The latest developments in the country and the global arena are giving disconcerting signal to the country’s readymade garment (RMG) sector. Reports say foreign apparel buyers postponed their meeting scheduled for last week on security grounds. The security concern was triggered by the killing of two foreign nationals. Many others also cancelled their visits to Bangladesh and asked their local suppliers to meet them outside the country for business talks. Following signing of the Trans Pacific Partnership (TPP) deal in Atlanta, USA, last week, fears loom large that Bangladesh might lose its competitive edge in global apparel business. Local exporters may face an uneven competition from the country’s tough competitors in the global apparel market, and the US, the country’s single largest garment importer. At present, Bangladesh garment exports to the USA are subject to 15.62 per cent duty that are paid by the importers there, whereas Vietnam’s RMG exports are subject to only 8.38 per cent import duty. The deal, once operational, will make Vietnam’s garment exports to the American market completely duty-free. But Bangladesh’s duty-advantage on garment exports to some other TPP member countries — Canada, New Zealand, Japan, Australia and Chile — might also be affected by the new trade deal. At the recently concluded Bangladesh Development Conference at Harvard University, many observers voiced their concern that due to tariff preferences and technology transfers following the TPP, Vietnam is likely to overtake Bangladesh as the second largest RMG exporter in global trade by 2024. The fear about Bangladesh finding itself in a situation where it loses its current position as the world’s second largest apparel exporter is quite worrying. However, if the country takes appropriate moves to be involved in, or associated with, TPP in one form or another, it may find its niche in textiles, leather and services. But if it does nothing, there is a possibility for a potential slowdown in the growth of its RMG export. If such situation persists, it is feared that it would take a heavy toll on the local readymade garment industry which is struggling to overcome the previous shocks. Cancellation of the buyers’ recent visits might ultimately lead to termination and the shifting of orders from Bangladesh to its competitors. On the other hand, apparel makers and western retailers’ groups are locked in a fresh row over post-inspection remediation issues, including incorporation of new conditions in the corrective action plan (CAP), duplication in follow-up inspection and funding. Although duplication had been avoided in the initial inspection, reports say, it has again surfaced in the follow-up as both the inspecting groups are sending their experts to oversee the remediation work in line with the CAP in the units that produce apparel products for both signatories of Accord and Alliance. Such activities are creating confusion among the buyers, lingering the remediation work and hampering the regular production activities. According to reports, Accord is attaching ‘unnecessary’ new conditions with its follow-up inspections and adding those to the CAPs. This is sending a wrong message to the buyers that the companies are not complying with the safety requirements within the set timeframe. As a result, the buyers are becoming confused over the nature of remediation going on in the units. Alliance is also doing the same and adding additional requirements, but phase by phase. On its part, Accord said its group supports the factories to fix the items found at the time of initial inspections, and as its engineers return to the inspected factories to verify the works done, additional safety hazards or backsliding in certain areas are found. When such safety hazards are found, they are added to the updated CAP. At present, labour unrest in the garment industry is not that much frequent. If it flares up again and continues for long, international buyers will not come up with new orders. On the contrary, orders will go to other countries if the unrest prolongs. And there are a good number of countries waiting in the wings, looking for opportunities to take over the country’s overseas markets. Frequent spate of violent agitation by workers for pay-hike in some garment hubs shows that the employer-employee relations in the country’s RMG sector is mired in intense mutual recrimination and trust deficit. This is the most unfortunate aspect of things about an industrial sector that is the cornerstone of the Bangladesh economy. In fact, the phenomenal success of Bangladesh’s apparel industry has made its competing RMG-exporting countries in the region and beyond it, quite envious. However, it needs to be pointed out that the strongest weapon to foil such conspiracies, if there are any, is maintenance of healthy industrial relations. The minimum wage in the Bangladesh apparel sector is the lowest in the world. Even in comparison with many sectors in the country itself, e.g. construction and timber (Tk 9,982), tannery (Tk 8,750), and oil mill and vegetable products (Tk 7,420), the RMG sector fares quite poorly. As pointed out by different quarters, the minimum wage in the apparel sector, which happens to be the major foreign exchange earner, has never been commensurate with the minimal cost of living of the workers. In the circumstances, it is very important to address the ‘genuine’ grievances of the workers, in terms of not only wages but also in creating good working conditions. Decent wages for workers and compliance with the same by all RMG factories will definitely tame labour unrest on the one hand and make the apparel sector viable, on the other. This is also equally important for the different actors in the sector to hold dialogue among themselves with the purpose of identifying the main issues that constrain the industry and reaching agreement on initiatives that need to be taken in order to help improve the sector’s competitiveness.
