FDI in RMG needs to be kept confined to EPZs
Tuesday, 14 December 2010
With the RMG (readymade garment) industry seeing a buoyant growth in exports thanks to the current inflow of orders from buyers the industry insiders require the government's move for backward linkage facility like electricity and gas on the fast track.
The government's supports include implementation of the stimulus package for RMG enterprises, appropriate move to depreciate the value of taka against US dollar, cut in bank interest rates, introduction of easier process for back-to-back L/C (letters of credit) by the banks in order to smoothen the export documents procedures.
Gauhar Siraj Jamil, managing director of the Four H Fashions Group, shared his views with the daily Financial Express recently and dwelled on many problems and prospects of RMG sector.
Four H Group is one of the best established garments exporters in Bangladesh. In 2004 the group went into operations with a state-of-the-art sewing and wet processing unit based in Chittagong.
Sincere efforts of the employees have spurred the company to success, enabling them to employ almost 7000 workers and staff and a targeted annual turn-over of US Dollar 72 million.
He put emphasis on the welfare of the workers and employees of the RMG sector saying, "If you pay them good you will get good feedback."
Most of the industry owners in the RMG sector are capable of paying the new wages and benefits structure recently announced by the government, the BGMEA leaders opined.
Four H Group's new project was set up with specialized machineries to meet the needs of the global market. They have all core facilities integrated to produce quality merchandise and timely delivery.
The Group, after attaining initial success, is now proceeding towards perfection. New generators have been installed to achieve uninterrupted power supply, the authority said.
New sample rooms and dry processing etc are in the finishing stage. All these are being made available to offer better services to their valued customers while their target is to attain better quality within the stipulated timeframe.
Mr Jamil told the FE that there is no alternative to developing adequate infrastructure including power, gas and port facilities for continued growth of the garment industry.
The government has undertaken a number of power plants but we are yet to receive any feed-back although nearly two years have elapsed.
"As of today we don't find much of appreciable steps on the part of the government for creating an investment-friendly environment in the RMG sector," the national export golden and silver trophy winner observed.
While commerce minister Faruk Khan is asking foreigners to invest in Bangladesh, they are not doing enough to attract local investment. The local entrepreneurs in the RMG must get full tax holiday, Jamil demanded.
"You should have opportunities for local investors equally. Everything is being relaxed for the foreign investors. Export Processing Zones (EPZs) should be exclusive for them."
He said that competitiveness of the local garments will be hit hard if the foreign investors with their global expertise and reputation invest in the local RMG sector beyond the EPZs. It is fully undesirable that the government allows further foreign direct investment in RMG under the given situation where small and medium garment industries have been struggling to survive.
He suggested that the government should form an independent body to look after and take care for providing better facilities to the business community of the country.
Industrial policy should be clear and transparent and all the government agencies should extend their wholehearted support and cooperation as required to set up more industries.
Basic policy rules and laws should also be enacted by the government against corruption and misrule in order to establish transparent and good governance in the country and it is to be ensured that such policies should remain unchanged and equally applicable to all future governments also.
Most of the government employees in the Chittagong Custom House are corrupt, he said, adding corruption in the top level has partially reduced while corruption in the mid-level officers, section officers and the clerical employees has doubled.
"Corruption of these people causes unusual price hike of commodities creating a lot of problems for the common people and forces people to pay more for the food, clothes etc they need to live," said an angered Jamil.
As for the port facilities the Chittagong Port Authority is not in a position to ensure equitable supply of container and cargo handling equipment, apparently due to inherent shortcomings in the existing management system.
There is no productive plan for procurement of equipment and as such port users have to undergo harassment and difficulties in various ways.
Inadequate storage facility of containers during rush of traffic offerings is considered a serious drawback in the existing port operational works. If additional space is provided this will surely be a good source of foreign exchange earnings for the port authority and at the same time help in easing congestion problem when situation so warrants.
He added that security system should be leak-proof for protection and inspection of the entire chain of cargo handling through the ports, enabling an improved level of maritime security with the help of top-of-the-line automated systems, especially by setting up more new close-circuit camera at the port's reserved area.
In this regard GS Jamil alleged that goods worth several millions of Taka were pilfered every month from the Chittagong port, the country's major maritime port, and organised gangs have been active in the pilferage.
Last September 388 roll garment fabrics imported by the Four H Fashions worth over Tk 10 million were stolen from the port reserved area against which a compensation suit for damaging reputation of the company is under trial in a joint district judge's court in Chittagong.
The government's supports include implementation of the stimulus package for RMG enterprises, appropriate move to depreciate the value of taka against US dollar, cut in bank interest rates, introduction of easier process for back-to-back L/C (letters of credit) by the banks in order to smoothen the export documents procedures.
Gauhar Siraj Jamil, managing director of the Four H Fashions Group, shared his views with the daily Financial Express recently and dwelled on many problems and prospects of RMG sector.
Four H Group is one of the best established garments exporters in Bangladesh. In 2004 the group went into operations with a state-of-the-art sewing and wet processing unit based in Chittagong.
Sincere efforts of the employees have spurred the company to success, enabling them to employ almost 7000 workers and staff and a targeted annual turn-over of US Dollar 72 million.
He put emphasis on the welfare of the workers and employees of the RMG sector saying, "If you pay them good you will get good feedback."
Most of the industry owners in the RMG sector are capable of paying the new wages and benefits structure recently announced by the government, the BGMEA leaders opined.
Four H Group's new project was set up with specialized machineries to meet the needs of the global market. They have all core facilities integrated to produce quality merchandise and timely delivery.
The Group, after attaining initial success, is now proceeding towards perfection. New generators have been installed to achieve uninterrupted power supply, the authority said.
New sample rooms and dry processing etc are in the finishing stage. All these are being made available to offer better services to their valued customers while their target is to attain better quality within the stipulated timeframe.
Mr Jamil told the FE that there is no alternative to developing adequate infrastructure including power, gas and port facilities for continued growth of the garment industry.
The government has undertaken a number of power plants but we are yet to receive any feed-back although nearly two years have elapsed.
"As of today we don't find much of appreciable steps on the part of the government for creating an investment-friendly environment in the RMG sector," the national export golden and silver trophy winner observed.
While commerce minister Faruk Khan is asking foreigners to invest in Bangladesh, they are not doing enough to attract local investment. The local entrepreneurs in the RMG must get full tax holiday, Jamil demanded.
"You should have opportunities for local investors equally. Everything is being relaxed for the foreign investors. Export Processing Zones (EPZs) should be exclusive for them."
He said that competitiveness of the local garments will be hit hard if the foreign investors with their global expertise and reputation invest in the local RMG sector beyond the EPZs. It is fully undesirable that the government allows further foreign direct investment in RMG under the given situation where small and medium garment industries have been struggling to survive.
He suggested that the government should form an independent body to look after and take care for providing better facilities to the business community of the country.
Industrial policy should be clear and transparent and all the government agencies should extend their wholehearted support and cooperation as required to set up more industries.
Basic policy rules and laws should also be enacted by the government against corruption and misrule in order to establish transparent and good governance in the country and it is to be ensured that such policies should remain unchanged and equally applicable to all future governments also.
Most of the government employees in the Chittagong Custom House are corrupt, he said, adding corruption in the top level has partially reduced while corruption in the mid-level officers, section officers and the clerical employees has doubled.
"Corruption of these people causes unusual price hike of commodities creating a lot of problems for the common people and forces people to pay more for the food, clothes etc they need to live," said an angered Jamil.
As for the port facilities the Chittagong Port Authority is not in a position to ensure equitable supply of container and cargo handling equipment, apparently due to inherent shortcomings in the existing management system.
There is no productive plan for procurement of equipment and as such port users have to undergo harassment and difficulties in various ways.
Inadequate storage facility of containers during rush of traffic offerings is considered a serious drawback in the existing port operational works. If additional space is provided this will surely be a good source of foreign exchange earnings for the port authority and at the same time help in easing congestion problem when situation so warrants.
He added that security system should be leak-proof for protection and inspection of the entire chain of cargo handling through the ports, enabling an improved level of maritime security with the help of top-of-the-line automated systems, especially by setting up more new close-circuit camera at the port's reserved area.
In this regard GS Jamil alleged that goods worth several millions of Taka were pilfered every month from the Chittagong port, the country's major maritime port, and organised gangs have been active in the pilferage.
Last September 388 roll garment fabrics imported by the Four H Fashions worth over Tk 10 million were stolen from the port reserved area against which a compensation suit for damaging reputation of the company is under trial in a joint district judge's court in Chittagong.