[🇧🇩] Textile & RMG Industry of Bangladesh

Saif · Sep 26, 2024

Apparel exporters go into overdrive to meet deadlines

Garment exporters have gone into manufacturing overdrive to recover from continual production disruptions over the past three months due to nationwide protests and curfews, the fallout from the ouster of the previous government, and the recent spell of labour unrest at major industrial belts.

www.thedailystar.net

Apparel exporters go into overdrive to meet deadlines

Many factories are now operating around the clock to make up for the time lost in July, August and September.

Garment exporters have gone into manufacturing overdrive to recover from continual production disruptions over the past three months due to nationwide protests and curfews, the fallout from the ouster of the previous government, and the recent spell of labour unrest at major industrial belts.

Factories are now operating around the clock to make up for the time lost in July, August and September -- the peak months for shipping Western orders centring Christmas and securing bookings for the upcoming autumn and winter seasons.

Besides, local exporters are turning to subcontractors and requesting extensions from international retailers to maintain long-standing business relationships.

According to Indian rating agency CareEdge Ratings, if the crisis continues for more than a quarter or two, nearly 10 percent of Bangladesh's ready-made garment (RMG) export orders could shift to market rivals like India and Vietnam.

At present, many exporters fear they will have to provide big discounts or opt for expensive air shipments due to production delays while some may face order cancellations.

According to apparel makers, shipping one kilogramme (kg) of dry cargo from Dhaka to Europe by air can cost over $4 while the same can be transported by sea for less than 10 cents.

Exporters said if international retailers and brands allow extensions to lead times considering the labour unrest and political changeover, they may be able to avoid adverse impacts.

"I have already requested extensions from the retailers and brands that I work with, explaining the recent labour unrest and political changes in the country," said AK Azad, chairman and managing director of Ha-Meem Group.

"I am hopeful that they will approve extensions if the current state of normalcy continues in the factories," he added.

Moreover, Azad is seeking subcontractors to ensure the timely production and shipment of goods.

Following the ouster of the Sheikh Hasina-led Awami League government on August 5 by a mass uprising, labour agitation in major garment industrial hubs flared up.

Their 18-point charter of demands included increased attendance bonuses and tiffin allowances.

After lengthy consultations with union leaders and the authorities during tripartite meetings, factory owners agreed to all 18 demands made by the workers and issued a joint statement on September 24.

Azad said all of Ha-Meem Group's factories are now operating at full capacity as normalcy is returning to industrial belts.

A major European retailer in Dhaka said his company did not cancel or seek discounts from any local suppliers due to the student movement, curfew, internet blackouts, political changeover or labour unrest, as they understood the turbulent political atmosphere.

"We are happy that normalcy is being restored to the sector," he said. "The shipment of our goods is now back on track."

Shams Mahmud, managing director of Shasha Denims, whose buyers include multinational giants like H&M and Marks & Spencer, said the labour situation has now stabilised and almost all factories are back in production.

"We are part of a global supply chain. Most of the orders we take are time-sensitive. Hopefully, with the improving law and order situation, we will be able to deliver goods on time," Mahmud added.

However, he said the backlog would likely lead to air shipments and discounts.

He noted that the financial implications of the situation require attention from the government and the central bank.

"Almost all RMG factories are currently burdened by forced loans due to mismatches in imports, exports, salaries, bank loan repayments and overdue payments," Mahmud said.

"Unless these issues are addressed promptly, especially for small and medium-sized garments, there could be long-term negative effects on macroeconomic stability."

He added that brands remain committed to Bangladesh.

"In all these discussions, the importance of Bangladesh's position, along with necessary investments in renewable energy and carbon reduction as well as the deployment of a circular ecosystem, is getting lost," he added.

Khandoker Rafiqul Islam, president of the Bangladesh Garment Manufacturers and Exporters Association, said on Wednesday that since normalcy is being restored to the garment sector, they would meet with major retailers and brands on Sunday or Monday to discuss the overall situation.

Buyers are expecting quick delivery, but they have not cancelled work orders yet, he said.

Islam also said that the garment sector lost over $100 million due to the recent labour unrest, as many factories were unable to produce goods and ship them on time. Buyers' visits to factories were also cancelled.

Saif · Sep 27, 2024

Inside the lives of rmg workers

In the shadowy predawn hours, the air in Ashulia, a small industrial town on the outskirts of Dhaka, is thick with anticipation.

www.thedailystar.net

Inside the lives of rmg workers

Photo: Aklakur Rahman Akash

In the shadowy predawn hours, the air in Ashulia, a small industrial town on the outskirts of Dhaka, is thick with anticipation.

The rhythmic hum of sewing machines will soon fill the air, heralding another day for the world's second-largest garment-exporting nation.

But before the machines roar to life, a different kind of movement begins – the quiet exodus of thousands of garment workers from their homes to the factories that dominate the landscape.

As the first rays of light break through the smog-heavy night, Rubiya Akter, a 30-year-old garment worker, emerges from a tin-roofed shack.

Her calloused feet hit the dusty path, each rhythmic step a testament to years behind a sewing machine.

Rubiya's day begins long before the sun dares to peek over the horizon, a brutal schedule dictated by the relentless demands of the fashion industry.

"I leave my children alone all day due to the immense pressure of work," she said.

Rubiya's long work hours and meagre wages exemplify the plight of lakhs in Bangladesh, where the demands of global fashion brands clash with the realities of the labour force.

Behind Rubiya, in the tiny tin shed she calls home, lie her most precious treasures: her daughter Omi, 6, and son Rakib, a Secondary School Certificate (SSC) candidate.

The single room that houses their dreams is a masterclass in resourcefulness. A single bed, where her children sleep soundly, hogs most of the space. Clothes hanging on the walls serve as a colourful tapestry of their life, each garment a story of careful budgeting and maternal pride.

In one corner stands an old refrigerator, a prized possession acquired through months of saving. But more often than not, its dim hum is all the comfort it offers. The shelves inside lay bare, a stark reminder of the family's financial standing.

Housing conditions are cramped and facilities are stretched thin.

"We have only two bathrooms for 10 families. We have to stand in line every morning," Rubiya said.

Education, seen as a path to a better future for future generations, comes with its own set of obstacles. "The kids walk to school, which takes an hour. All the schools are one hour away from our house."

Healthcare accessibility also proves challenging. The nearest affordable medical facility, Gonoshasthaya Kendra, is a gruelling journey away.

"It takes almost 2 hours on the road, but we go there for medical treatment as it is less expensive."

The arithmetic of survival

As Rubiya walks, calculations race through her mind.

Her monthly salary of Tk 12,800 – hard-earned through countless hours of stitching and sewing – seems to evaporate before her eyes.

The numbers dance in her head: Tk 3,500 for rent, Tk 500 for electricity, Tk 6,000 for food and basic necessities.

The remaining Tk 2,800 must somehow be stretched to cover her children's education – Omi's school fees and Rakib's crucial SSC exam preparations.

"Sometimes I can't even pay tuition fees," she admitted, the weight of stress evident in her voice. "I need to borrow money frequently. It's a cycle that never ends."

In Ashulia's kitchen market, four eggs cost Tk 65, broiler chicken Tk 200 per kilogramme (kg), beef Tk 750 per kg, onions Tk 120 per kg, and green chilis Tk 70 per kg.

"I generally cook small tilapia fish for my children as I can't afford beef," Rubiya explained. "There was a time when I tried to purchase eggs every day, but due to price hikes, those are now out of reach."

Speaking about the standard of living of RMG workers, Syed Sultan Uddin Ahmmed, executive director at the Bangladesh Institute of Labour Studies (BILS), said real wages had not increased greatly because of persistent inflation.

According to the cost of living indexes of various government institutions, including the Bangladesh Bank, it is not possible to live on Tk 12,500, the minimum monthly RMG wage.

"Our government has not adopted any programmes for workers' welfare for a long time. There is no initiative to improve industrial areas with schools, hospitals, markets, housing, or transportation. The civic benefits and social security of workers should be ensured regionally. Again, at the factory level, workers do not have the opportunity to express themselves, so their needs are not known."

Stories of struggle

Rubiya's story is not unique. Similar tales of hardship echo throughout the narrow alleys and crowded worker houses in Ashulia, home to over 407 garment factories.

Shahida Khan, 37, works as an operator from 8 in the morning to 10 at night. A single mother, she supports her university-going daughter on a monthly salary of Tk 12,500.

Including overtime, she earns a maximum of Tk 16,000.

"My daughter lives in Dhaka," Shahida shared. "Her semester fee is Tk 3,000. Plus, there's her sublet rent. I can't save any money for her future. Meat is a dream for us."

Nearby, Polash Mahmud and Jasmin Akter struggle to balance work and family. Their 4-year-old son lives with relatives in their village home of Jamalpur, a heart-wrenching decision driven by necessity.

Polash mentioned: "I used to be the sole earner, but now my wife also works at the factory to help make ends meet."

Due to their struggles, they have had to sacrifice their role in raising their child.

"We've sent our son to the village as we don't have enough time or money to take care of him," Polash explained. "We have to send Tk 2,000 home each month. Mostly, I have to buy basic commodities on credit. There's no money left for medical and other necessary expenses."

Polash and his wife rent a small room for Tk 4,000. "The environment here is poor. When it rains, our house floods due to water logging, but we stay here to save on transport costs."

Hosna Akter is a 24-year-old mother of one child who has been working in a garment factory of Mirpur for more than five years. She was getting Tk 13,550 as a senior operator.

After working for five years, Hosna's husband Manna, an operator, earns Tk 13,800.

The couple's monthly expenditure includes Tk 6,000 for rent, Tk 400 for electricity, Tk 500 for internet, and Tk 8,000 for groceries – more than 54 percent of their joint earnings. Then there is the money that they have to spend on their child.

Hosna and Manna recently resigned out of frustration, deciding they would be better off if they relocated to their village.

Another worker from Mirpur, Shanta, has processed her way to Jordan to work as a labourer as she found it impossible to meet her expenses with the low pay in the garment sector.

A system under pressure

Data from the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) shows that there are 3.3 million workers in garment factories, with 52.28 percent being women.

Although the industry provides crucial employment, it also operates on razor-thin margins. Factory owners, under pressure from global brands to keep costs low, often struggle to improve working conditions or raise wages significantly.

Dr Rubana Huq, a former president of the BGMEA, said: "Tk 12,500 is not the ideal salary but because of not getting the prices from buyers and the declining value and volumes of the clothes, there is little scope to give anything more. Thus, we need to think about non-wage benefits such as transport, housing, and food subsidies. These are the areas that the government must consider. Manufacturers need to come forward too."

She added that workers must be given education and healthcare benefits.

Last year, workers protested for an increase in their monthly minimum wage to Tk 25,000. After negotiations, the government settled on Tk 12,500 for entry-level workers in the RMG sector – a 56 percent increase from the previous Tk 8,000, but still far below what workers say they need to live with dignity.

Of the amount, Tk 6,700 has been fixed as basic salary, Tk 3,350 as the house rent, Tk 750 as medical allowance, Tk 450 as conveyance, and Tk 1,250 as food allowance.

Bangladesh's garment exports reached $32.86 billion from July to February in fiscal year (FY) 2023-24, up 4.77 percent year-over-year, according to the Export Promotion Bureau (EPB).

The Export Promotion Bureau (EPB) noted that garment exports during the first two months of this year amounted to $9.47 billion, registering a 13.15 percent year-on-year growth.

Khondaker Golam Moazzem, a research director of the Centre for Policy Dialogue (CPD), opined: "The structure of the minimum wage is faulty. Allocations for basic housing and medical expenses are far less than required. Besides, some other expenses are important – child education, communication expenses, entertainment, and internet bills. These are not in the salary structure."

He added that workers did not compete on an even footing when it came to negotiating for better wages and working conditions.

"The wage negotiation should be tripartite, including the government, workers and owners. But in reality, the decision comes in a bipartite fashion – from the government and owners only," Moazzem said.

"Workers fear that they may lose their jobs during these negotiations. Meanwhile, owners argue that higher wages would increase costs and reduce competitiveness, though there's little evidence supporting this.

"According to the Bangladesh Labour Act, there are 12 indicators for wage negotiation, but only two or three are used. Ultimately, wage negotiations in our country are not data-driven and owners tend to avoid them."

The human cost of fast fashion

As the sun sets on another gruelling day, Rubiya makes her way home. Her fingers are sore, her back aches, but her resolve remains unbroken. Tomorrow, she'll do it all again.

The stories of Rubiya, Shahida, Polash, Jasmin, Hosna, Manna, Shanta and countless others serve as a powerful reminder of the human cost of the price tags we see in stores.

Some expressed plans to leave the industry if the situation of workers does not improve, agreeing that it's better to settle in their village homes.

As night falls, the factories finally fall silent. But in countless tiny homes, the struggle continues – a testament to the resilience of those who stitch our clothes and, in doing so, weave the very fabric of their dreams.

Saif · Sep 28, 2024

50 RMG units suspend operations amid unrest

At least 51 readymade garment factories in Ashulia and Gazipur suspended operations on Saturday, primarily after lunch, as workers staged protests over arrears, the reopening of factories, and demands for a wage increase...

www.newagebd.net

50 RMG units suspend operations amid unrest
Staff Correspondent 28 September, 2024, 13:35

The workers of a garment factory staged a demonstration on Dhaka-Mymensingh highway demanding resignation of an official of a garment factory in Konabari of Gazipur on Saturday. | UNB photo

At least 51 readymade garment factories in Ashulia and Gazipur suspended operations on Saturday, primarily after lunch, as workers staged protests over arrears, the reopening of factories, and demands for a wage increase.

Workers from several garment factories, including Mondol Knitwear, blocked the Bypile-Abdullahpur road in the Zirabo area of Ashulia in the morning, demanding the reopening of closed factories, the withdrawal of cases against workers, and an increase in the minimum wage to Tk 22,000.

Workers of four garment factories in Gazipur staged demonstrations over separate demands, including opening of closed factories and payment of arrears, New Age Gazipur corresponcent reported.

Workers also blocked the Dhaka-Mymensingh and Konabari-Kashimpur roads.

Workers of Jamuna Denims Limited in the Konabari area, HR One Fashion Limited and HR One Accessories factory in Shalna area and Silicon Swing Limited factory in Memberbari area held protests and blocked roads.

Law enforcement agencies later cleared the workers from both locations.

Officials from the Industrial Police stated that workers at Mondol Knitwear had blocked the Ashulia road for three hours in the morning due to their demands for a wage increase, among other issues.

As a result of these incidents, 20 to 25 readymade garment factories in Ashulia announced the closure of their units after lunch.

The majority of factories in the industrial zone had been operating since morning, with workers attending their workplaces.

Protests from the Lusaka Group and Mondal Group, along with several nearby factories, however, forced many to announce closures.

According to industry sources, a total of 49 garment factories in Ashulia and two in the Gazipur industrial belt halted production on that day.

Of these, 12 factories in Ashulia closed under labour law provision 13(1), which states ‘no work, no pay,’ while the remaining 37 factories announced a holiday as workers either did not report for work or left after attending.

Garment factory owners had agreed on September 24 to all 18 demands of the protesting workers, including increases in attendance, tiffin, and night shift allowances, in an effort to restore normalcy in the units, particularly in the Ashulia area, where protests had been ongoing since August 29.

Saif · Sep 28, 2024

Major brands sticking to Bangladesh

Contrary to what has been claimed in a number of media reports, a recent survey of some 20 global apparel buyers points to their continued confidence in Bangladesh readymade apparel (RMG) industry. Following widespread protests by workers in the industrial belts of Gazipur and Ashulia since early t

thefinancialexpress.com.bd

Major brands sticking to Bangladesh
Published :
Sep 28, 2024 22:02
Updated :
Sep 28, 2024 22:03

Contrary to what has been claimed in a number of media reports, a recent survey of some 20 global apparel buyers points to their continued confidence in Bangladesh readymade apparel (RMG) industry. Following widespread protests by workers in the industrial belts of Gazipur and Ashulia since early this month, nearly 100 RMG factories were forced to shut down disrupting the export supply chain. These events have sent shockwaves across Bangladesh and beyond, but findings of a survey carried out by the Business and Human Rights Resource Centre (BHRRC) provide some reprieve. The centre had reached out for feedback from some twenty global clothing brands to know about their future plans on apparel sourcing from Bangladesh particularly in light of the recent labour-related disturbances. Interestingly, some of the major names have stated that they have no immediate plans to divert orders from the country, which include Adidas, C&A, H&M amongst others. Although some brands politely declined to share their future plans, one cannot forget that the country offers not only the economies of scale in production but offers some of the most competitive prices for particular segments in apparels anywhere in the world.

The relations between foreign brands and Bangladeshi garments manufacturers span many decades and it is not that easy to replicate these longstanding relations in a different country simply because of more favourable conditions elsewhere. Cost remains a major issue and sourcing particularly low-end products any of the other competing countries including India, Cambodia or Vietnam will inevitably bring new challenges for buyers. Hence it makes sense for a lot of these brands not to have transferred orders as they are waiting to see how the situation unfolds. Interestingly, the BHRRC found some major fashion brands to be unhelpful in coming up with information requested. As pointed out in a recent report published in The Financial Express, the body stated that "several brands were reluctant to provide information on the impact of the protests on how they have ensured responsible purchasing practices and protection of worker welfare during the unrest."

With the exception of two brands out of 11, all others were on board to offer varying degrees of vendor support and letters of credit options to help ease cash flow issues. What all this points to is that a sizeable portion of international brands are not abandoning the country's RMG sector. While one brand has been forthcoming in providing "low-interest or no-interest financing to suppliers and have also covered the cost of air shipments to mitigate delivery challenges", this is by no means the consensus amongst brands covered. Hence the question arises, what will be brands' response in the next quarter should unrest continue to persist in industrial areas.

It is obvious that the potential fallout of any further unrest will have on Bangladesh and it is heartening to learn that a tripartite agreement among government, the industry and labour rights organisations have been reached. That said, there are enough external elements that appear hell bent on continuing to brew discontent over perceived deprivations and it is very much up to authorities to improve the law and order situation. Buyers for their part should keep faith that the country is picking up the pieces after a total change in the seat of government and work with their Bangladeshi counterparts to overcome obstacles, and not abandon what is obviously a win-win situation out of panic. Things are improving on the ground and time needs to be given to restore order.

Bilal9 · Sep 30, 2024

It is clear beyond the shade of a doubt that the defeated party and their backer India, are behind this unrest ^^. No need to verbalize further. In any case, here is the Bangladesh apparel sector MMF strategy as defined and interpreted by Lightcastle Partners, a Dhaka thinktank. Bangladesh exports mostly cotton apparel currently and this will need to change.

The full article is available here,

RMG Sector's Move to Man-Made Fiber for Sustainable Fashion

Explore how Bangladesh's RMG sector is adopting man-made fibers (MMF) to enhance sustainability and implement a circular fashion lifecycle.

lightcastlepartners.com

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Bangladesh’s Fiscal Year (FY) 2024-25 budget has been prepared amidst ongoing economic challenges, proposing a total allocation of BDT 7,970 billion (around USD 66 million). Concurrently, the government has set an ambitious new export revenue projection of USD 110 billion by 2027, as outlined in the export policy for 2024-27. Achieving this ambitious target, requires urgent attention from the ready-made garments (RMG) industry leaders, as they strategize to boost apparel exports and maintain sector competitiveness in the global market.

However, Bangladesh’s RMG sector has faced a decline in export growth since the beginning of 2024, particularly from major buyer countries. One contributing factor to this decline has been the shifting trade policies in these markets. For instance, changes in U.S. trade policies and tariff structures have likely influenced export dynamics with Bangladesh. Simultaneously, the EU’s stringent green regulations and due diligence requirements have put additional pressure on Bangladesh’s export competitiveness. As a result, exports to the EU dropped by 9.85% (Eurostat, EU) between January and April, while exports to the USA fell by 14% (OTEXA, USA) during the same period, raising serious concerns for industry leaders.

As the RMG industry is increasingly saturated with cotton-based apparel production, manufacturers must diversify into non-cotton-based apparel, particularly man-made fiber (MMF) to retain Bangladesh’s position as the second-largest RMG exporter in the global market. The demand for MMF-based clothing is growing worldwide, driven by a focus on recyclable raw materials and high-value-added apparel, making diversification essential for Bangladesh’s export basket. Bangladesh must also align with upcoming EU regulations, such as the EU Green Deal framework and the Eco-design for Sustainable Products Regulation (ESPR). These regulations are prompting global apparel brands to shift towards sustainable initiatives, boosting the use of recycled inputs and encouraging suppliers to incorporate environmentally friendly materials.

Adopting such practices facilitates a closed loop within the apparel lifecycle, promoting circularity by ensuring resources are continuously reused or recycled into new garments.

This approach significantly reduces waste and diminishes reliance on virgin materials, helping Bangladesh meet its export targets and comply with international sustainability standards.

Figure 3: Latest Annual Sustainability Report of Respective Brands.

Global brands are also increasingly integrating recycled raw materials into their production processes, as shown in the figure, and by adhering to these sustainable practices, apparel producers are incorporating environmentally friendly raw materials that require less water and energy. This shift includes focusing on man-made fibers (MMF) as part of sustainable raw materials for apparel producers. A key reason for MMF’s global ascent is its higher sustainability performance compared to cotton.

The Imperative to Integrate MMF in the Production Process

Diversifying into various categories of fibers enables manufacturers to achieve a balanced production mix without overburdening a single material. With this diversification in mind, suppliers are increasingly incorporating man-made fibers (MMFs) into their production processes due to their superior recyclability.

Figure 4: Defining various types of non-cotton fibers

Focusing on MMFs is crucial as it supports the implementation of a circular economy model, which extends the apparel life cycle, and carbon footprint by 1.5kg compared to using cotton across the value chain. MMF demonstrates lower water consumption and carbon emissions in comparison to cotton fibers. This increasing popularity of MMFs is helping exporters prepare for upcoming sustainability compliance regulations. Leading MMF-supplying countries like India and Vietnam are significantly ahead of Bangladesh in incorporating MMFs into their apparel production processes.

The recycling potential of man-made fibers (MMFs) offers a significant advantage for apparel manufacturers, enabling them to incorporate non-cotton raw materials into their production processes. This shift allows apparel leaders to capture a larger market share in the global apparel market. Consequently, in 2021, global exports of man-made and blended apparel reached USD 271 billion, surpassing cotton exports, which stood at USD 219 billion. Over the past decade, the relative significance of cotton garments has declined, while apparel made from man-made fibers has more than doubled.5

Global Landscape in the Production of MMF

The growing global population also presents a significant challenge for the apparel industry. The United Nations estimates a population of 8.1 billion by 2025, leading to a substantial rise in food consumption. This, in turn, is expected to put a strain on arable land, potentially limiting the availability of natural fibers like cotton.

Figure 6: Global Trend of Fiber Consumption

In response to this looming resource scarcity, the share of natural fibers in the apparel industry has declined from 41% to around 27% in 2020. This shift is driven by changing consumer preferences, as people worldwide become more conscious of the environmental impact of the fashion industry. Consumers increasingly prefer garments made from eco-friendly raw materials to reduce carbon footprints and minimize the use of virgin materials.

Producers are aligning their production processes with these consumer preferences, prompting suppliers to shift towards more non-cotton apparel, particularly MMFs. These fibers are favored for their durability, versatility, and ability to blend with other materials to create innovative fabrics. Over the past five years, non-cotton fiber production has grown at a compound annual growth rate (CAGR) of 2.5%, in contrast to a -1.4% CAGR decline in cotton production.

The global fashion industry is facing a pressing need for sustainable practices, and international brands are leading the charge in promoting a shift towards recycled man-made fibers (MMFs), particularly recycled polyester, among others. This strategic move capitalizes on the inherent recyclability of MMFs, offering a significant advantage over natural fibers like cotton and wool when it comes to post-consumer life. Recycled polyester, primarily derived from PET bottles, offers a compelling alternative to virgin polyester. Reusing PET bottles to create recycled polyester for garments embodies the circular economy principle within the fashion industry with approximately 99% of recycled polyester feedstock made from PET plastic bottles. Traditionally, garments made from virgin polyester rely on new petroleum resources. By diverting used PET bottles for clothing production, dependence on fossil fuels is reduced, and the overall carbon footprint is

lowered, implementing circular practices within the textiles value chain. But the innovation doesn’t stop there, international brands are actively exploring the potential of other post-consumer plastics like ocean waste and packaging scraps, alongside pre-consumer waste like fabric offcuts. This closed-loop system keeps plastic waste out of landfills and oceans, preventing pollution and environmental damage.

Recognizing the immense potential, leading brands like Adidas, H&M Group, and the Inditex Group have joined forces to significantly increase the use of recycled polyester in garments. Their ambitious target of 45% by 2025 is just the first step, with an ultimate goal of reaching 90% by 2030. Among the global brands, Nike took the initiative to make India’s national cricket team jerseys made from recycled polyester. Similarly, Adidas made the jerseys for the Indian team entirely from recycled polyester. By utilizing recycled polyester for these jerseys, India is harnessing the inherent environmental benefits of synthetic fibers like polyester.

(Cont'd in the next post)

Bilal9 · Sep 30, 2024

(Cont'd from previous post)

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Navigating the Footsteps of the Peer Economies

Vietnam

Vietnam’s “Strategy for the Development of Vietnam’s Textiles and Clothing, Leather and Footwear Industries to 2030, with a vision to 2035 emphasizes moving towards higher value-added products within the textile and garment industry. MMFs are often used in technical textiles, functional apparel, and activewear, which tend to have higher profit margins compared to basic cotton garments. Increased demand for these products could stimulate domestic MMF production to meet those needs.5 The government of Vietnam (GoV) is planning to establish specialized industrial parks centering on the textile, clothing, and others. As a result, it may become an attractive destination for the factories to set up, encouraging domestic production of MMF along with foreign direct investment (FDI) in their economy.

India

India has been incentivizing new start-ups in the textile segment to boost private investment in the economy, allocating research grants of up to USD 59,904.50 (50 lakh rupees) specifically targeting startups and individuals working with technical textiles. Moreover, India is heavily promoting the production of man-made fibers (MMFs) through its ‘Make in India’ initiative, which includes revoking anti-dumping duties on purified terephthalic acid (PTA), viscose staple fiber (VSF), and acrylic. This initiative encourages domestic manufacturers to integrate MMFs into their production processes and increase production capacity, as evidenced by India’s use of MMFs in their national cricket team’s jersey production.

As the data depicts, India experienced a robust rise in its compound annual growth rate for man-made filament yarn (MMFY) by 9.2% in 2021-22, indicating a rising demand for MMFY, which translates to increased production of polyester, viscose, and other synthetic apparel. Strategically capitalizing on this trend, India has allocated USD 1.28 billion (10,683 crore rupees) to implement a product-linked incentive (PLI) scheme. This scheme provides incentives to firms based on their incremental revenue over five years and is designed to boost economies of scale in the MMF-based textiles and apparel segment. The initiative also aims to generate more employment in the economy.

Exploring the Potential of MMF Production in Bangladesh

As Bangladesh nears its graduation from the Least Developed Countries (LDC) category, the diversification of the ready-made garments (RMG) sector, becomes increasingly crucial. While it signifies noteworthy development progress, it also means losing preferential trade benefits that provide privileges associated with LDC status. Without these advantages, the RMG industry’s heavy concentration on specific product lines could threaten the industry’s position in the global apparel market and weaken its ability to negotiate competitive prices with global brands.

Figure 10: Comparison of Price Difference Between Bangladesh and Highest Recipients due to Lack of Negotiating Power

The figure illustrates the price disparity between Bangladesh and other competing countries, with Bangladesh receiving lower prices for its cotton-based apparel. For instance, Peru receives 83% more for men’s cotton shirts, and Thailand secures 79% higher prices for women’s cotton jackets than Bangladesh. Additionally, men’s woven cotton trousers from Bangladesh were sold for USD 7.01 per piece in 2020, which is 9.20% below the global average of USD 7.72. However, to help the RMG leaders negotiate for higher prices, Bangladesh is diversifying its production basket, with the share of man-made fibers (MMF) increasing from 21.8% in 2021 to 28% in 2022, to cater to the growing demand for sustainable clothing in the major buyer destinations.

Figure 11: ITC trade map and PwC analysis

To facilitate fiber mix diversification, RMG manufacturers are strategically navigating their production processes to move up the value chain and expand their product lines. Industry leaders are incorporating man-made fibers (MMFs) into their production, following the example of peer nations, to be able to deliver high-value-added products such as blazers, denim wear, and activewear. These kinds of products are high-priced in the global market due to their technical properties and higher market value.

Note:

Following the MMF-based apparel export basket, woven dresses for women grew at a compound annual growth rate of 27% from 2017 to 2022 in Bangladesh as illustrated in the graph above. This growth indicates that Bangladesh is diversifying its apparel product line beyond cotton production to include MMF production for value addition. Woven dresses, in particular, hold a higher value than knitted dresses, making them a strategic focus for RMG exporters aiming to produce high-value-added products. In alignment with the previous Export Policy for 2021-24, which emphasizes the need for such high-value products like men’s and women’s blazers, leather jackets, and MMF items, Bangladesh has been actively investing in MMF-based suits and blazers (HS Code 620333), with a CAGR of 20% in 2022. This targeted investment depicts the sector’s intention to tap into the potential of MMF and achieve product line diversification within the RMG sector.

Alongside, to enhance the MMF backward linkage, Bangladesh is collaborating with Chinese engineering firms to locally manufacture PET and PSF chips. Furthermore, in the recent FY 2024-25 budget, the government reduced import duties on MMF raw material polypropylene yarn from 10% to 5% to support local carpet manufacturing industries. This reduced import duty on polypropylene will also aid textile and RMG manufacturers in producing sportswear, undergarments, and medical gowns locally. Similarly, with the ongoing collaboration with the Chinese engineering industries, Bangladesh can integrate updated technology and transfer skills to bolster the production of MMF-based garments. This formation of joint ventures with international brands and retailers facilitates foreign direct investment (FDI) within the country. FDI holds the potential to catalyze transformative outcomes, such as increased exports and seamless integration into the global value chain (GVC). Hence, the forthcoming collaboration and influx of FDI can empower the RMG factory owners in Bangladesh to leverage their global reputation, enabling them to negotiate higher unit prices for export items.

Way Forward: Exploring Other Non-Cotton Raw Materials

While diversifying Bangladesh’s apparel exports by incorporating man-made fibers (MMF), it is crucial to recognize the associated environmental concerns. Although MMF materials like polyester and viscose reduce carbon footprints and address the issue of fast fashion due to their durability, they are predominantly made from non-renewable resources. These materials, while durable, are also non-biodegradable. To mitigate over-reliance on a single type of raw material, it is essential to integrate other non-cotton materials such as wool and silk into the production mix.

Potential for other non-cotton materials

In 2022, Bangladesh achieved the highest market share in the outerwear category of non-cotton apparel, capturing 38% compared to other leading nations. This category includes suits, blazers, and coats, among others, made extensively from MMF, wool, cashmere, silk, and other non-cotton fabrics. Despite this achievement, the country’s share of exports across the upstream non-cotton value chain remains minimal, with the overall non-cotton apparel export share at just 5% in 2022.

Figure 13: Non-cotton export countries market share in 2022

Diversifying into other non-cotton raw materials allows RMG manufacturers to expand their market reach. For instance, in 2022, Bangladesh successfully exported its non-cotton apparel to destinations for instance, European Union (EU), France, Germany, and Spain, as well as the USA.

Exploring the potential of wool and silk fiber

Amongst the various types of fibers, wool and silk have a lower environmental impact unlike cotton, which requires significant water resources and pesticide use. On the other hand, wool and silk are derived from animals and don’t necessitate large-scale land cultivation. Both wool and silk are naturally biodegradable, compared to synthetic MMFs derived from fossil fuels, which can take centuries to decompose and contribute to microplastic pollution.

Besides being environmentally friendly, wool is also used to make high-value apparel, such as suits, shirts, pants, and knitwear sweaters for export. As shown in Figure 7, recycled wool holds a 7% market share in the global apparel industry, following recycled polyester. To boost the market for wool-based products, industry leaders in Bangladesh plan to import wool from Uruguay besides Australia, and China. Importing wool from Uruguay would enable industry leaders to explore the Mercosur market, a trade bloc that facilitates the free movement of goods, capital, and services, among its member countries, thereby expanding the consumer base to include countries like Brazil, Argentina, and Paraguay.

Furthermore, to build a diplomatic relationship with Uruguay, a bilateral free trade agreement is being drafted that will allow Bangladesh to enjoy tax reductions or reduced duties on exported items.

By focusing on other non-cotton fibers, particularly those with high value-added potential, the industry can achieve a two-pronged approach: diversifying fiber production and exploring new market destinations to strengthen its position within the existing market. Addressing climate concerns, garments made from fibers like wool, linen, or high-performance synthetics not only reduce the dependence on a single type of raw material but also contribute to a more balanced and environmentally responsible apparel production strategy. Similarly, offering high-value-added products will qualify Bangladesh for the GSP+ scheme, enabling the country to retain its competitive advantage and allow RMG leaders to strengthen their brand image in the global apparel market.

Author

This article was authored by Sadia Karim, a Business Analyst at LightCastle Partners. Advisory and editorial support was provided by Samiha Anwar, Senior Business Consultant at LightCastle Partners. For further clarifications, contact here: samiha.anwar@lightcastlepartners.com

References

WRITTEN BY:

At LightCastle, we take a systemic and data-driven approach to create opportunities for growth and impact. We are an international management consulting firm which creates systemic and data-driven opportunities for growth and impact in emerging markets. By collaborating with development partners and leveraging the power of the private sector, we strive to boost economies, inspire businesses, and change lives at scale.

For further clarifications, contact here: info@lightcastlepartners.com

Saif · Oct 1, 2024

Reforming wage structure, policy in RMG sector

Against the backdrop of spiralling workers' unrest with attendant violence in the Readymade Garment (RMG) units in Ashulia, Savar, Gazipur and elsewhere, the UN agency dealing with labour-related issues, ILO, has identified five key areas that demand urgent attention. Evidently, the international l

thefinancialexpress.com.bd

Reforming wage structure, policy in RMG sector
Published :
Oct 01, 2024 22:02
Updated :
Oct 01, 2024 22:02

Against the backdrop of spiralling workers' unrest with attendant violence in the Readymade Garment (RMG) units in Ashulia, Savar, Gazipur and elsewhere, the UN agency dealing with labour-related issues, ILO, has identified five key areas that demand urgent attention. Evidently, the international labour body has been closely monitoring the escalation of agitation among the garment workers, their grievances and the complexities involved that reflect systemic problems requiring speedy redress. The key issues identified by the ILO and the suggested remedies include wage structure, policy and labour law reform and strong social and legal protections and industrial relations, and occupational safety and health (OSH).The first step towards addressing the issues causing destabilisation in the garment and other industries is to acknowledge those by all the stakeholders involved. The next step would be to conduct constructive dialogues between the RMG factory owners, workers and government officials in a spirit of collaboration and good faith so that workers' rights are recognised and protected, while the sustainability of the RMG industry is also ensured.

Admittedly, workers must be motivated to develop a sense of ownership of the factories they work for a healthy industrial relations system in the RMG sector or any other industry. Continued unrest in the country's highest foreign exchange earning sector is only indicative of a trust deficit between workers and employers. The ILO's input in this case is definitely timely and welcome for riding out the crisis. Notably, the international labour body did highly commend the September 24 agreement reached between the RMG workers and employers as a 'landmark' accord. But hardly a week had passed since that agreement when violent clashes between workers and law-enforcers erupted on Monday last in the Ashulia area leading to the death of one worker and critical injuries to several others. Clearly, the situation appears to be grave since following the latest violence, owners of the Ashulia area has sought protection of their factories, their staff and workers against what they termed 'outsiders' who are out to destroy the industry.

Obviously, this latest development flies in the face of the 'worker-employer agreement' termed 'landmark' by the ILO. Even so, the latest unrest only points to how germane the ILO inputs and suggestions are to the crisis-ridden RMG sector. Now that the overall atmosphere in the RMG industry is getting toxic for reasons yet to be identified, the interim government needs to put its foot down to protect this vital sector of the economy. At the same time, it should see to it that the measures suggested by the ILO to restore a healthy worker-employer relationship in the entire industry are implemented duly. In this context, the suggested move to reform the wage structure and policy towards a gender-responsive national wage policy as well as reforming the minimum wage mechanism (through inclusive consultations between workers and employers) should be started without delay. Similarly, amendment to the Bangladesh Labour Act, introduction of an independent alternative dispute resolution institution and reform of the labour court system should also be initiated. Also, for social protection of workers, the ongoing pilot scale 'Employment Injury Scheme'should be institutionalised and legalised. To ensure occupational safety and health (OSH) for workers, the government would be well-advised to ratify the related conventions nos. 155 and 187 for developing a comprehensive OSH system in the sector.

Finally, the owners of the RMG factories should take the leading role to keep their workers happy in the interest of improving industrial relations and establishing peace and stability in the sector.

Saif · Oct 2, 2024

Why do RMG workers always get a raw deal?

Since its inception, the ready-made garment (RMG) industry has gone through many ups and downs over the last four decades. Now the industry has reached a stage where it can take pride in its achievements as the world's second-largest garment supplier as well as the main source of foreign income for

thefinancialexpress.com.bd

Why do RMG workers always get a raw deal?
Atiqul Kabir Tuhin
Published :
Oct 02, 2024 21:39
Updated :
Oct 02, 2024 21:39

Since its inception, the ready-made garment (RMG) industry has gone through many ups and downs over the last four decades. Now the industry has reached a stage where it can take pride in its achievements as the world's second-largest garment supplier as well as the main source of foreign income for Bangladesh. While Saudi Arabia, Venezuela, and Iran among others may take pride in their petroleum exports, Bangladesh is up there with RMG exports.

The apparel sector accounts for over 84 per cent of the country's total export earnings and employs around four million workers directly and many more millions indirectly. While the overall economy of Bangladesh has significantly benefited from the growth of the RMG sector, resulting in the emergence of a nouveau riche class, millions of workers who have contributed to the industry's success through their hard work, blood, sweat and tears remain trapped in a cycle of poverty and exploitation.

Their occasional outbursts of frustration for drawing attention to meet their needs are manifestations of the growing unrest in the RMG sector. Issues such as salary arrears, reluctance to pay mandatory festival bonuses, non-implementation of labour laws etc., plague many of the approximately 3,500 RMG factories in the country. A research report published by the Centre for Policy Dialogue (CPD) shows that Bangladeshi garment workers get the lowest monthly wages compared to other garment-producing countries like Cambodia, China, India, Indonesia and Vietnam.

That is understandable in many respects to keep prices down and to maintain international competiveness, but, seemingly, it is always at the expense of the garment workers - who get the short end of the stick and that cannot be right.

Of late, the International LabourOrganisation (ILO) has identified five key issues troubling Bangladesh's readymade garment (RMG) industry, and recommended reforms. These include amending the wage structure, labour law revisions, and establishing mechanisms for dispute resolution.

In 2023, during the latest minimum wage negotiations, workers demanded Tk 25,000, while owners proposed Tk 10,400. A comprehensive cost-of-living study by the Bangladesh Institute for Labour Studies (BILS) had shown that workers need at least 23,000 taka to stay above the poverty line. And yet, Tk 12,500 was finalised as minimum wage and workers were apparently forced to accept that through violence, lawsuits, and even gunfire. Four workers lost their lives, challenging the decision.

In 1994, the first wage board for Bangladesh garment sector was established, setting the minimum wage at Tk 930 per month. After 30 years and many substantial increases in the cost of living, this has been increased to a mere Tk 12,500, while revenue from garment exports surged from $223 million to over $40 billion during the same period.

Making profit is nothing bad and the industry would not exist without profit, but it seems to lack fair play when considering the plight of the workers. Repeated incidents of unrest and violence in RMG sector raise numerous questions. Why must workers continually risk their life and limb to press their demand for the implementation of minimum wages? Why is it not automatic, perhaps once yearly? Why does the demand for increase in pay and perks lead to severe consequences in the industrial sector? Why are owners permitted to suppress workers' demands by using violent force? As the RMG industry keeps Bangladesh afloat, why is not the government doing more to protect all those involved? Why, for example, are not the workers benefitting through a profit-share scheme?

Workers have every legitimate reason to be angry about the various injustices in wages and working conditions. It is said there is no organisation or independent trade union through which they can properly voice their concerns and grievances. Workers, many of whom are illiterate, find it extremely hard to express themselves and have their grievances addressed.

Following the horrific Rana Plaza collapse in 2013, international pressure led to the relaxation of the registration process to allow for the formation of trade unions in the garment industry. To date, 1,300 trade unions have been registered in this sector. A majority of these unions or committees are led by individuals loyal to the owners or an offshoot of the factory itself. Those who are not loyal face various forms of harassment after every movement. Most factory owners, understandably, are averse to the concept of unions, because they fail to recognise that healthy union activity is key to maintaining stable industrial relations. On the other hand some of the unions allegedly serve the interests of political parties rather than those of the workers, further undermining the workers' ability to seek fair treatment.

Lack of an effective labour court system in Bangladesh is another problem. The few labour courts that exist are ill-equipped to provide justice for workers. Institutional support for workers is virtually non-existent, and without a proper mechanism for addressing grievances, workers are left with little recourse but to take to the streets and risk life for their rights.

As the RMG industry is the mainstay of the economy, the government must show a greater interest and offer much better protection for the workers. The government and industry leaders must prioritise the establishment of a strong and effective institutional framework for setting wages and resolving disputes. Wage increases should be predetermined and enforced over fixed periods to prevent workers from resorting to protests. The practice of wage arrears, fraud, and deceit must be eradicated. ILO calls for amendments to the Bangladesh Labour Act to align with international standards, expanding coverage to all workers and simplifying trade union registration. In addition, the ILO urges the establishment of an alternative dispute-resolution institution and reform of the labour court system.

For the RMG industry to remain competitive on the global stage, ensuring workers' rights is not just a matter of moral obligation and justice, but an economic necessity. International trade is becoming more increasingly influenced by concerns about human rights and environmental sustainability. Consumers are forcing brands to become more selective, prioritising ethical supply chains. While everyone seeks quality garments cheap, they do not want to wear the guilt it was made in a sweatshop. Therefore, the industry must take proactive steps to improve workers' wellbeing and safety, moving beyond merely fulfilling basic obligations.

Saif · Oct 5, 2024

Apparel exporters demand $10m in Debenhams dues

A platform representing three dozen local apparel manufacturers has demanded over $10 million payment for fashion items they supplied to the UK retail giant Debenhams.

www.thedailystar.net

Apparel exporters demand $10m in Debenhams dues

PHOTO: REUTERS

A platform representing three dozen local apparel manufacturers has demanded over $10 million payment for fashion items they supplied to the UK retail giant Debenhams.

At a press conference at the Economic Reporters Forum (ERF) in Dhaka yesterday, they said they will file a case against the local forwarder of the now-bankrupt British store chain unless the payment is made within 15 days.

Md Zahangir Alam, convener of the Debenhams vendors' community platform, said that due to the negligence of the forwarder Expo Freight Limited (EFL), they have not received the payment to date.

The 36 vendors were supplying readymade garments (RMG) to Debenhams, a 150-year-old UK-based public limited company.

As Debenhams was a highly reputable company in the UK and other Western markets, Alam said they were selling the goods through sales contracts.

"The payment terms were to surrender the bill of lading to the nominated forwarder, EFL in this case, after receiving the export proceeds in the bank," he said.

"We have been supplying the goods for the past decade following these terms," he added.

Alam said the 36 companies supplied garments worth $70 million before Debenhams went bankrupt due to the Covid-19 pandemic. "Out of the $70 million, the suppliers have received nearly $60 million over the last four years, but $10 million remains unpaid."

"Now, Expo Freight Limited is legally responsible for paying the arrears to the suppliers as it handled the shipments to the now-bankrupt British retailer Debenhams," he said.

"We have relentlessly tried to resolve this matter and to some extent, we have succeeded. But due to the negligence of the EFL, we have not received the export value to date," said Alam.

On April 9, 2020, Debenhams filed for liquidation in the UK and the court appointed an administrator.

Subsequently, the Bangladeshi vendors came together and formed the platform called the Debenhams Vendors Community.

Alam said the main objective of this community is to negotiate, liaise, realise the dues and make collective decisions regarding the goods lying in the port and transit.

He said that among the 36 suppliers, whose total export value exceeds $5 billion annually, many are small and medium-sized companies that cannot absorb such losses.

"These companies will face unrecoverable losses if the arrears are not paid on time," he added.

Saif · Oct 6, 2024

Faulty NIDs deprive garment workers of welfare fund benefits

Many garment workers have been facing challenges in accessing financial benefits from the Central Fund for the industry because of inaccuracies in their national identity (NID) cards, analysts said yesterday.

www.thedailystar.net

Faulty NIDs deprive garment workers of welfare fund benefits

Although workers in the garment industry are entitled to many benefits, they often fail to avail them due to a lack of awareness. Many of them cannot even access the central welfare fund due to inaccuracies in their national ID cards. Photo: Star/File

Many garment workers have been facing challenges in accessing financial benefits from the Central Fund for the industry because of inaccuracies in their national identity (NID) cards, analysts said yesterday.

The Central Fund for the welfare of garment workers was set up in 2016, with the country's apparel makers contributing 0.03 percent of their export proceeds to the fund each fiscal year.

As per the conditions of the fund, the workers must submit their NIDs to take financial benefits from the fund.

However, at the end of the day, not all workers can access the money as their NID cards are littered with mistakes, speakers said.

They made the comments at a roundtable discussion, titled "Social Protection for RMG Workers in Bangladesh", jointly organised by The Daily Star and the UN Capital Development Fund at The Daily Star Centre in Dhaka.

According to the ministry sources, there is around Tk 1,000 crore in the Central Fund at present.

Md Abdus Samad Al Azad, director of the Central Fund under the Ministry of Labour and Employment, said his ministry plans to remove barriers in fund disbursement by correcting complexities related to Mobile Financial Services (MFS) and finding an alternative to NIDs.

He said faulty NIDs are the biggest factor depriving workers of social protection measures.

Azad added that payments from the Central Fund would gradually be digitised so workers could avail funds easily and without hassle.

Government officials, senior officials from different garment factories, international cooperation bodies, union leaders and officials from different NGOs also participated in the discussion, which was moderated by Tanjim Ferdous, in-charge (NGOs and foreign mission) of The Daily Star.

The Central Fund is one of many social protection measures for garment workers. Other such schemes include the Social Protection Programme for Unemployed Workers by the European Union and Germany, the National Social Insurance Scheme, the Employment Injury Scheme, the Mental Health Initiative for RMG Workers, the Mother and Child Benefit Program, Child Daycare Centers and the Universal Pension Scheme.

Unfortunately, most workers cannot enjoy such benefits as they lack awareness about these facilities. Bureaucratic hassles and complex processes present other major barriers.

While presenting the keynote paper, Shariful Islam Chowdhury, project analyst of UNCDF Bangladesh, said most RMG workers are unaware of such programmes.

He recommended increasing awareness, collaborating with industry associations, integrating factories with the universal pension scheme, and digitising the central fund so workers can benefit from these measures.

Masing Newar, assistant field officer of the World Food Programme, echoed Chowdhury's views.

Newar said her office offered social protection measures for garment workers, such as child and mother and nutrition programmes. But many do not know about these measures, so they do not avail of them.

Joly Talukder, vice-president of the Bangladesh Garment Sramik Trade Union Kendra, urged the government to publish a white paper on the Central Fund for more transparency.

ANM Saif Uddin, chairman of the Standing Committee on the International Labour Organization and Labour Affairs of the BGMEA, said the BGMEA had built eight schools in Dhaka and one in Chattogram that offer free education for the children of garment workers.

But most of the workers do not know about these facilities.

This is also the case for the eight healthcare centres in Dhaka and a full-fledged hospital in Chattogram. These institutions are run by the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), but workers are unaware of them.

Fazlee Shamim Ehsan, executive president of the Bangladesh Knitwear Manufacturers and Exporters Association, suggested bringing all social protection measures under a central framework.

Such a move would ensure that workers can enjoy benefits and enhance monitoring by the authorities, he said.

Saif · Oct 7, 2024

Boosting efficiency, image of RMG sector

The rapid expansion of readymade garments industry (RMGI) over the past four decades has made significant contribution to the socio-economic uplift of Bangladesh. It is also a matter of satisfaction that a majority of workers employed in this sector are female. At present, about 75 per scent RMG fa

thefinancialexpress.com.bd

Boosting efficiency, image of RMG sector
Helal Uddin Ahmed
Published :
Oct 08, 2024 00:27
Updated :
Oct 08, 2024 00:27

The rapid expansion of readymade garments industry (RMGI) over the past four decades has made significant contribution to the socio-economic uplift of Bangladesh. It is also a matter of satisfaction that a majority of workers employed in this sector are female. At present, about 75 per scent RMG factories are located in the Dhaka region, viz. Dhaka city, Savar, Ashulia, Gazipur and Narayanganj. But the recent turmoil in these factories have once again proved the need for maintaining a stable working environment through coordinated efforts and team-work of all stakeholders including the workers and owners.

Initiatives should be taken now to enhance the competitive edge and efficiency of the RMG sector for its sustainable growth. Loopholes in the regulatory framework should be addressed to reduce the time-lag in sending or receiving consignments. The time-frame for customs clearance should be reduced drastically and the whole exercise should be digitalised by shedding unnecessary dependence on manual procedures.

With the exception of a few units, most garments manufacturers in the country lack research and development (R&D) set-up. But the R&D teams in the factories of competitor countries are usually stronger. The local factories normally take 3 to 4 months for product development (from design to sample preparation). But countries like China spend only 15 to 30 days for the purpose. Lack of efficiency and weak productivity have become critical factors, as a result of which average production cost unnecessarily goes up, thereby offsetting the advantage of lower labour cost in Bangladesh.

Repairing and developing the road infrastructure at places like Ashulia and Gazipur have also become urgent now, as better road communication would decrease the time wasted during transportation of RMG consignments. Alongside adequate port facilities, the overall logistic framework including reliable supply of utilities like electricity should be ensured, so that all related activities including import of inputs and export of RMG products can be performed seamlessly without unnecessary delays.

In the backdrop of a rapidly changing market scenario across the globe, the entrepreneurs need to enhance their investments in automation and digitalisation, as production efficiency can be improved through adoption of modern technology and digital systems. Besides, value-addition can be enhanced through curtailing dependence on manual labour. For tapping the growth potentials, due importance should also be attached to the skill development of workers, which in turn would lead to enhanced productivity. These skills include communication cum technological knowhow and expertise. Moreover, ensuring a safe work-environment accompanied by fair wages and other benefits for workers is very important for fruitful team effort. A stable and motivated workforce can be maintained if workers' rights are upheld and regular dialogues are held between the factory management and trade union members.

The recent proliferation of online trading has added an element of unpredictability in RMG business. Many buyers prefer to do business online now instead of undertaking physical visits. Consequently, the nature of business is fast changing and smaller establishments have to compete with bigger ones on equal footing via the worldwide web for attracting buyers. The shape and form of retail marketing are also undergoing significant changes, and appropriate adjustments are needed to remain competitive. However, the big buyers usually maintain consistency in their sourcing, and usually do not make sudden or erratic moves.

The RMG products also need diversification in the light of a changing global scenario. A gradual shift towards sportswear, specialised apparels and dresses can aid in this move to high-value garments from that of low-value traditional ones. But items like shirts, trousers, jackets, t-shirts and sweaters still dominate the export basket of Bangladeshi RMG. Greater product diversification has therefore become urgent for improving the situation.

The power of innovation should also be applied in the use of fabrics and other ingredients. Utilising environment-friendly and sustainable fabrics will not only meet global expectations, but will also help Bangladesh in playing a leading role in sustainable fashion marketing across the globe. For this, good governance and policy supports have to be ensured. A stable political climate as well as neutral cum non-partisan business environment are essential for the growth of local RMG industry. Specifically, reforms should be undertaken in the banking, customs, and taxation sectors in order to ensure transparency, efficiency, and accountability. The industry should comply with the global standards for remaining competitive globally. Maintaining the highest quality through compliance with the standards of production and processes, and upholding labour rights and environmental sustainability are crucial for future growth of the industry.

Overall, the 'Bangladesh' brand should be projected in the right manner as a reliable supplier in the global market. The country's achievements in the area of sustainability should also be highlighted. For example, the leading role played by Bangladeshi RMG factories in green industrialisation can be publicised. This would also enhance Bangladesh's reputation as an ethical source. Besides, measures should be taken for ensuring fair prices from international buyers, which will also help in providing higher wages and improved work-environment for workers. This, in turn, may attract more skilled workers to the RMG industry.

The social and ethical considerations should be given top priority by the factory owners and the government. The image of Bangladesh's RMG industry will be automatically bolstered if corruption is curtailed and transparency in business processes cum official procedures are ensured. Regular dialogues between the employers and workers and strict adherence to ethical labour standards and fair management practices will help the industry in meeting social obligations and boosting its reputation worldwide.

For expanding the RMG exports to new and emerging markets, diplomatic initiatives may be undertaken by the government alongside BGMEA and BKMEA. Boosting exports to the potentially high-growth non-traditional markets will help reduce dependence on the traditional export markets like the EU and USA, and assist in overcoming associated risks. A competitive edge in the global market should be maintained through strengthening supply chain management - especially by reducing lead time and enhancing efficiency. This should include adoption of best practices and application of modern technology for optimal production.

Saif · Oct 9, 2024

Some RMG work orders shifted to other countries for unrest

Some garment work orders have shifted to competitor countries as a result of the recent spell of labour unrest in major apparel manufacturing belts across Bangladesh.

www.thedailystar.net

Some RMG work orders shifted to other countries for unrest
Square Group CEO Tapan Chowdhury says in conversation with ERF members

Although textile and garments is the biggest and most successful sector in terms of contribution to the economy, employment generation and women empowerment, businesspeople in the industry are facing some challenges due to labour unrest, said Tapan Chowdhury, chief executive officer of Square Group. Photo: Rajib Raihan

Some garment work orders have shifted to competitor countries as a result of the recent spell of labour unrest in major apparel manufacturing belts across Bangladesh.

Renowned entrepreneur and garment exporter Tapan Chowdhury made the remark during a conversation with members of the Economic Reporters' Forum (ERF) at its office in Dhaka yesterday.

Chowdhury, chief executive officer of Square Group, said his company, which produces garment items for leading clothing brands, had seen a portion of work orders shift to other countries, especially Sri Lanka, as buyers want to avoid uncertainty and ensure smooth and timely supply of goods.

However, it is expected that these brands will return with a handful of work orders for his company and Bangladesh as a whole if stability and normalcy are restored.

Chowdhury, also managing director of Square Pharmaceuticals, said the law-and-order situation in major garment-producing areas is better now than it was during the initial days after the interim government was formed.

Replying to queries, he said Bangladesh's graduation from the group of Least Developed Countries (LDCs) should be postponed as the sudden erosion of the preferential trade benefits may present challenges for businesses.

He added that investors had delayed plans to set up industries in the Active Pharmaceutical Ingredients (API) Industrial Park in Gazaria of Munshiganj as gas connections were yet to be provided.

He further said that Square Group plans to list more companies under the conglomerate on the stock markets if better opportunities arrive in the future, although he conceded they are now facing difficulties in managing their two listed companies.

"We are feeling very comfortable after a big change," he said regarding the political changeover and the business environment in the country.

"We are hopeful as the interim government's tenure is short and they want to bring a positive change. The advisers to the interim government are also saying that such an opportunity will not come again."

During a recent visit to the US to attend the United Nations General Assembly, chief adviser Prof Muhammad Yunus asked major clothing brands to source more garment items from Bangladesh, Chowdhury said.

The Square Group CEO also voiced his support for the action being taken by the interim government against corrupt businessmen.

He recalled how he was involved in the family business with his father, where he learned not just to manage day-to-day operations, but also the importance of values and ethics in running businesses.

Chowdhury also mentioned a few instances of how some leading pharmaceutical companies failed to survive due to their tendency to dodge taxes.

He said it was very unfortunate that the reforms adopted by the previous caretaker government were not continued by the immediate past government.

"I want to believe change will come. I hope the interim government will be successful. The political leaders should also know that power does not exist forever."

Although the textile and garment sectors are the biggest and most successful sectors in terms of contribution to the economy, employment generation and women empowerment, they have been facing some challenges due to labour unrest.

However, Chowdhury said the employees of Square are considered family members and this is the main strength of the company's values.

The workers, especially female workers, also have a huge contribution to the sector's success, he said.

"They spend their primes working in the garment sector and then contribute to their families, but it does not affect their productivity," he said, adding that female garment workers in Bangladesh are extremely disciplined.

"We want stability in the country. The decision of who will run the country will come through a vote," he added.

Large industries are investing in the heavy industrial sector and if the opportunity presents itself, Square Group also has plans to invest in large and heavy industries.

Since the county does not have a petrochemical industry, there is a lack of APIs.

Chowdhury added that the price of medicine is fixed through stringent consultation among regulators. As the drug administration monitors the process, companies cannot fix prices at will.

However, he said prices of oncology medicines are higher as most are imported.

Saif · Oct 13, 2024

Bangladesh lags behind competitors in RMG export to the US

Instead of expanding the volume of export of the readymade garment products to the US, Bangladesh is falling behind its competitors in the sector in exporting to the country. Though the export of RMG products of all top five exporters to the US in the first eight months decreased, the amount of...

en.prothomalo.com

Bangladesh lags behind competitors in RMG export to the US
Staff Correspondent
Dhaka
Published: 13 Oct 2024, 19: 37

Workers at a readymade garment factory File Photo

Instead of expanding the volume of readymade garment exports to the US, Bangladesh is falling behind its competitors in this regard. Though the export of RMG products of all top five exporters to the US in the first eight months of the year decreased, the decrease for Bangladesh is larger.

This was revealed in the latest report of the Office of Textile and Apparel (OTEXA) of the US Department of Commerce.

It said the US traders imported apparel products worth USD 51.3 billion from various countries around the world in the first eight months this year. The amount is 4.11 per cent less than the corresponding time last year.

According to the OTEXA, Bangladeshi entrepreneurs exported RMG products worth $4.71 in the US markets in that time period which is 9.16 per cent less than the time last year. The amount of export was $7.29 billion between January and August last year.

Bangladesh is the third largest exporter with 9 per cent market share while the share of China is 21.18 per cent, the largest exporter of RMG products to the US. The country exported products worth $10.69 billion which is 2.98 per cent less than the time last year

Vietnam is the second largest exporter of RMG products to the US. The country is also gaining momentum fast in recuperating from the drop in exports. It exported products worth $9.56 billion from January to August this year. The amount was $9.66 in the previous year.

India and Indonesia are the fourth and fifth largest exporters of RMG products to the US. The exports of India to the country dropped by 1.47 per cent while the drop was 7.16 per cent from Indonesia.

Though the production and export of RMG products for three months was hampered due to the quota reform movement, student-people uprising, floods and labour unrest, the entrepreneurs remain hopeful of the US market due to the formation of the interim government with Nobel Laureate economist Dr. Muhammad Yunus at the helm.

President of the apex body of knitwear manufacturers, Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), Fazle Shamim Ehsan, told Prothom Alo, “The buying of essential goods not made in the US declined due to inflation. The foreign buyers are a bit worried over the ongoing unrest in the markets. But we will turn around if we can ensure some kind of good governance."

Responding to another question, Fazle Shamim Ehsan said, “We are hopeful about the US market.”

Given the positive global identity of the chief adviser of the interim government, Dr. Muhammad Yunus, he pointed out, “If we could take avail some tariff facilities from the US, our export volume will rise.”

Saif · Oct 14, 2024

Garment export to US falls 9.16% in Jan-Aug

Data released from the Office of Textiles and Apparel (OTEXA) showed the fall

www.thedailystar.net

Garment export to US falls 9.16% in Jan-Aug
Data released from the Office of Textiles and Apparel (OTEXA) showed the fall

Representational image. File photo

Garment export to the USA fell by 9.16 percent year-on-year to $4.70 billion in the January-August period of the current year because of a fall in demand for apparels in American markets, according to data from the Office of Textiles and Apparel (OTEXA).

The data on apparel and textile import from different countries has recently been released by the OTEXA, which undertakes industry analysis, contributes to US trade policy development, participates in trade negotiations and trade promotion and addresses trade barriers.

In combined, the textile and garment shipment from Bangladesh to the USA also fell by 8.98 percent year-on-year to $4.84 billion in the January-August period this year, the OTEXA data also said.

Saif · Oct 18, 2024

37pc audits in RMG factories identify critical violations in working hours and wages

About 37 per cent of audits conducted in Bangladeshi readymade garment factories during the period of January to September 2024 revealed critical violations related to working hours and wages. More than half of all critical non-compliances in Bangladeshi factories during this period were related t

thefinancialexpress.com.bd

37pc audits in RMG factories identify critical violations in working hours and wages
QIMA REPORT
Monira Munni
Published :
Oct 18, 2024 09:12
Updated :
Oct 18, 2024 09:12

About 37 per cent of audits conducted in Bangladeshi readymade garment factories during the period of January to September 2024 revealed critical violations related to working hours and wages.

More than half of all critical non-compliances in Bangladeshi factories during this period were related to working hours and wages, compared to about one-third globally, according to a recent report.

"From January to September 2024, critical violations related to working hours and wages were found in 37 per cent of audited factories in Bangladesh, more than double the rate of 2023," according to QIMA report.

QIMA is currently operating in more than 100 countries offering supplier audit, laboratory testing and product-inspection services in Asia, Africa, Australia, Europe and North America and South America.

According to the report, the global incidence of such critical violations identified during factory audits was 16 per cent while the rate was 20 per cent and 11 per cent in China and Vietnam respectively.

The rate was 9.0 per cent and 17 per cent in Bangladesh in 2022 and 2023, according to QIMA report.

Citing its previous reports, QIMA said compliance with working hours and wages has long been a pressing issue in global supply chains and the latest audit findings echo trade union concerns, suggesting that worker compensation issues in Bangladesh are 'endemic and pervasive'.

More than a decade after the Rana Plaza tragedy, Bangladesh is no longer synonymous with deadly working conditions, it said, adding a year-long surge in protests by garment workers has highlighted ongoing issues with working hours, pay, and freedom of association in the Bangladeshi RMG sector.

The report, however, said despite these challenges, a recent agreement reached between the industry players and worker representatives in late September offers a glimmer of hope for improvement in Bangladesh's garment industry.

Bangladesh's textile and apparel sector has struggled throughout 2024, it said, adding with dozens of factories shutting down due to labour unrest, global brands and retailers have had to turn elsewhere to stock up for the holiday season.

QIMA data shows that demand for textile and apparel inspections in Bangladesh in Q3 of '24 only grew by 3.0 per cent YoY, at the same time as demand for the same services in China, India, Indonesia and Vietnam has spiked.

The inspections demand by global buyer in the third quarter of 2024 increased by 25 per cent in China, 49 per cent in Vietnam, 30 per cent in Indonesia while 65 per cent in India respectively, according to QIMA.

When asked for comments, Nazma Akter, president of the Sammilito Garment Sramik Federation, partly disagreed with the findings, saying that the report did not provide clear details about the violations and also failed to mention the number of factories involved.

She, however, said that there are issues related to timely monthly wage payments, which she believes are not much high. The latest wage structure has not been fully implemented in all factories, leading to wage issues across different grades, she added.

She also noted that the latest labour unrest in major industrial belts was the outburst of long political suppressions, including absence of freedom of expression.

She called on the stakeholders, including global buyers, to support the industry by continuing to source from Bangladesh to help sustain the country's economy and employment.

Saif · Oct 18, 2024

Unrest in the RMG sector and harm to the economy

Bangladesh's reputation has been harmed as a brand in the outside world. Factories are being shut down due to the political unrest and labour demands

en.prothomalo.com

Unrest in the RMG sector and harm to the economy
Ashfaq Ahmed
Published: 18 Oct 2024, 14: 50

At an RMG factory Prothom Alo

The readymade garment sector is one of the major driving forces of Bangladesh's economy. This export-oriented sector is contributing to the GDP as well as generating employment.

According to the World Trade Organisation (WTO)'s report, 'World Trade Statistics 2023: The Insights and Trends', in 2023 Bangladesh remained at the second top place globally in readymade garment (RMG) exports, as in 2022. Exporting RMG less than Bangladesh by 7 billion dollars, Vietnam ranks third. And at the top place, as always, is China.

According to the WTO report, Bangladesh exported RMG worth 38 billion dollars (3,800 crore dollars) worth of readymade garments last year. In 2023 Bangladesh’s share of the global RMG market was 7.38 per cent. The year before, that is 2022, the volume of RMG exports totaled 45 billion dollars (4,500 crore dollars).

However, political unrest, the fall of the government and the recent labour unrest has created concern that a large chunk of the work orders may be diverted to other countries. This is being viewed as a potential crisis for this export sector.

If factories are closed, unemployment will mount, leading to further unrest. The office of the chief advisor has assured that the situation is under control. However, apprehensions persist that the miscreants may instigate trouble at any time

Down the years, Bangladesh’s RMG sector has steadily advanced to reach this position. All those involved in this sector have toiled tirelessly for the development and expansion of this industry. However, it has been noted that since the fall of the last government there have been certain efforts to disrupt the sector.

After the change in political landscape, labour unrest has emerged in Savar and Ashulia of Dhaka, Kaliakoir of Gazipur, Araihazar of Narayanganj and other industrial belts. Certain vested quarters are trying to use this unrest in their own interests.

Several reasons behind the labour unrest in the country’s RMG sector are coming to the fore. There is the conflict over the ‘jhut’ (waste fabric) trade, ownership problems, outstanding dues, instigation by outsiders and certain new demands being raised by the workers.

A look at the unrest in the RMG sector over the past one month will reveal that after the political changeover, the leaders and activists of various parties have begun to assert themselves. This has appeared in reports of a leading newspaper of the country too.

Even a large party like BNP has taken action against these elements following the allegations. The report mentions that certain names of the party’s leaders too, though action remains pending. One of the accused persons even reportedly demanded benefits from the export-oriented Fakir Group in Narayanganj.

If a look is taken at the problems that have befallen the RMG sector till mid-August, it will be seen that the RMG factories, textile mills and even spinning mills have been under lock and key.

Later, after acquiescing to extortion, these factories were restarted. Only when promised to be paid “toll”, did a group of these activists, under political shelter, reopen the locks of around 57 establishments in Narayanganj’s Araihazar, Satgram, Gopaldi and Duptara. Many of the accused have been expelled from the party.

Concerning these errant BNP men who have been using the party’s name, BNP’s senior joint secretary general Ruhul Kabir Rizvi has said, “I request all persons including the concerned establishments to be alert concerning such motivated aggression. These people do not represent BNP.”

It must be understood that after the mass uprising, a constructive mindset has emerged among the people of Bangladesh. The national elections will be held. The political parties like BNP need to undergo reforms to tally with the mindset of the people and only then can they be totally ensured of the people’s mandate.

No establishment gathers strength on its own. There are thousands of workers and international brands involved. Production worth millions of taka and the supply chain of the RMG and other industries and sectors, are involved too. If cases and attacks continue on political considerations in this manner, what message will this deliver to our buyers abroad! Who is benefitting from this unrest? It is for the government to find out. The government and all concerned quarters must pay attention to these signs and speedily find a solution.

The situation is gradually improving, but it will take time to fully recover. Former president of Bangladesh Garment Manufacturers and Exporters Association (BGMEA), Rubana Huq, recently told the media, the two-week closure has caused harm to the industry. But the biggest harm is that our buyers are moving elsewhere. The fact is within December, 25 to 30 per cent of the orders will move away. Bangladesh National Labour Federation's general secretary Marium Akhter feels that outsiders are behind the worker unrest. It is still unclear when this promising sector will be fully functional again.

Bangladesh's reputation has been harmed considerably as a brand in the outside world. The factories are being shut down due to the political unrest and labour demands. Production has been hampered. In the meantime, new orders in the RMG sector are being diverted to Vietnam, India, Myanmar and other such countries.

A recent report quoting figures from the US Department of Commerce's Office of Textiles and Apparel (OTEXA), said that in the eight months from January to August, Bangladesh exported readymade garments worth 4.71 billion (471 crore US dollars) In the corresponding period last year 7.29 billion US dollars of readymade garments were exported. Presently Bangladesh is the third highest exporter of readymade garments to the US.

Bangladesh at present faces serious economic damage. Money has been laundered in huge sums, banks have been riddled with uncontrolled corruption, inflation has spiralled and there has also been a spate of natural calamities, all contributing to pushing the economy to the brink.

At this juncture, if the readymade garment industry is chucked into dire straits, the entire country's economy will be harmed. If factories are closed, unemployment will mount, leading to further unrest. The office of the chief advisor has assured that the situation is under control. However, apprehensions persist that the miscreants may instigate trouble at any time.

* Ashfaq Ahmed is a journalist and writer

Saif · Oct 19, 2024

RMG work orders returning as labour unrest subsides

After more than a month of disruption due to the political changeover and subsequent labour unrest in major industrial belts, international apparel retailers and brands are returning to Bangladesh with work orders for upcoming seasons.

www.thedailystar.net

RMG work orders returning as labour unrest subsides

After more than a month of disruption due to the political changeover and subsequent labour unrest in major industrial belts, international apparel retailers and brands are returning to Bangladesh with work orders for upcoming seasons.

Local garment suppliers said more Western retailers and brands are now visiting the factories and inquiring about production as normalcy has returned to the sector.

They said Western buyers are placing orders for the next autumn and winter seasons.

"I haven't noticed any major challenges in the inflow of work orders for the upcoming seasons," said Kutubuddin Ahmed, chairman of Envoy Legacy. "They haven't shifted orders away from here."

However, many factories are facing increased costs for having to make air shipments due to production delays caused by the unrest, Ahmed added.

He said a stable production environment is crucial for both suppliers and retailers.

During the unrest in September and early October, apparel factories in major industrial hubs were shuttered. Consequently, some summer orders have already been relocated to Bangladesh's rivals.

On top of the lost production and missed work orders for small and medium-sized factories, Ahmed said manufacturers are struggling as some banks are unable to open letters of credit (LCs) due to a liquidity crisis, US dollar shortage and reduced loan repayment capability of their clients.

Requesting anonymity, a major European buyer said their company did not shift any work orders out of Bangladesh due to the unrest.

"Production facilities are improving but uncertainty remains and our headquarters is concerned about the factories that were affected by the labour unrest," the buyer said.

Although buyers do not plan to reduce order quantities, overall volumes may not reach previous levels as any unrest has some negative consequences, he added.

"I have been meeting with buyers to assure them that normalcy has returned to the industrial zones and factories have resumed production," said Kalpan Hossain, managing director of Dekko Legacy Group.

Hossain's factories were shut down for 23 days in September and five days in October. This translated into a daily production loss of 80,000 pieces of trousers and jackets, valued at $4.8 lakh.

"Buyers want stability as they also need to ensure timely shipment of goods and profit," he said.

If a stable business and political environment continues, it is expected that upcoming seasons will be good for business, Hossain added.

"None of my buyers have shifted work orders so far," said Sharif Zahir, managing director of Ananta Group.

Zahir said he is hopeful that the upcoming seasons will be good as buyers are placing a significant number of orders now that normalcy has been restored.

The labour unrest was largely centred at manufacturing hubs around Dhaka. As a result, production at garment factories located in other areas was quite unscathed.

"I have work orders for the next seasons as the environment was relatively peaceful in Chattogram compared to other industrial zones in Dhaka," said Vidiya Amrit Khan, deputy managing director of Desh Group.

To sustain buyers' confidence, she said maintaining stability and a normal business environment are very important.

Requesting anonymity, a garment manufacturer from Rupganj upazila in Narayanganj said buyers are demanding discounts for their products due to shipment delays.

Apart from political stability and tight competitiveness, there are other challenges at the home front facing apparel manufacturers and textile millers. These include consistent gas and power supplies.

Khorshed Alam, chairman of Little Group, said his yarn production has declined 50 percent due to gas shortages and load shedding.

His Ashulia-based mill usually produces 24,000 pounds of yarn daily, but is now slumping to 12,000 pounds.

According to Alam, while the demand for yarn is increasing with the resurgence of garment work orders, inadequate gas supply remains a major obstacle.

Kyaw Sein Thay Dolly, managing director of Cloths R Us, said the labour unrest particularly hurt small and medium enterprises.

"Now both we and the buyers want to be optimistic," she said.

Khandoker Rafiqul Islam, president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), said the unrest impacted autumn garment production.

He said the BGMEA will hold a meeting with representatives of international retailers and brands next week to reassure them of the restored business environment and the association's commitment to meeting deadlines.

Saif · Oct 19, 2024

Garment industry lost $400m to worker unrest

The garment industry of Bangladesh has suffered collective production losses of nearly $400 million due to a series of labour unrest in September and early October, exporters said.

www.thedailystar.net

Garment industry lost $400m to worker unrest
BGMEA says

The garment industry of Bangladesh has suffered collective production losses of nearly $400 million due to a series of labour unrest in September and early October, exporters said.

However, the industry has now regained stability as the labour situation in major industrial belts improved, according to Khandoker Rafiqul Islam, president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA).

He made this remark during a press conference at the BGMEA office in Dhaka yesterday.

Islam highlighted that maintaining law and order alongside discipline is now the major challenge for the garment industry as factories are currently operating as usual.

Also, the BGMEA chief urged the interim government to allow the use of gas from CNG refuelling stations as industrial units are not getting an adequate supply of the fuel.

Over the past few years, many garment and textile units have been using compressed natural gas (CNG) purchased from refuelling stations to power production equipment as they are not getting enough supply from government pipelines.

Furthermore, Islam asked the authorities not to disconnect factories from utility services, such as gas or electricity, for failing to pay bills for the next three months as most of them were affected by the labour unrest.

Additionally, he sought government intervention to lower bank interest rates to a single digit and suggested that a joint security force led by the army should be formed to ensure safety at the garment industrial belts.

Other requests placed by the BGMEA included allocating interest-free bank loans for 39 manufacturing units based in Ashulia that were unable to pay their workers' wages for September amid the unrest.

In regard to improving the ease of doing business, Islam sought the interim government's cooperation in expediting the loading and unloading activities at Chattogram port.

The BGMEA chief also urged to ensure that none of the reform or punitive measures for certain sectors, companies or individuals end up adversely impacting industrial operations in the country.

The interim government recently formed a taskforce involving officials of the Bangladesh Bank and National Board of Revenue to create a more business friendly environment.

Besides, the formulation of a sustainable power policy, which includes fixing a rational price for electricity and ensuring its adequate supply, is needed, he said.

The BGMEA's charter of demands included keeping the recycling of waste fabric, locally known as jhut, and other garment products away from the outside influence by formulating a separate policy.

Shams Mahmud, a director of the platform for apparel makers and exporters, said the BGMEA is continually engaging with foreign stakeholders to attract them more.

"We are constantly updating our partners and different brands on the evolving situation," he said. As a part of the dialogue, the BGMEA will be meeting with the American Apparel & Footwear Association, which represents over 1000 brands from the US.

"We will update them about the current situation," Mahmud added.

Abdullah Hil Rakib, senior vice president of the BGMEA, said they have asked the chief adviser to lobby the US for lowering the tariff on garment shipments as the Western nation has suspended its trade benefits under the Generalised System of Preferences (GSP) for all countries.

Saif · Oct 21, 2024

Unrest erodes Bangladesh’s RMG edge over rivals

Garment exports by Bangladesh’s market rivals like India, Vietnam, China and Cambodia have increased to major Western markets due mainly to the latest spell of labour unrest and political changeover earlier in August in the country.

www.thedailystar.net

Unrest erodes Bangladesh’s RMG edge over rivals

Garment exports by Bangladesh's market rivals like India, Vietnam, China and Cambodia have increased to major Western markets due mainly to the latest spell of labour unrest and political changeover earlier in August in the country.

In September, India's readymade garment (RMG) exports grew by 17.3 percent year-on-year, capitalising on political instability in Bangladesh, according to Indian daily The Telegraph.

The growth comes despite global challenges such as inflation and supply chain disruptions, which have impacted other major garment-exporting nations, the report states.

"India's RMG exports have recorded high growth despite global headwinds and inflationary pressures," said Sudhir Sekhri, chairman of the Apparel Export Promotion Council.

"Many leading apparel exporters have experienced a slowdown in recent months, but India has benefitted from Bangladesh's socio-political unrest," he added.

Bangladesh's internal turmoil forced some factories to close temporarily, causing delays in delivery schedules.

Referring to India's CareRatings, The Telegraph also said if the unrest continues for more than one or two quarters, Bangladeshi exporters could face significant challenges in meeting deadlines.

In the July-September period of the current fiscal year, Bangladesh's garment export grew 5.3 percent year on year to $9.28 billion, according to the Export Promotion Bureau (EPB).

Despite the EPB's growth count, apparel exports in the first eight months of 2024 to the US and European Union (EU) were not encouraging compared to Bangladesh's market competitors.

For instance, garment export to the USA, the country's main export destination, fell by 9.16 percent year-on-year to $4.70 billion in the January-August period of the current year, according to data from the Office of Textiles and Apparel (OTEXA).

OTEXA attributed the fall to slumping demand for apparels in the American market.

In combined, the textile and garment shipment from Bangladesh to the USA also fell by 8.98 percent year-on-year to $4.84 billion in the January-August period this year, showed the OTEXA data.

Bangladesh's competitors performed well in the USA and EU markets as data showed that their exports, in terms of quantity, increased. The countries also took the advantage of the rebounding US economy, as consumer spending on retail goods, including apparel items, increased.

The retail sales in the US increased again in September as employment grew and inflation and interest rates fell, said Jack Kleinhenz, chief economist of the National Retail Federation (NRF), the world's largest retail trade association.

In the January-August period, the quantity of apparel imported by the USA increased by 1.5 percent year-on-year, while Bangladesh's export declined by 3.8 percent in terms of quantity.

During the period, US apparel sourcing from China increased by 3.6 percent in terms of quantity.

Apparel exports to the USA by Vietnam during this period increased by 5.2 percent, from India by 7.6 percent and from Cambodia increased by 7.7 percent, according to OTEXA data compiled by the BGMEA.

Similarly, in the January-July period, garment imports by the EU countries increased by 3.3 percent and the growth was only 2.8 percent from Bangladesh, according to Eurostat data compiled by the BGMEA.

During this period, apparel export to the EU by China grew by 6.4 percent, from India at 5.18 percent, from Cambodia at 18.35 percent, from Vietnam at 12.61 percent and from Pakistan by 14.41 percent, showed the data.

Overall in the July-September period, garment export from Bangladesh grew by 5.34 percent, whereas Vietnam recorded the overall apparel export growth at 15.57 percent and India at 13.45 percent, the BGMEA compiled data showed.

The data analysis showed that the garment exports by other countries grew faster than Bangladesh in the major markets largely because of the political and labour unrest.

The local garment exporters could not produce goods smoothly and ship those on time.

Exporters said some of the international retailers and brands either suspended their factory visit or shifted work orders to other countries.

A good number of garment factories have witnessed on and off situations since the beginning of the anti-discriminatory student movement in mid-July this year.

AK Azad, chairman and managing director of Ha-Meem Group, which mainly exports to the USA, said he experienced labour unrest and his export was affected like others.

"However, now I have been booking a lot of work orders from the buyer as they are coming back for the next seasons," Azad said.

Ex-president of now dissolved Bangladesh Garment Manufacturers and Exporters Association (BGMEA) Khandoker Rafiqul Islam also echoed Azad, saying, "Buyers are coming back now as the normalcy has restored in the sector."

Saif · Oct 21, 2024

CEMS-Global USA to host Textile Series of Exhibitions in Dhaka

CEMS-Global USA, a New York-based multinational exhibition and convention organiser, on Monday announced that it would host Bangladeshi edition of its globally renowned Textile Series of Exhibitions.

www.newagebd.net

CEMS-Global USA to host Textile Series of Exhibitions in Dhaka
Staff Correspondent 21 October, 2024, 22:47

CEMS-Global USA, a New York-based multinational exhibition and convention organiser, on Monday announced that it would host Bangladeshi edition of its globally renowned Textile Series of Exhibitions.

The 23rd edition of the Textile Series of Exhibition will be held from November 6 to 9 at the Bangladesh-China Friendship Exhibition Centre in the capital Dhaka and it will remain open from 10.00am to 7.00pm. It will comprise three international expos that will serve as vital platforms for textile and garment industry.

The company provided the details about the exhibition at a press conference held at a hotel in the city on Monday.

Meherun N Islam, president and group managing director of CEMS-Global USA and Asia-Pacific, said, ‘In the past, entrepreneurs of the garment and textile sectors of Bangladesh used to go to various exhibitions abroad to know about necessary products and raw materials. Now they will be able to save money, labour and time through this exhibition.’

SS Sarwar, group chief executive officer of CEMS-Global, said that amid the current situation, this exhibition would be of special importance and if it succeeded, Bangladesh would have a more positive image internationally.

Organisers said that the Textile Series of Exhibitions was already playing a major role in the advancement of South Asian ready-made garments and textile industries.

More than 1,475 companies from 37 countries are expected to participate in more than 2,245 booths in all three of the exhibitions.

Saif · Oct 21, 2024

Loss to RMG industry

Before his exit from the post of president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) on Sunday, Khandoker Rafiqul Islam claimed that normalcy has returned to the apparel sector but at a huge cost. According to him, the industry lost $400 million in more than a month-

thefinancialexpress.com.bd

Loss to RMG industry
FE
Published :
Oct 21, 2024 21:53
Updated :
Oct 21, 2024 21:53

Before his exit from the post of president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) on Sunday, Khandoker Rafiqul Islam claimed that normalcy has returned to the apparel sector but at a huge cost. According to him, the industry lost $400 million in more than a month-long industrial unrest, which has yet to be confirmed by any independent statistical body. If the figure of loss is anywhere near the given sum, it raises more questions than can be answered. In 2023, the readymade garment (RMG) sector fetched $47.38 billion, a record high, and the apex apparel body did not do enough to settle some of the endemic issues souring the industry's labour relations. The fact that the garment owners in the RMG belt most affected by the unrest ultimately accepted all the 18 demands of their workers is a proof that the latter's demands were reasonable and justified. Then why did they allow the situation to escalate to an ugly disruptive level?

Clearly, the inflexible garment owners have none but only themselves to blame. Significantly, garment factories managed well and have been offering reasonable wages to their workers stayed free from the industry's turmoil. It is the ones which were reluctant to give a fair share of the profit to workers have been responsible for leaving their employees and even themselves a casualty of the industrial disruption. The loss has been double-pronged---financial and labour relations. Their litany of infiltration of outsiders for provoking agitation was more a ploy than a reality. That the BGMEA failed to exercise a sobering influence leading to a solution to the problem is clear from the internal feud that has made one group to level charges against another and the vice versa. Finally, an administrator has been appointed to oversee the next election to the body.

The just departed BGMEA president made an appeal to the government to enforce strict law and order in the interest of the sector's stability. This is intriguing if not ludicrous. If workers are not paid their outstanding dues and cleared off their overtime and other benefits on time, the low-paid workers find it difficult to keep their body and soul together in an extremely hostile and volatile market condition. It is the industrial relations, not the army or the law-enforcement agencies, that determine peace, harmony and increased productivity in any industry. Deprived and exploited labour forces are the last to put in their hundred per cent in their performance.

There is a need for a paradigm shift in the mentality of management and owners, particularly at a time when the rallying call for narrowing social discrimination by students who spearheaded the recent movement is gaining momentum, in favour of a fair share of profit with workers. Many garment factories have been doing so and the others should follow suit. The apparel industry has received incentive packages for long and it is asking for more for the factories adversely affected by the recent labour unrest. Well, the appointment of an administrator and formation of neutral board under him speaks volumes for the discord within the industry. Patronage cannot be doled out without accountability. The need is to subject ailing factories' financial audits to stringent inspection before granting loan or stimulus packages.

Saif · Oct 24, 2024

RMG units struggle to adopt global reporting standards

Local garment factories are struggling to implement the Global Reporting Initiatives (GRI) standards, a set of 246 globally accepted standard issues, owing to a raft of factors, including a lack of data, local expertise, national policy directives and incentives, according to a keynote paper...

www.thedailystar.net

RMG units struggle to adopt global reporting standards
Keynote paper blames a lack of data, expertise

Experts attend a roundtable on “Implementing GRI in the RMG Sector of Bangladesh”, jointly organised by The Daily Star and Swisscontact at The Daily Star Centre in Dhaka yesterday. Photo: Star

Local garment factories are struggling to implement the Global Reporting Initiatives (GRI) standards, a set of 246 globally accepted standard issues, owing to a raft of factors, including a lack of data, local expertise, national policy directives and incentives, according to a keynote paper presented yesterday.

The GRI standards represent global best practices for reporting publicly on a range of environmental, social and governance (ESG) impacts.

But so far, only 33 local garment factories have implemented GRI standards for reporting.

The paper also said that 66 percent of global consumers, including 73 percent of millennials, are willing to pay more for sustainable goods.

By 2026, ESG-related assets under management (AuM) are expected to increase to $33.9 trillion, which would account for over one-fifth of total global AuM.

Even more importantly, the EU Sustainability Reporting Standard (ESRS) will be enforced by 2026, said Mohammad Monowar Hossain, head of sustainability at Team Group, while presenting the paper at a roundtable on "Implementing GRI in the RMG Sector of Bangladesh."

The discussion was jointly organised by The Daily Star and Swisscontact at The Daily Star Centre in Dhaka yesterday. Tanjim Ferdous, in-charge (NGOs and foreign missions) of The Daily Star, moderated the roundtable, which featured experts, exporters, professionals, entrepreneurs and officials of different diplomatic missions.

Asif Ashraf, managing director of Urmi Garments Ltd, said the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) was the first trade body in the country that had helped its members implement GRI standards in their factories.

However, many small and medium enterprises do not have the financial capabilities or human resources to implement the standards, he said.

"International retailers and brands are not ready to pay higher prices, but every such initiative costs money," Ashraf added.

Melita Mehjabeen, a professor at the Institute of Business Administration of the University of Dhaka, said GRI standards also need to be implemented in sectors such as steel.

She added that a number of companies did not have an adequate understanding of GRI standards.

Md Akhter Hossain Apurbo, vice-president of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), said local exporters are eager to learn how to increase trade while adhering to rules and regulations.

However, Apurbo added that Bangladesh's graduation from the group of least developed countries to a developing nation in 2026 may pose a challenge because of the erosion of trade preference that the country enjoys given its current status.

Mohammad Rashed, another vice-president of the BKMEA, said huge costs are associated with the implementation of such initiatives.

"Moreover, different buyers raise different compliance issues. But many small and medium enterprises do not have the capability to implement those rules and become more compliant."

Michael Klode, project manager at the Programme for Sustainability in the Textile and Leather Sector of the GIZ, identified the unavailability of data as another barrier to the implementation of GRI standards, saying it is sometimes difficult to know what is happening in factories.

Khondaker Golam Moazzem, research director at the Centre for Policy Dialogue (CPD), said global partnerships and new rules and laws were on the horizon and that the country would have to adapt.

Although Bangladesh is still struggling with social challenges, environmental issues are being given increasing importance, he added.

"Social issues like human rights and labour rights should not be sidelined," he said, pointing to progress in occupational safety and workers' health and nutritional issues.

He also highlighted the lack of functional trade unions and said it is important to comply with international financial reporting standards.

Thijs Woudstra, deputy head of mission at the Embassy of the Kingdom of the Netherlands, appreciated that Bangladesh has the highest number of green garment factories in the world despite facing a lot of setbacks.

GRI is a more data-driven initiative, he said, adding that a country should be able to address these issues.

"ILO's fundamental principles and rights at work guarantee fair and decent working conditions for all. These principles are at the core of the social reporting framework. Bangladesh's garment industry can lead the advocacy effort for a single framework on sustainability reporting," said Anis Nugroho, programme manager of Better Work.

He added that Better Work has been working with 100 global retailers and brands and 470 garment factories in Bangladesh.

Zahedul Hoque, managing director of Kido BD, said the country was moving in the right direction in terms of compliance, but also acknowledged challenges.

"We have to develop by ourselves," Hoque said.

Ainee Islam, programme director at Asia Foundation, said they launched a programme named Oporajita for female garment workers in Bangladesh.

Mohammad Abdullah Yousuf Khan, programme manager at Solidaridad Network, said transparency in the whole supply chain is very important. Transparency will improve buyer confidence and suppliers can get a premium, he said.

Ikramul H Sohel, senior programme officer, market development cooperation section, Swedish International Development Cooperation Agency, said there are many requirements for implementing GRI standards. Skilled manpower is also needed, he added.

Sadril Shahjahan, senior research associate of the Centre for Entrepreneurship Development at BRAC University, said there should be a data repository for the garment sector.

It is required because it will allow those who wish to comply with and adopt GRI initiatives to learn more about it and understand the challenges, he said.

Tanzila Tajreen, senior policy adviser at the Embassy of the Kingdom of the Netherlands, said Bangladesh still has a long way to go as only 33 factories have implemented GRI standards.

"Is this an extra burden for the factories?" she asked.

Ishrat Fatema, team leader at Swisscontact, said they have multiple projects in the garment sector and some will be coming soon.

Mujibul Cezanne Hasan, country director at Swisscontact, said GRI standards are quickly becoming a requirement. It has associated costs but should be treated like an investment, Hasan said.

Sahela Akter, deputy secretary to the Ministry of Industry, also spoke.

Saif · Oct 24, 2024

Meeting $100b garment export target by 2030 tough, but feasible

Bangladesh’s ambitious $100 billion garment export target by 2030 is currently facing a number of challenges both at home and abroad, but local manufacturers and business leaders are still optimistic about achieving the goal.

www.thedailystar.net

Meeting $100b garment export target by 2030 tough, but feasible
Say manufacturers, business leaders

Bangladesh's ambitious $100 billion garment export target by 2030 is currently facing a number of challenges both at home and abroad, but local manufacturers and business leaders are still optimistic about achieving the goal.

To meet the target, readymade garment exporters seek government policy support, a stable political environment and overall security for their production units.

In fiscal year 2023-24, Bangladesh, the second largest apparel exporter of the world, shipped readymade garments worth over $36 billion.

Now domestic challenges facing manufacturers include a poor business and investment climate, disruptions to production and shipments and shortages of gas and power for production lines.

These issues are compounded by global inflationary pressures and declining prices for apparel items in key markets.

Moreover, the country's scheduled graduation from the least developed country club in 2026 will strip away preferential market access facilities for Bangladeshi RMG items, estimated at $7.77 billion by the World Trade Organization (WTO).

"Buyers are returning to Bangladesh. Therefore, achieving the target is possible if the government can improve gas and power supply," said Faruque Hassan, former president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA).

During his tenure at the BGMEA, Hassan set the export target in 2022. To achieve this goal, the BGMEA then identified adequate gas and power supply, new investment, product and market diversification and investment in man-made fibre products as crucial factors.

However, current political uncertainties have compounded the existing energy situation and increased production costs.

Hassan said that with adequate gas and electricity supply, fresh investment would flow into the sector and many entrepreneurs would invest or expand their operations in high-value-added garment items like man-made fibre garments, jackets, activewear, jerseys, skiwear and sports items.

This value addition, he said, would fetch higher prices compared to traditional basic item exports.

On an optimistic note, he said Bangladesh's exports to non-traditional markets such as Japan, India, Russia, South Korea, South Africa and Australia appear promising.

"If exports continue at the current pace to these markets, along with traditional markets like the USA, Canada and the European Union (EU), it is possible to achieve the target," added Hassan, also the managing director of Giant Group.

The former BGMEA president also said that international retailers and brands have solid confidence in Bangladesh due to improvements in workplace safety and labour rights after the Rana Plaza garment collapse in 2013.

Moreover, he mentioned that China has been losing its global market share. Consequently, apparel work orders are coming to Bangladesh not only from China but also from Pakistan, Myanmar, Ethiopia and Sri Lanka due to political tensions in those countries.

Similar to Hassan, Kalpan Hossain, managing director of Dekko Legacy Group, said non-traditional markets, along with traditional ones, will be key drivers in achieving the target. Besides, he said Latin American countries could be excellent destinations for Bangladesh's apparel shipments.

"Achieving the target will be challenging, but it is still possible," said Hossain. "We have the potential and we must utilise it."

Shams Mahmud, managing director of Shasha Denims, said the country's garment exports have steadily increased over the past decade.

"Therefore, garment exports may grow at an even higher rate in the next six years, provided the sector gets adequate gas supply, financial support, government policy support, political stability and industrial security," he said.

Khandoker Rafiqul Islam, president of the now-dissolved board of directors of BGMEA, also sounded confident in achieving the $100 billion garment export target by 2030, provided all necessary facilities are in place.

With adequate gas supply, he said many companies would expand or invest in new ventures.

However, Mohammad Abdur Razzaque, chairman of the Research and Policy Integration for Development (RAPID), expressed a different view on achieving the target on time.

"When the target was set, the country's business environment was different and it has now changed," Razzaque said. "With the current business environment, achieving $100 billion might be challenging, but the country may reach $70 billion-$80 billion if a better business environment is ensured."

He added that a global slump in demand for clothing items, coupled with domestic challenges, is making the target difficult.

Razzaque also talked about the possibility of higher tariffs on Chinese items imposed by the USA if the Republican Party wins the next election. He believes this could divert massive work orders to Bangladesh from China.

Saif · Oct 29, 2024

We must revitalise the home textile sector

Ensure adequate gas supply, resolve dollar crisis

www.thedailystar.net

We must revitalise the home textile sector
Ensure adequate gas supply, resolve dollar crisis

We are concerned about the current state of the home textile sector that has been struggling to regain its lost work orders over the past two years. Reportedly, due to the doubling of gas prices in Bangladesh and a significant devaluation of the Pakistani rupee against the US dollar, many work orders shifted to Pakistan. This shift, combined with a prolonged gas crisis, unstable exchange rates, and rising production costs, has forced numerous factories to shut down, further eroding the sector's competitive edge in the export market. Recent labour unrest and ongoing political instability in the country have worsened the situation further. If these issues are not addressed, the home textile sector will continue to incur losses in the future.

It may be recalled that this sector had experienced notable growth in 2021, with exports surpassing the $1 billion mark, registering a remarkable 49.17 percent year-on-year increase. That momentum carried over into 2022, with exports rising by another 40-odd percent to $1.62 billion. However, as the gas crisis intensified, home textile exports—including bedsheets, tents, rugs, etc—dropped, with earnings falling to $1.09 billion. In FY 2023-24, exports further declined by 2.05 percent to $851.01 million, according to the Export Promotion Bureau (EPB). Industry insiders attribute this downturn to the persistent gas crisis that began in early 2023, following the then government's 150.41 percent hike in gas prices, from Tk 11.98 per unit to Tk 30 per unit. With soaring production costs, many exporters were unable to secure new orders, leading to a shift of international business to Pakistan.

To revitalise the sector, the government must prioritise uninterrupted gas supply to home textile mills so that they can operate at full capacity. As home textile production relies heavily on gas for processes like running steam boilers and dyeing fabrics, the sector's energy needs cannot be sustainably met by imported gas alone. It is crucial, therefore, for the government to explore and develop domestic gas fields rather than relying solely on imports. Unlike Pakistan, which produces much of its own raw materials, Bangladesh depends on external markets, making the ongoing dollar crisis an additional hurdle. That needs to be resolved, too.

We urge the government to take necessary steps to stabilise the sector and support its needs. Doing that will not only help the home textile sector recover but also secure its long-term position in the global market.

Saif · Oct 29, 2024

BGMEA seeks payment from Australian buyer

The Bangladesh Garment Manufacturers and Exporters Association (BGMEA) yesterday requested the Australian high commissioner in Bangladesh to take measures regarding approximately $20.30 million in outstanding payments that a Sydney-based company owes to 23 local exporters.

www.thedailystar.net

BGMEA seeks payment from Australian buyer

The Bangladesh Garment Manufacturers and Exporters Association (BGMEA) yesterday requested the Australian high commissioner in Bangladesh to take measures regarding approximately $20.30 million in outstanding payments that a Sydney-based company owes to 23 local exporters.

Anwar Hossain, the administrator of the trade body, sent a letter Nardia Simpson, acting high commissioner of Australia in Bangladesh, seeking payments to the affected suppliers.

In the letter, Hossain said 16 BGMEA member factories had been experiencing non-payment issues with Mosaic Brands Ltd in September, reporting that approximately $14.9 million was outstanding at the time.

"We regret to inform you that an additional seven BGMEA member factories are now facing similar issues, with Mosaic Brands Ltd withholding export payments totalling approximately $4.9 million," according to the letter.

"We respectfully seek your kind support in securing the outstanding payments to the affected factories."

Ensuring these payments will not only safeguard the operations of these factories but also protect the livelihoods of the workers who depend on them, the administrator said.

Non-payment is adversely impacting the regular business activities of the factories in their dealings with the line banks.

Mosaic Brands Ltd, formerly Noni B Limited, grew into one of the largest speciality fashion retailers in Australia, with over 1,000 stores nationally, according to its website. The brands under its umbrella include Millers, Rockmans, Noni B, Rivers, Katies, Autograph, W Lane, Crossroads and Beme.

However, the company has run into financial trouble after cycling in and out of profitability in recent years.

On Monday, Mosaic Brands announced that it had entered voluntary administration, putting almost 3,000 jobs at risk.

Voluntary administration is a process where an insolvent company is placed in the hands of an independent person who can assess all the options available and generate the best outcome for a business owner and its creditors.

[🇧🇩] Textile & RMG Industry of Bangladesh

Bangladeshi & Senior Moderator

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