[🇧🇩] Textile & RMG Industry of Bangladesh

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Financial inclusion among garment workers low: Experts

Poor financial and digital literacy among garment workers in Bangladesh coupled with a lack of supportive policies and related data are the main barriers for improving financial inclusion for this segment, according to experts.

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Financial inclusion among garment workers low: Experts

Experts attend a roundtable styled “Improving Financial Health of RMG Workers in Bangladesh: Policy Frameworks and Future Pathways” at The Daily Star Centre in Dhaka yesterday. Photo: Amran Hossain

Poor financial and digital literacy among garment workers in Bangladesh coupled with a lack of supportive policies and related data are the main barriers for improving financial inclusion for this segment, according to experts.

Besides, the absence of formal employment contracts and prevalence of informal payment channels for garment workers are the other roadblocks to improving their financial inclusion.

These comments came at a roundtable, styled "Improving Financial Health of RMG Workers in Bangladesh: Policy Frameworks and Future Pathways".

The event was jointly organised by The Daily Star and Sarathi, a project of Swisscontact Bangladesh that works for improving the financial health of local garment workers, at The Daily Star Centre in Dhaka yesterday.

Sajid Amit, director of the Center for Enterprise and Society (CES) at the University of Liberal Arts Bangladesh (ULAB), said financial inclusion among garment workers has yet to reach its full potential.

In his presentation, titled "Stitching Financial Health for a Resilient Future: Policy Brief on Improving Financial Health of RMG Workers in Bangladesh", he informed that 70 percent of garment workers use mobile financial services (MFS).

However, challenges persist in improving their financial inclusion through MFS as only 30 percent of the workers own smartphones and have access to the internet.

Meanwhile, it was found that 45 percent of them have security concerns about digital transactions.

Amit also informed that while nano loans and earned wage access solutions have gained popularity among garment workers, their limited smartphone ownership, low credit score and other hurdles are preventing them from availing these facilities.

Moreover, garment workers are largely unable to visit bank branches during operating hours due to demanding factory schedules, which is why their banking activities are typically limited to fund withdrawals, deposits or transfers, he added.

During the presentation, the speakers said that access to loans is one of the main draws for financial inclusion as people often turn to external financing for large expenses.

However, most female garment workers face communication barriers that make it difficult for them to understand the products being offered.

Also, the absence of formal employment contracts means that it is nearly impossible for garment workers to secure bank loans.

Against this backdrop, Md Arfan Ali, chairman of Zaytoon Business Solutions, said bank policies in this regard are not aligned with the interests of marginalised people.

"This one of the reasons why financial inclusion has not improved among garment workers," he added.

Stressing the need for a legal framework to facilitate financial inclusion, Mohammad Rashed, president of Digital Finance Forum Bangladesh, said related policymakers and stakeholders should be knowledgeable to this end.

Mosleh Saad Mahmud, the head of cash management and liability marketing at Dhaka Bank, said the process of improving financial inclusion among garment workers should start from the banking sector.

But when the banks assess workers' eligibility for loans, they do not get the required information due to the lack of relevant data, such as the applicant's creditworthiness, he added.

Md Forhad Mahmud, head of mobile banking division and financial inclusion at Dutch Bangla Bank, said they facilitate the salary payments of 2.5 million workers through their MFS service "Rocket".

However, the accountholders limit their activities to only basic transactions for a lack of financial and digital literacy, he added.

Rumana A Tulee, assistant vice president of the agent banking division at Bank Asia, said four factors -- accessibility, convenience, supportive products and financial literacy -- should be improved to facilitate financial inclusion of workers.

Rashadul Islam, senior assistant vice president of Dhaka Bank, said the process and cost of access to finance should be made easier and more affordable for garment workers.

Terming infrastructure, innovation, skills and literacy as vital for expanding financial inclusion, Shariful Islam Chowdhury, project officer at UNCDF, said it is not possible to ensure financial inclusion by just providing access to banks accounts.

Tanjim Ferdous, in-charge (NGOs and foreign missions) of The Daily Star, stressed the importance of introducing related topics for improving financial literacy in academia.

Tahmina Khan Majlish, CEO of Digital Finance Forum Bangladesh, said the financial inclusion of garment workers would improve if their perspective is taken into consideration.

"It should be looked at whether the end-users feel comfortable, confident and secure," she added.

Shoheli Afrin, additional director of the Bangladesh Bank, highlighted various policies taken by the country's central bank for ensuring the financial inclusion of garment workers.

However, the central bank cannot improve financial inclusion on its own, she said, adding that commercial banks and factory owners also have roles and responsibilities to play in this regard.

Salma Akhter, senior manager of partnership and advocacy at Swisscontact Bangladesh, said the biggest challenge for ensuring financial inclusion is social barriers.

"To overcome these challenges, the mindsets of all stakeholders should be changed," she added.

Fazle Razik, head of programme at Swisscontact Bangladesh, said the issue of improving financial inclusion among garment workers was practically untouched when they started working on it.

"When it comes to our vision, we have come a long way and are slowly gaining new ground," he added.

Tasmina Rahman, managing director at Grameen Trust, Sk Khalidujjaman, associate director at Waadaa Insurance, and Ahmed Shamsul Huda, national business manager of Rocket, spoke at the event.

Mushfiqur Rahman, senior manager of projects and research at ULAB's CES, and Md Sajib Hussain, senior assistant secretary (international trade, environment and sustainability) of the Bangladesh Knitwear Manufacturers and Exporters Association, were also present.​

 

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Bangladesh skips India, reroutes global textile exports through Maldives

Bangladesh, the world’s second-largest garment producer, has opted to bypass India and ship its textiles to global markets through the Maldives, hurting the cargo revenue prospects of India’s airports and ports amid strained bilateral ties, reports Mint.

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Bangladesh skips India, reroutes global textile exports through Maldives

Bangladesh’s garment exports fell 4.34 percent year-on-year to $44.47 billion in FY24, according to Bangladesh Bank. The decline was attributed primarily to reduced shipments of readymade garments, reflecting broader economic challenges. The photo was taken recently at a garment factory in Gazipur, around 25 kilometres north of the capital Dhaka. Photo: Anisur Rahman

Bangladesh, the world's second-largest garment producer, has opted to bypass India and ship its textiles to global markets through the Maldives, hurting the cargo revenue prospects of India's airports and ports amid strained bilateral ties, reports Mint.

The Indian business newspaper, citing three people aware of the development, reports that Bangladesh was rerouting its textile exports to the Maldives by sea and then dispatching cargoes by air to its global customers, including H&M and Zara.

"Previously, Bangladeshi goods were shipped through Indian airports, but now they are rerouting shipments from other locations," Deepak Tiwari, managing director of MSC Agency (India) Pvt Ltd, told Mint over the phone.

"This shift means India's airports and ports lose revenue previously earned from handling these cargoes," he said.

The Mediterranean Shipping Company (MSC) is a leading global container shipping company.

The redirection of textile exports could weaken trade relations between India and Bangladesh and reduce the collaborative opportunities in logistics and infrastructure projects, said the newspaper.

It could also potentially threaten India's revenue from port and transit fees, alongside business generated from Bangladesh's exports that pass through Indian borders, it said.

Seized by the issue, the Indian government is exploring a balanced solution to ensure that Bangladesh's textile exports—significant in volume and linked to Indian manufacturing hubs in Bangladesh—remain beneficial to Indian interests, one person said.

"A significant portion of these Bangladeshi textile exports are being produced in facilities or factories owned or operated by Indian companies based in Bangladesh," the first person said.

Bangladesh's textile industry contributes 80 percent of its exports and 13 percent of its GDP.

"The issue is under the government's attention. We are currently reviewing its impact on India," the second person said.

Industry experts suggested that Bangladesh took this step to gain greater control over its supply chain and meet its shipment deadlines by avoiding delays caused at India's airports, said Mint.

"This new route offers Bangladesh a strategic advantage along with improved reliability, which is crucial for meeting tight deadlines in the international clothing market," said Arun Kumar, president of the Association of Multimodal Transport Operators of India.

"Furthermore, by avoiding reliance on Indian ports, Bangladesh is ensuring greater control over its supply chain," said the chief of the association advocating seamless, efficient transportation solutions across sea, rail and road networks in India.

Kumar explained that textiles were also treated as perishable goods and that failure to deliver them on time results in the rejection of consignments. Garments meant for a specific season lose their value if they are delivered late.

Indian textile exporters had a different perspective on the rerouting of exports by Bangladesh.

"There's nothing to read into this," Anil Buchasia, executive member, eastern region, Apparel Export Promotion Council, told Mint over the phone.

"Indian airports are already congested, and we had also requested the government to restrict Bangladeshi textiles from passing through Indian airports," he said.

The third person aware of the developments dismissed suggestions that the move was linked to the ouster in August of former Bangladesh prime minister Sheikh Hasina, who is currently said to be staying in India.

The International Crimes Tribunal (Bangladesh) had issued an arrest warrant against her in October.

"The government does not see this as a reaction to Sheikh Hasina's asylum. Textiles are the backbone of Bangladesh's economy, so they must have made this decision to promote their textile exports," the third person said.

Bangladesh's garment exports fell 4.34 percent to $44.47 billion in FY24, according to Bangladesh Bank.

The decline was attributed primarily to reduced shipments of readymade garments, reflecting broader economic challenges.​

 

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What's causing the unrest among factory workers?

Kalpona Akter, labour rights activist and president of Bangladesh Garment and Industrial Workers Federation, talks to The Daily Star.

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What's causing the unrest among factory workers?

What is causing the current wave of protests by factory workers?

Although the government accepted all 18 demands of RMG workers in late September, communication of the announcement, as well as the implementation, remained problematic. For example, demands such as increasing the tiffin allowance have not been adequately communicated to all the factories. Additionally, some factories showed reluctance to comply with the directive. In Ashulia, most factories accepted the directive, but in places like Gazipur and beyond, we noticed that the directive was not properly communicated and owners, too, were reluctant to comply.

Another issue regarding unpaid wages arose in several factories where the owners are currently absconding. Those aligned with or sheltered by the previous regime fled after the political shift or change in the government. As a result, there is no clear directive regarding who should control these factories, who will pay the wages, or who will uphold workers' rights. No clear instructions are available either from the factory authorities or from any government office or ministry. There is ambiguity regarding who is responsible—should it be the metropolitan police, the industrial police, or the military personnel, who were recently given temporary magistracy power?

Even though the military has, in many cases, attempted to locate owners and ensure wage payments, they, too, face challenges, as handling such matters is not part of their usual protocol. The industrial and local police, traditionally responsible for these matters, now appear hesitant. They always seem to be waiting for military intervention. Their fear of retribution because of past misuse of power remains unresolved. However, it will be unjust to blame workers for this fear, because the police themselves once misused the law and now hesitate to act due to concerns of retaliation.

Is there a political aspect influencing these labour issues?

Many factory owners were previously affiliated with the former ruling party, the Awami League or enjoyed AL's political shelter. Besides, many use the RMG industry, the largest in Bangladesh, to gain political advantage. By inciting a bit of unrest, one can easily capitalise on this politically or advance specific political goals, by scapegoating the workers. In this sense, workers are being used to further a political agenda, and we have observed such issues arising within the labour sector.

We see a similar problem in the scrap clothing industry, although the government has tried to mitigate the problems. Recently, disputes have broken out between two factions of the BNP over the scrap-based apparel business and there were similar unrests in Chattogram, Ashulia, and Gazipur. Unless this political conflict is addressed, a third party will continue to exploit workers for its own interests, making effective problem-solving even harder.

What steps could improve the situation between workers and factory owners?

Communication between factory owners and workers is essential to bridge the gap. Without clear communication, the distance between workers and owners will only grow. The best approach to reducing this gap is to allow workers to freely exercise their union rights. If workers can unionise freely and exercise their bargaining rights, it would significantly decrease external confrontations, enabling discussions to occur within the factory premises rather than on the streets.

One major unresolved issue remains—the demand for wage re-evaluation. For the past two to two-and-a-half months, workers have been demanding a wage increase. The government has set a deadline until December, and a committee has been established to address this issue. If this committee can work efficiently and produce a viable solution, it may bring calm to the industry in the coming days. I believe that the committee should recommend an increase in wages, taking into account workers' quality of life as well as the financial capacity of the industry. If the committee can provide a fair recommendation based on these factors, and the owners and government agree to it, then the wage increase may finally bring about the peace that workers seek in the industry.

Do you feel that any government has proactively supported workers in the past, even before any demands were raised?

No political party or administration has ever consistently advocated for the working class. When they do, it's often to appease specific groups or to fulfil their own interests. Throughout my career, I have never witnessed a government that voluntarily stepped up to improve workers' conditions. No administration has come forward with a dedicated plan to enhance workers' rights, nor has any government truly addressed workers' issues beyond verbal promises.

If this interim government disregards the importance of labour issues, they will be making a big mistake. Out of Bangladesh's 17 to 18 crore people, almost 7.5 crore belong to the labour force, across all levels, including white-collar employees. Ignoring their concerns is not an option; the government should sit down and engage in dialogue with representatives of the labour force.

In an ideal world, we would see political representation for workers, similar to the Labour Party in the UK. Though left-leaning groups in our country claim to represent the working class, throughout our history, we have not seen them being vocal in parliament. Labourers still have not reached the point where they can form their own political party or hire political representatives. However, an avenue should exist for workers to have a political voice. Otherwise, those of us in marginalised communities will continue to be left behind.​

 

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Denim demand rebounds gradually: experts

The demand outlook for locally made denim garments is gradually improving as Western economies rebound, local and foreign businessmen said yesterday.

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Denim demand rebounds gradually: experts
Bangladesh Denim Expo kicks off in the capital

The 17th Bangladesh Denim Expo began at the International Convention City Bashundhara in Dhaka yesterday, with industry insiders expressing optimism that the demand for products made from the popular garment would rebound after slowing in recent years. Photo: Anisur Rahman

The demand outlook for locally made denim garments is gradually improving as Western economies rebound, local and foreign businessmen said yesterday.

There is intense competition in the global denim market as almost all competing countries, including Turkey, Pakistan and Vietnam, have always been strong denim producers.

Sales of denim products slowed over the last three years due to the severe fallouts of the Covid-19 pandemic, Russia-Ukraine war, and high inflationary pressures in the Western world, including the European Union (EU) and the US.

"Major challenges are coming for the overall export-oriented garment sector since Bangladesh will have to fulfil EU due diligence conditions by 2026 and reduce carbon emissions significantly by 2030," said Syed M Tanvir, managing director of Pacific Jeans, which produces more than 1.5 lakh denim trousers a day.

He also said that denim mills in the country need more value-addition to better compete on the global stage, adding that his company was targeting at least 12 percent export growth by the end of the year.

He made the remarks while visiting the 17th Bangladesh Denim Expo, which kicked-off at the International Convention City Bashundhara in Dhaka yesterday.

Md Ali Rasul (Tuhin), director of Team Group, said international clothing retailers and brands were worried by the recent spate of labour unrest in industrial belts as well as political volatility because they want timely delivery of goods.

If normalcy prevails, business will grow and work orders, which shifted to other countries in the aftermath of the political changeover on August 5, will begin to return, he said.

At a seminar on the sidelines of the expo, Ziaur Rahman, regional country manager, production (Bangladesh, Pakistan and Ethiopia) of Swedish retail giant H&M, outlined the commitments and improvements that customers would like to see.

"If you have demand or grievances, you can't opt for unrest. You need collective discussion. From vandalism, no one wins. Safety and security of the supply chain is a minimum requirement," Rahman said.

"Transparency is key. The supply chain should be self-sufficient. No one will monitor us but us. We should be responsible for our own operations."

He also suggested investing more in people and their development.

"Embrace technology. Innovation and research are really missing here," Rahman added.

He also suggested producing more value-added products to grab a bigger slice of the pie in the global apparel market, which was estimated to be valued at around $1.8 trillion.

Yilmaz Demir, a representative of Bossa, a Turkish denim fabrics supplier, said the slow demand for denim is temporary. Business will grow as inflationary pressures are also easing.

Muhammad Monsoor Bilal, senior vice-president of Karachi-based Naveena Group, said Bangladesh remains competitive globally because of price and quality.

He supplies five million metres of denim fabrics to local companies annually, adding that he expects his business in Bangladesh to grow at least 25 percent over the next year.

Manish Chauhan, chairman and co-founder of Noize Jeans, said Bangladesh is irreplaceable because of price and quality.

Chauhan has been doing business in Bangladesh for 20 years and is now running two garment factories that export denim goods worth $80 million a year.

Mostafiz Uddin, the organiser of the denim expo, said they were seeking better prices from international retailers and brands. However, he said the law-and-order situation should be improved further so buyers have more confidence in Bangladesh.

According to the organisers of the expo, many international exhibitors could not secure visas this year so they could not attend the event. Still, a total of 56 companies from 18 countries are participating in the two-day event.​

 

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Garment exporters prefer cheaper Maldives, bypassing Dhaka, Indian airports

Exporters say the traditional air shipment routes through Dhaka, Kolkata, Colombo or Singapore had either become too expensive or too slow

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Garment exporters prefer cheaper Maldives, bypassing Dhaka, Indian airports

File photo

Bypassing the traditional air shipment routes through India or Bangladesh, garment exporters have found the Maldives to be a cheaper as well as faster route.

Exporters said air freight through the island nation of the Indian Ocean, about 2,800km away from Dhaka, saved them almost up to a dollar per kilogram of shipment cost to European countries.

They said the traditional air shipment routes through Dhaka, Kolkata, Colombo or Singapore had either become too expensive or too slow.
The RMG industry was facing a substantial backlog in the wake of the student protests of July and August when everything had ground to a halt.

Shipment rates through Dhaka had climbed to $6.30–$6.50 per kg, which has now come down to $3.80–$4.10 per kg for shipping to Europe.
This is when Bangladeshi exporters stumbled upon the new route through the Maldives.

Kabir Ahmed, president of Bangladesh Freight Forwarders Association (BAFFA) said, the Maldives airport route emerged almost organically as the cost of shipment was too high through other routes.There was a sudden surge of shipment demand as factories resumed production after the restoration of order as the interim government took over.

The demand for dry cargo shipment almost doubled to 800–900 tonnes at Dhaka airport from the usual 400–450 tonnes per day.

The exporters could not ship goods via the maritime route using Chattogram either because the student movement in July and August had halted operations at the port as well as much of the country. The consequent backlog also had to be cleared quickly once operations resumed as exporters became desperate to meet their looming deadlines, many of which had presumably been extended considering the political situation.

Dhaka's Hazrat Shahjalal International Airport is expensive for exporters because of its high operational costs, levies and operational hazards.

The Dhaka airport also suffers from a dearth of necessary equipment like scanning machines and explosive detection systems (EDS). Further, there are not enough airlines connecting to Dhaka to fly the goods out.

In contrast, local exporters say shipment through the Maldives is faster and costs only $3–$3.50 per kg.​