Search for ways to bail RMG sector out of crisis

The garments industries of Bangladesh appear to be on its way to becoming a political pawn of the European Union (EU) and the US. In the aftermath of the Rana Plaza and the Tazreen Fashions disasters, a number of big overseas ready-made garment (RMG) buyers, on the plea of these unfortunate tragedies, have been raising absurd claims imposing bizarre conditions which are, in fact, very difficult for a Third World country, like Bangladesh, to implement. And in view of this fact, they are perhaps exerting enormous pressure in a bid to compel the government to materialise their goals, apparently laced with political aspirations.
The US has suspended its preferential trade facilities i.e. GSP (Generalised System of Preferences), for Bangladesh, while the European Union (EU) has been putting many conditions. On the contrary, Pakistan has been brought under the purview of GSP facilities by the EU, and India is also under active consideration as per media reports.
Meanwhile, India has taken a number of aggressive measures to grab the RMG export market from Bangladesh. In order to make their apparels more competitive, the Indian government has declared a number of lucrative cash incentives and other facilities for their exporters. They have also adroitly depreciated their currency to a great extent to make their apparel products more competitive to the buyers. Apart from these facilities, Indian banks and financing institutions have decided to provide the sector with low-interest finance.
On the other hand, the government of Bangladesh has declared a trivial amount of cash stimulus for its exporters at the rate of 0.25 per cent on FOB effective from January 01, 2014. But the wages for the RMG workers have been increased substantially under the pressure of the government for petty political gains immediately before the national election on January 05, 2014, notwithstanding the fact that the buyers are reluctant to raise their rates at all. At the same time, the prices of gas, electricity and fuel, as well as transport costs, have been enhanced abnormally and exorbitantly in Bangladesh.
IMPEDIMENT TO UNINTERRUPTED PRODUCTION: Compared to the incremental cost of production, the cash incentive of mere 0.25 per cent is simply ludicrous and trifling for the sector. Dearth as well as fluctuation of supply of gas and electricity in the country has also become a serious impediment to uninterrupted production in the sector. Moreover, the voltage fluctuation has also long been jeopardising the life-cycle of capital machinery. As a result, production in the sector is tremendously dwindling causing the entrepreneurs to incur huge losses.
If all these issues are taken into due cognisance, the cost of production in the apparel sector of Bangladesh is surging at a geometric rate. The situation is also pushing the industry to the edge of virtual extinction. Cashing in on this circumstance, Indian apparel exporters have already been able to capture a large chunk of our apparel market share taking the advantage of incentives declared by their government. The supposition is amply corroborated by the fact that about 30-40 per cent apparel orders of Bangladesh have already been redirected to India and other places.
If we allow this situation to continue any more, the RMG sector of the country is likely to end up with the fate of jute. All stakeholders of the apparel sector, including workers, labour leaders and the civil society of the country should ponder the issue with paramount importance.
THE ACCORD AND THE ALLIANCE: Of late, the EU and the (North) American garment product buyers have formed 'syndicates' by the names of the Accord and the Alliance to press home their demands in Bangladesh. In the name of compliance related to structural repairs and remedies, they have already de-listed many factories and are recommending work suspension in some other units of the country as vendors. It is very much alarming. Due to their irrational classification of factories as being non-compliant, many workers have become jobless and many more are also in the queue to accept the same fate. If we allow this matter to go on unchallenged, then the apparel sector must brace for a disastrous situation to be plagued by unemployment. The spillover impact will also be felt in other sectors as well, as the RMG sector is the engine of many other sectors in the country.
In a much-hyped humanitarian world, thousands of toiling workers are being compelled to live in unwholesome and insecure shanties and suffer from malnutrition. They are also facing premature deaths. The garment buyers of the developed countries are too much busy with the 'fire safety' issue. But they seem to have no concern for the premature deaths of these poor workers caused by frequent fires in those insecure slum dwellings, where they are compelled to live after losing their jobs. The main responsibility for this unwarranted and unfortunate situation of these poor workers and their untold sufferings should be shouldered by those so-called humanitarian countries and their big RMG buyers. We do presume that perhaps the general citizens of their countries have been kept in the dark very slyly about such inhuman activities being perpetrated by these buyers in the name of humanity.
FOREIGN POLICY: If anybody looks into the foreign policy of our country, it might appear to him that Bangladesh is much more interested to develop its bonhomie with China, Russia and India to an extent which is higher than what is necessary and pragmatic. It is also fact that we do not have many exports to these countries. The aim and objective of foreign policy of Bangladesh is not quite understandable. The lion's share of our country's foreign exchange earnings comes from export of manpower and RMG products. These earnings come mainly from the Middle East, Malaysia, the EU and the USA. Without doubt, the dominant export destinations of our products are the EU, the US, Canada and Japan, and obviously not Russia, China and India. Circumstantial evidence reveals that our relations with Middle East, the EU and the US are not that much tepid.
Perhaps, the Grameen Bank issue and the 'voter-less one-party election' held in January, 2014, have appeared as a big question-mark to the peoples and the governments of those countries. Here it is worth mentioning that the EU, the British Parliament and the US Congress also expressed their strong resentment over the issues.
The government should form a high-powered committee on the basis of consensus incorporating members of the  civil society as well as some acceptable personalities from the Bangladesh Nationalist Party (BNP). The committee should interact with the representatives of different countries to come to a meaningful understanding on the country's RMG problem.
At the same time, it has become imperative to undertake immediate and pragmatic steps to take at least 5/6 years' time from the buyers to comply with the standards of Accord and Alliance. The BGMEA and the BKMEA should start meaningful dialogue with the government to set up a number of economic zones at different places of the country.
WELFARE MEASURES: Meantime, the government should initiate the process of establishing a Garment Worker Welfare Board and Fund for the benefit of the RMG workers. The Board shall fix direct or indirect levies on the beneficiaries who are involved with the sector to create the Fund for the welfare of the workers. At the same time, financial assistance from the reputed buyers and donor countries can also be sought for the fund. If required, interest-free loans or those at a minimum interest rate, can be taken from the World Bank, JICA, IDB and other bilateral or multilateral financial organisations.
The government should introduce a rationing system involving essential food items for those poor toiling workers of garment factories who are contributing to the nation's earnings of foreign currency. If these sorts of facilities are introduced in a transparent way, it is believed to be more beneficial and welfare-oriented for the workers than anything else.
This will enhance the workers' capabilities and productivity. Besides, it will also encourage them more than that prompted by mere wage increase. If the policy is implemented, the 'smiling face' of our apparel workers will induce the foreign consumers to buy more Bangladeshi products than ever before.
At this moment, everybody, irrespective of workers, owners, labour leaders and political parties, should work hand in hand, to take the sector out of this calamitous situation. In fact, everybody should make a holistic attempt to facilitate the means of livelihood of 160 million people of the country, and thus contribute to infusing due momentum into our foreign currency-earning efforts.
The writer is former president, Chittagong Chamber, BSAA,
BMSA and PUF.
 faridahd@colbd.com