Challenges that lie before apparel sector

Bangladesh policy planners and apparel industry leaders are expecting readymade garment (RMG) exports to fetch $50 billion when the country reaches its 50th year of independence in 2021. However, most are of the opinion that the industry needs to address the challenges of energy, skilled human resources and poor infrastructure promptly in order to reach the export target.
BGMEA (Bangladesh Garment Manufacturers and Exporters Association) president says poor infrastructure is the main challenge to the growth of our exports. It takes about one day to transport produced goods from Gazipur or Narayanganj to Chittagong Port.
Shortage of electricity and gas is a major challenge. While it costs only Tk 6.0 to produce per kilowatt of electricity by the state-run power plants, it costs Taka 16.7 for the same from a diesel-operated generator.
The BGMEA president also identified the higher cost of production, high bank interest rates and lack of trained manpower as some other challenges to achieving the target by 2021.
After the fire incident at Tazreen Fashions and Rana Plaza building collapse, the cost of production has increased significantly, but retailers do not pay higher prices for apparel items, RMG owners alleged. Although the Accord (European buyers' club for workers' safety) and the Alliance (North American buyers' club for workers' safety) already inspected the factories, they did not approach any retailer to increase the volume of export orders from factories housed in shared buildings, they commented.
The buyers' representatives identified five specific challenges to the sector: lack of finance to remedy the factory buildings, safety in the factories that are not within the purview of the Accord and the Alliance inspection, relocation of factories from Dhaka to other places, policy for subcontracts, and departure of the Accord and the Alliance after 2018. Both the Accord and the Alliance will continue to inspect factory buildings until June 2018, but the manufacturers are concerned whether the workplace safety programmes will continue after the departure of the agencies.
The International Labour Organisation (ILO) country director in Bangladesh thinks that the country has done much for workplace safety and workers' rights after the Rana Plaza building collapse. "Now the factory buildings should be renovated", he said. "The garment sector in Bangladesh is going towards the right direction," he added.
"A mechanism should be adopted by the government, Bangladesh Garment Manufacturers & Exporters Association (BGMEA) and Bangladesh Knitwear Manufacturers & Exporters Association (BKMEA) to take responsibility of monitoring the factory buildings after the departure of the agencies'', the ILO representative felt. Media reports mentioned that after completing the inspection of more than 1,100 factories, the Accord made a recommendation to close down 25 factories.
On the other hand, our commerce minister felt the major challenge of the sector is the propaganda spread by a section of people, who do not work in the factories but demonstrate against the sector in Bangladesh. The minister also said that his government cannot, through amendments to the Export Processing Zone law, introduce trade unionism in the factories housed inside the EPZs as the foreign investors do not want it.
These foreign investors want continuation of the workers' welfare associations, which are considered as trade unions to protect workers' rights. This runs contrary to what the United States, the country's biggest trade partner in RMG, wants.
This scribe has quoted from media reports, as these are known to be the barriers to Bangladesh apparel sector's growth. Nobody has so far questioned whether poor infrastructure or high bank interest rates can only be responsible for non-optimal growth of apparel industries. After Rana Plaza disaster, Bangladesh apparel workers have seen sharp rise in their wages. It has become almost at par with India.
Despite the fact that many industries suspended production as their vendors or sub-contracting was stopped, the price of RMG has not seen any significant rise. Many industries are not able to shift from a shared building or purchase new firefighting or disaster management equipment. Though productivity has been identified as the single most important issue, most of the industries could not invest enough for workers' training or replacement of outdated and less productive machines. Despite much hue and cry, development partners or buyers' syndicate could not come up with any notable 'bail-out' package too.
The suspension of Generalised System of Preferences (GSP) facility by the USA, possible curtailment of the same by European Union (EU), delay in establishment of industrial clusters or special economic zones, emerging competition from India and stiff competition from Vietnam are also being discussed as possible barriers to Bangladesh RMG sector's growth. Few are talking about shifting of orders to Kenya, Tanzania or Myanmar. Few also speak about non-availability of skilled and semi-skilled workers or reduction in available labour force in RMG sector.
This writer considers price and productivity factors as the success for the Bangladesh apparel industry. Solution to both warrants coordinated efforts from industry owners, commerce and labour ministries, buying country governments, buyers syndicate and development partners. Crisis time fund raising or distribution won't help growth of Bangladesh RMG industries. Only productivity improvement can help divert many orders from Vietnam and China. Optimum price from the buying companies could also help investing enough on workers' training and supervisors' development.
The country seems to be increasingly stuck in ad-hoc solutions to its RMG sector. It requires mid- to long-term policy actions. Many question: should the country allow its RMG sector to grow further when it faces multiple challenges? Or should we rather give impetus to the textile sector or other exporting items?
However, there is still enough room for the country's RMG sector to grow. A quality shift to better clothes, better design or improved productivity or improved work place could fetch better prices, create more employment opportunities, accelerate poverty reduction and  create large pool of people with higher purchasing power to buy more `made in Bangladesh' goods and services.
The writer is a banker and
economic analyst.  nahid.sultana@bgmea.com.bd