To be or not to be is the question
Thursday, 10 September 2009
Enayet Rasul Bhuiyan
THE Bangladesh Garments Manufacturers and Exporters Association (BGMEA) made an unwitting statement. It was interpreted as one that sought to hold the government hostage just like any irresponsible trade union body. Later, the BGMEA president had to retract the statement. In their earlier statement, the BGMEA president had sought to draw government's attention to the need for providing support to the tune of some Taka 30 billion to the readymade garments (RMG) owners to be able meet the financial demands of workers before the coming Eid. That statement was laced with observations that failure on the part of the government to do so could set off serious labour troubles in the garments industries to the detriment of all.
For understandable reasons, such demands by the BGMEA have widely been likened to blackmailing the government in order to squeeze undeserved favours from it in the sensitive period before the Eid when expectations from workers peak. Certainly, the BGMEA has no right to ask the government to pay money to their workers nor the government has any obligation to that end. The BGMEA, as the critics noted in the wake of their earlier statement, had chosen the time with rather an immoral motive. Unruly workers breaking out into violence of the sort -- that was witnessed recently at Ashulia and Savar -- on the eve of Eid would pose both a serious law and order challenge for the government and embarrass it deeply before the people. In order to avoid these possibilities, the government would give in and accept the BGMEA's demands. The BGMEA and the industries it represents, as the critics noted, are no better than hostage takers.
There is no doubt that the wordings of the BGMEA in their earlier statement were made in a very unguarded manner. That left hardly any scope for any other interpretation than the way it was made by different quarters. Later, the circumstances compelled the BGMEA to clarify their earlier statement. However, the purport of the BGMEA's pleading for some government support under the bail-out programme, in the context of the adverse global economic situation, should not be misunderstood by any quarters. The RMG sector has been the most successful in the industrial realm of the country in the last three decades. For any non-refined statement from the BGMEA does not take away the urgency sought to be conveyed by it about helping the country's premier economic sector by the government or the justifiability of the same.
None can afford to ignore the following hard facts:
l The export-oriented garments sector earns about 75 per cent of the country's foreign currencies from export of tangible goods.
l It employs nearly 3.0 million workers directly. Another 4.0 million people live off the earnings of these workers as family dependants. Yet another three million people are workers in the linkage industries of the garments industries or are their dependants. Thus, in a myriad of ways, the livelihood of some 10 million people or more is linked to the garments sector as a whole.
l A big part of the entire banking, insurance and shipping businesses of the country have regular ample dealings with the garments sector. Investments in the garments sector, for example, have been made heavily using banking sector funds. Thus, a downturn in the garment sector would invite turmoil in the financial system of the country.
From the above, it should otherwise be clear that the garments sector is pivotal for the economy. From earning foreign currencies to providing large scale employment and for maintaining the health of the financial system of the country, the garments sector occupies a very important position in the economy. Not facilitating this sector with some kind of reasonable support to help overcome its bad times can only translate into a major setback for the economy of Bangladesh. From unemployment to classified loans of this sector bedeviling the financial system, the troubles starting from a garment sector going downhill, can be great and overwhelming, indeed.
In their clarifying statement later last Monday, BGMEA leaders underlined these aspects mainly. They tried to explain that they have no intention of blackmailing or squeezing out funds from the government to cover up their own failures. What they sought was what the government itself had earlier indicated it would do to come in aid of the sector. Government pledged the formation of a special Taka 60 billion fund to provide incentives and assistance to the country's global recession-hit export-oriented sectors. Understandably and logically, the biggest beneficiary of this packaged governmental assistance programme was expected to be the garments sector for its leading role in the export activities of the country.
But assistance from this Taka 60 billion fund was released in small or proportionate amounts to other export-oriented sectors such as jute and shrimps. The garments sector was comforted by statements at that time that help would be also extended to the garments sector as well from this fund in time. But no such fund has so far been released to the RMG units.
Thus, the BGMEA leaders should not entirely be blamed for any misplaced expectation that since most of this bailout fund remained unallocated. Though the RMG sector was assured that it would eventually expect a generous part of it, the promise of a supportive nature was not redeemed.
Meanwhile, the closure of some 100 garments industries during the last couple of months, with more fearing closure, does provide a strong reason for providing some emergency succour. This has to be given on the basis of a clear identification of the reasons for such closure and the nature of links between the operations of the related garments units and the global economic recession. Such assistance has been given by the governments of India, Pakistan and Vietnam to their garments and textiles sector. These are the rival countries of Bangladesh in garments exports and they could gain an edge over Bangladesh from getting such timely supports to their garments industries from their governments.
The garments sector in this country cannot be expected to fight an unequal battle for long with rival exporters of these countries under such circumstances. Without policy supports alongwith soon financial assistance, the competitiveness of the garments sector in Bangladesh will be eroded further, leading to a situation where some 40 per cent of the garments industries could be forced to close down only a few months from now.
Fears have thus, been expressed by the BGMEA circles. Export orders to Bangladesh have been falling worryingly and prices offered fell drastically. In this situation, the export growth showed a declining trend during last July and August. It was in this backdrop that the owners of garments industries have been pressing for provision of some financial supports to them in order to meet the challenges facing them now. Meanwhile, the BGMEA leaders in their latest statement have clarified that they would, of course, go allout to meet the legitimate demands of workers before Eid relying on their own resources. All concerned would hope that most BGMEA members would able to meet their obligations to the workers.
Furthermore, the BGMEA leaders have now taken pains to make it clear that they do not seek direct dole from the government. They do not look forward to getting cash directly from the government to pay off the workers. What they essentially want is some help from the government to remain 'competitive' against rival countries. For examples, government can help them by subsiding the price of diesel they buy to run generators, by charging lower tariff on power supplied to them by PDB, by giving a small financial incentive to them when they receive payments in taka against their foreign currency earnings, etc. If they regain their competitiveness from the immediate announcement of such governmental measures, then they would probably be willing in most cases to carry on production even after absorbing losses and still be able to pay the workers their due all by themselves with the hope that they would recoup their losses in the future from regaining the crucial competitiveness.
THE Bangladesh Garments Manufacturers and Exporters Association (BGMEA) made an unwitting statement. It was interpreted as one that sought to hold the government hostage just like any irresponsible trade union body. Later, the BGMEA president had to retract the statement. In their earlier statement, the BGMEA president had sought to draw government's attention to the need for providing support to the tune of some Taka 30 billion to the readymade garments (RMG) owners to be able meet the financial demands of workers before the coming Eid. That statement was laced with observations that failure on the part of the government to do so could set off serious labour troubles in the garments industries to the detriment of all.
For understandable reasons, such demands by the BGMEA have widely been likened to blackmailing the government in order to squeeze undeserved favours from it in the sensitive period before the Eid when expectations from workers peak. Certainly, the BGMEA has no right to ask the government to pay money to their workers nor the government has any obligation to that end. The BGMEA, as the critics noted in the wake of their earlier statement, had chosen the time with rather an immoral motive. Unruly workers breaking out into violence of the sort -- that was witnessed recently at Ashulia and Savar -- on the eve of Eid would pose both a serious law and order challenge for the government and embarrass it deeply before the people. In order to avoid these possibilities, the government would give in and accept the BGMEA's demands. The BGMEA and the industries it represents, as the critics noted, are no better than hostage takers.
There is no doubt that the wordings of the BGMEA in their earlier statement were made in a very unguarded manner. That left hardly any scope for any other interpretation than the way it was made by different quarters. Later, the circumstances compelled the BGMEA to clarify their earlier statement. However, the purport of the BGMEA's pleading for some government support under the bail-out programme, in the context of the adverse global economic situation, should not be misunderstood by any quarters. The RMG sector has been the most successful in the industrial realm of the country in the last three decades. For any non-refined statement from the BGMEA does not take away the urgency sought to be conveyed by it about helping the country's premier economic sector by the government or the justifiability of the same.
None can afford to ignore the following hard facts:
l The export-oriented garments sector earns about 75 per cent of the country's foreign currencies from export of tangible goods.
l It employs nearly 3.0 million workers directly. Another 4.0 million people live off the earnings of these workers as family dependants. Yet another three million people are workers in the linkage industries of the garments industries or are their dependants. Thus, in a myriad of ways, the livelihood of some 10 million people or more is linked to the garments sector as a whole.
l A big part of the entire banking, insurance and shipping businesses of the country have regular ample dealings with the garments sector. Investments in the garments sector, for example, have been made heavily using banking sector funds. Thus, a downturn in the garment sector would invite turmoil in the financial system of the country.
From the above, it should otherwise be clear that the garments sector is pivotal for the economy. From earning foreign currencies to providing large scale employment and for maintaining the health of the financial system of the country, the garments sector occupies a very important position in the economy. Not facilitating this sector with some kind of reasonable support to help overcome its bad times can only translate into a major setback for the economy of Bangladesh. From unemployment to classified loans of this sector bedeviling the financial system, the troubles starting from a garment sector going downhill, can be great and overwhelming, indeed.
In their clarifying statement later last Monday, BGMEA leaders underlined these aspects mainly. They tried to explain that they have no intention of blackmailing or squeezing out funds from the government to cover up their own failures. What they sought was what the government itself had earlier indicated it would do to come in aid of the sector. Government pledged the formation of a special Taka 60 billion fund to provide incentives and assistance to the country's global recession-hit export-oriented sectors. Understandably and logically, the biggest beneficiary of this packaged governmental assistance programme was expected to be the garments sector for its leading role in the export activities of the country.
But assistance from this Taka 60 billion fund was released in small or proportionate amounts to other export-oriented sectors such as jute and shrimps. The garments sector was comforted by statements at that time that help would be also extended to the garments sector as well from this fund in time. But no such fund has so far been released to the RMG units.
Thus, the BGMEA leaders should not entirely be blamed for any misplaced expectation that since most of this bailout fund remained unallocated. Though the RMG sector was assured that it would eventually expect a generous part of it, the promise of a supportive nature was not redeemed.
Meanwhile, the closure of some 100 garments industries during the last couple of months, with more fearing closure, does provide a strong reason for providing some emergency succour. This has to be given on the basis of a clear identification of the reasons for such closure and the nature of links between the operations of the related garments units and the global economic recession. Such assistance has been given by the governments of India, Pakistan and Vietnam to their garments and textiles sector. These are the rival countries of Bangladesh in garments exports and they could gain an edge over Bangladesh from getting such timely supports to their garments industries from their governments.
The garments sector in this country cannot be expected to fight an unequal battle for long with rival exporters of these countries under such circumstances. Without policy supports alongwith soon financial assistance, the competitiveness of the garments sector in Bangladesh will be eroded further, leading to a situation where some 40 per cent of the garments industries could be forced to close down only a few months from now.
Fears have thus, been expressed by the BGMEA circles. Export orders to Bangladesh have been falling worryingly and prices offered fell drastically. In this situation, the export growth showed a declining trend during last July and August. It was in this backdrop that the owners of garments industries have been pressing for provision of some financial supports to them in order to meet the challenges facing them now. Meanwhile, the BGMEA leaders in their latest statement have clarified that they would, of course, go allout to meet the legitimate demands of workers before Eid relying on their own resources. All concerned would hope that most BGMEA members would able to meet their obligations to the workers.
Furthermore, the BGMEA leaders have now taken pains to make it clear that they do not seek direct dole from the government. They do not look forward to getting cash directly from the government to pay off the workers. What they essentially want is some help from the government to remain 'competitive' against rival countries. For examples, government can help them by subsiding the price of diesel they buy to run generators, by charging lower tariff on power supplied to them by PDB, by giving a small financial incentive to them when they receive payments in taka against their foreign currency earnings, etc. If they regain their competitiveness from the immediate announcement of such governmental measures, then they would probably be willing in most cases to carry on production even after absorbing losses and still be able to pay the workers their due all by themselves with the hope that they would recoup their losses in the future from regaining the crucial competitiveness.