violence and the Dhaka Export Processing Zone (DEPZ) closed twice. The imposition of emergency and the reconstitution of the caretaker government appears to have put a brake in the violence but the simmering discontent in the RMG sector is considered to be still there.
Even garments industries have been facing mysterious fire incidents one after another in recent months and the latest one led to the complete burning down of a big foreign owned RMG factory within the DEPZ which is supposed to be a very well cased for and protected area. Thus, the buyers are thought to be suffering from a crisis of confidence in relation to the Bangladeshi RMG sector and there is nothing like improving business confidence to promote sales specially in areas involving foreign trade. Meanwhile, orders denied to Bangladesh are going to Vietnam, Cambodia and China.
Thus, it is so very important that government should play a stronger pro-active role than before and take all-out measures to stop the decline in the RMG sector, in the light of the latest developments concerning it. The tripartite dialogue among the workers, management of RMG industries and the government, must be expedited leading to full establishment of durable peace in the RMG sector. The achievement in this area will have to be well conveyed to the buyers. The security conditions of garments industries inside and outside the export processing zones will have to be made foolproof. Besides, the government must take the initiative with no loss of time to ensure that there is no market disruption for the Bangladesh's exports of RMG products. Here, the withdrawal of restrictions by the European Union (EU) and Canada on import from China in 2008 holds out a big challenge. Appropriate policy initiatives by the government is indispensable for enhancing the competitiveness of Bangladesh's garment and knitwear products and retaining existing global market shares. In view of the serious economic jolt that Bangladesh has received from the recent flood, the matter is serious for the government to act upon in order to keep the operational conditions of the RMG sector, the major export earner for the country, free from any major disruptions.
The slowdown in RMG exports from Bangladesh has been attributed to several factors. The one that is discussed the most is one of consumer buying dropping in the United States and the pattern of placing orders changing due to weather changes and the consequent unpredictability in the importing countries. But hard watchers of the scene point to other worrisome developments. They say that less orders are being placed with Bangladeshi exporters and this has a crucial link with the uncertain situation that buyers perceive as existing in the RMG sector in Bangladesh. They point to unprecedented rioting in garments industries in Bangladesh for eight weeks last fiscal when 400 factories which were socially compliant, were damaged in the violence and the Dhaka Export Processing Zone (DEPZ) closed twice. The imposition of emergency and the reconstitution of the caretaker government appears to have put a brake in the violence but the simmering discontent in the RMG sector is considered to be still there.
Even garments industries have been facing mysterious fire incidents one after another in recent months and the latest one led to the complete burning down of a big foreign owned RMG factory within the DEPZ which is supposed to be a very well cased for and protected area. Thus, the buyers are thought to be suffering from a crisis of confidence in relation to the Bangladeshi RMG sector and there is nothing like improving business confidence to promote sales specially in areas involving foreign trade. Meanwhile, orders denied to Bangladesh are going to Vietnam, Cambodia and China.
Thus, it is so very important that government should play a stronger pro-active role than before and take all-out measures to stop the decline in the RMG sector, in the light of the latest developments concerning it. The tripartite dialogue among the workers, management of RMG industries and the government, must be expedited leading to full establishment of durable peace in the RMG sector. The achievement in this area will have to be well conveyed to the buyers. The security conditions of garments industries inside and outside the export processing zones will have to be made foolproof. Besides, the government must take the initiative with no loss of time to ensure that there is no market disruption for the Bangladesh's exports of RMG products. Here, the withdrawal of restrictions by the European Union (EU) and Canada on import from China in 2008 holds out a big challenge. Appropriate policy initiatives by the government is indispensable for enhancing the competitiveness of Bangladesh's garment and knitwear products and retaining existing global market shares. In view of the serious economic jolt that Bangladesh has received from the recent flood, the matter is serious for the government to act upon in order to keep the operational conditions of the RMG sector, the major export earner for the country, free from any major disruptions.