Despite setbacks and odds, country’s garment sector has performed well. Yet expectations from the burgeoning sector are high. Many say the sector has the capacity to achieve a $50-billion apparel export target by 2021. Diplomats, economists and the International Labour Organisation (ILO) officials aired such optimism at a roundtable held in the city recently. They said adequate foreign direct investment (FDI) flow in the sector, completion of the ongoing remediation programme for factories and ensuring workers’ rights in the industry can help achieve the target easily. Analysts are, however, of the opinion that the target of $50 billion export set by the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) is consistent with the overall economic growth of the country. But completion of the ongoing remediation programme in the garment factories appears to be a big challenge, really. There was, however, a loud appeal to the government from the experts in the meeting to arrange foreign funds worth $200 million so that factory owners could be able to complete the remediation task at their units. They say there is a need to double the investment in the next five years to achieve the $50-billion export target by 2021. The fact remains that the required investment will not be possible without FDI. Remediation in ‘risky’ garment factories assessed under the government-ILO joint initiative has so far made a little progress. Industry insiders attributed it mainly to the lack of expertise, government vigilance, funding and unwillingness of factory owners. Many factories are located in rented or shared buildings that accommodate other establishments and the row among the factory and building owners as to who will carry out the necessary flaw-fixing work is also to blame for the slow progress. The joint-assessment programme that ended late last year after a period of two years has reportedly assessed structural, fire and electrical integrity in some 1,500 garment factories. Some 219 units have been marked as ‘risky’ with amber marking under the joint initiative. On its part, the authorities said the extent of risk will be determined after conducting the Detailed Engineering Assessments (DEA). Until July last, the overall structural, fire and electrical progress in the 219 amber-marked factories was only 16 per cent, 10 per cent and 14 per cent respectively. Reports say more than 110 out of 219 factories are yet to start any remedial work. Some 63 per cent of the initially-identified flaws have been fixed in Accord-listed 1,600 factories, while the percentage is 54 per cent in some 673 units inspected by Alliance. Some RMG manufacturers alleged that the number of DEA is insufficient compared to the number of garment units and the firms also charge high taking the advantage of long queues. Many units are located in a 10-storied building that accommodates other factories and establishments. The factory managements did apparently want to carry out all the prescribed recommendations. But it took so much time to complete the procedure in getting approval from the building owner. Without conducting the DEA, it is impossible to move forward with remedial work. On the other hand, many factory owners do no appear to be positive towards remedial work, which is one of the major reasons behind such a poor progress. However, this is also a fact that the agencies kdo not have sufficient manpower to monitor the post-inspection activities. The existing team, on the other hand, also lacks related know-how. An amount of $1.0 billion in costs is needed to complete remediation of factories in line with the suggestions made by two platforms of global buyers and a national initiative. According to an estimate, remediation activities worth some $294 million have been carried out in the Bangladesh RMG sector over the last two years through the actions of the Bangladesh Accord and the Alliance. if the factory does not need extensive structural retrofitting work, the cost of remediation may now range between $20,000 and $900,000 The remediation cost for 80 per cent of the factories was estimated at between $0.1 million. A recent study, however, estimated that 75 per cent of the RMG factories in Bangladesh will not need large structural retrofitting work and the 25 per cent, which require retrofitting, are facing remediation costs which in extreme cases can reach $1.5 million. However, it is thus apparent that the cost of remediation, lack of willingness of factory owners were identified as the prime challenges to the remediation. The high interest rates and a lack of financial literacy were also seen as major obstacles to obtaining remediation financing by factories in the local RMG sector. According to a report, interest rates that range between 9.0 per cent and 15 per cent were cited as a barrier to carrying out remediation. However, most of the deals are now done in between 10 and 12 per cent. It is thus imperative that all stakeholders in the sector in Bangladesh should learn more about the significance of remediation finance. The factories concerned should also consider all expenditures on safety as investment. Once compliance levels are respected, buyers will have more confidence, leading to overall expansion of the industry.
