Readymade garment factories inspected under the initiative of the European buyers and retailers registered only two per cent progress in safety hazard remediation works in the last one year. According to the latest report published by the buyers’ platform, Accord on Fire and Building Safety in Bangladesh, the factories completed 91 per cent of the remediation works as on January 1, 2020, which was 89 per cent as on January 1, 2019. The report published on January 27 showed that a total of 273 factories finished the initial remediation works while more than 90 per cent of the works were completed at 1,173 factories. The Accord report said that a total of 1,101 factories remained behind the schedule in the remediation works for safety hazards. The platform terminated business relations with 167 factories as the units failed to make the required progress in fixing life threatening safety hazards in time. After the 2013 Rana Plaza building collapse, which killed more than 1,100 people, mostly garment workers, the EU retailers formed Accord under a five-year plan and set timeframes and accountability for inspections, training and workers’ empowerment programmes. The platform conducted initial fire, electrical and structural assessment at more than 1,600 RMG factories from where the platform buyers procured their products. At the same time, the North American brands and retailers formed Alliance for Bangladesh Worker Safety which inspected around 700 factories. Alliance has already left the country after completing its task. Although the five-year timeframe of Accord had expired, the court allowed the platform to continue operations in the country till May this year. Following the initial inspections, the factories and Accord were tasked with developing a corrective action plan that would detail the remedial actions with concrete timelines for completion. The Accord engineers conducted follow-up inspections to monitor the remediation works and verify that corrective actions had been completed as per plan. Each factory was inspected approximately once every four months, the report said. The report showed that 45 per cent of the factories still lacked adequate fire detection and alarm systems while installation of fire suppression systems remained pending at 54 per cent of the units. The report also showed that there was a lack of design check against lateral load still at 13 per cent of the factories while inconsistency with building plan and drawings was found at 16 per cent of the factories.

Only 273 garment factories out of 1,600 inspected by the western retailers’ platform, Accord, have managed to fix the safety hazards found in initial inspection. The Accord on Fire and Building Safety in Bangladesh and the Alliance for Bangladesh Worker Safety sprang to life close on the heels of Rana Plaza building collapse that killed more than 1,100 workers in April 2013. The retailers-led groupings were dedicated to improving the workplace safety in the country’s readymade garment sector. Until January 01 last, a total of 273 factories completed full remediation from the initial audits, according to the Accord’s latest update made available on its official website. Some 1,173 garment factories completed 90 per cent remediation, it said, marking 91 per cent the overall remediation progress until January 01. Still, the installation of fire detection and alarm system completion rate is 55 per cent, while 46 per cent factories have done installation of fire suppression system, it said. Accord received 1,900 complaints while 664 were non-occupational safety and health-related. Some 552 safety complaints raised by workers or their representatives have been resolved by its safety and health complaints mechanism, it said. Currently, 156 complaints are under investigation, it noted. Accord has terminated business relations with 167 factories on the grounds of non-compliance with required remedial work. President of the Bangladesh Garment Manufacturers and Exporters Association, BGMEA, Dr Rubana Huq acknowledged the slow progress in fire safety. The Accord and the BGMEA did not have any joint technical committee before and alternative national context was not inserted and practiced, she said, explaining the reasons behind slow advancement. “In spite of great progress in structural and electrical, the apparently slow remediation in fire has caused the low figures,” she added. Of the remaining 1,390 factories, 616 have completed fire alarm system installation and are now ready for testing and commissioning. If these factories could pass such testing, the number of 100 per cent completed factories would increase to over 800.The BGMEA chief expressed the hope the proper remediation picture will be reflected by the end of May when the joint technical committee comprising the Accord and the association find out the reasons for the low number. The last joint technical committee meeting minutes were finalised recently and they would be announcing the joint technical resolutions shortly, which would help seal the issues of the remaining factories, she said. Accord, a platform of more than 220 mostly European brands, buyers and trade unions, was formed for five years, which ended in May 2018. Later, the government allowed a six-month extension to the Accord until November 30, 2018, although the platform pressed for more time. In May 2019, the Supreme Court allowed the Accord to continue its activities for 281 days after it signed a memorandum of understanding with the BGMEA. According to the memo, the proposed RMG sustainability council would be set up during this period and inherit both the Accord’s staff and infrastructure after the expiry of its tenure.

Readymade garment manufacturing groups with multiple companies but one tax identification number are facing troubles in getting registration numbers required for the units for enabling automated certification system for European Union GSP due to an EU regulation. They are in apprehension that export might hamper in the EU as only one registered exporter (REX) number was given against each taxpayer identification number but many of the companies were running one more entities against a TIN number. Citing the EU regulation, the EPB informed exporters that there was no scope for providing more than one registration number against a TIN number as the IT system of EU allowed one registration against a unique number. The government, as per the instruction from the EU, introduced a registered exporter system (REX) for the country’s exporters who made their shipment to the European Union in July last year through giving registration numbers to 10 exporters. The commerce ministry had asked all the exporters to get registered with a database by the Export Promotion Bureau by December last year to get a unique registration number to avail the GSP facilitates in the EU market. Till date, the EPB has registered some 1,904 local exporters with the majority from textile and RMG sectors, the EPB official added. Under the system, Bangladeshi exporters would make self-certification of the country of origin to avail the generalised system of preference in the EU market. Currently, the EPB manually issues country of origin certificate to the exporters for the GSP facility in the EU market. Recently, the Bangladesh Garment Manufacturers and Exporters Association has sent a letter to the EPB to provide REX numbers to all units under a company against a TIN number. The trade body fears that if more than one REX number is not provided against a TIN number, the activities of many units would be shut down and labor unrest would take place in the country. The BGMEA urged the EPB to provide REX numbers in favor of all units of Ananta Group, Azim Group, Standard Group and Envoy Group against their TIN numbers or in any alternative way. EPB officials said that they held a number of meetings on the issue and it was discussed that REX number might be provided against business identification number but finally the proposal was not settled. The EPB in a letter on January 22 requested the BGMEA to obtain separate TINs for the units of the business groups saying that despite having group/proprietorship Saad Musa Fabrics (unit-2 and 3), Garib and Garib Company Ltd (unit-2) and Divine Textile Ltd (unit-2) took separate TINs for getting Rex number. The bureau also said that if the business group received a single REX against several of its factories and the EU revoked the REX under in any circumstance, all the factories would come under the purview of the revocation. It also informed exporters that considering the present complexities in getting REX numbers against all entities the EU extended its time frame up to June 30 this year so that exporters could get separate TIN for a separate entity.

Pulled down by the garments sector’s low earnings, Bangladesh’s export continues to slump, raising concerns that the country will not be able to achieve the current fiscal year’s target of $45.5 billion. Earnings were $3.43 billion short of the overall export target of $26.34 billion during the first seven months of this fiscal year. Of the shortfall, RMG alone accounted for $3.05 billion. Apparel exports were expected to fetch $22.11 billion, but real earnings amounted to $19.06 billion. During the seven months, overall exports posted positive growth only in July and December by – 8.55% and 2.89% respectively on the back of better performance of apparel sector. Lower export receipts also are a threat to a widening of the country’s already negative balance of payments and trade deficit, which in turn can turn the exchange rate further volatile. The latest data compiled by the Export Promotion Bureau (EPB) show that during July-January export earnings fell by 5.21 percent, the figure being negative at 1.70 percent in January. If Bangladesh wants to achieve its annual target, it has to export goods worth $4.5 billion per month on an average, which has never happened in the country’s history.

Exporters have blamed the sluggish exports on declining prices, overcapacity and a stronger local currency compared to the US dollar. An analyst, however, said Bangladesh has to enhance its efficiency and reduce lead time in order to remain competitive in the world market. “December to January is supposed to be peak months, but we haven’t picked up yet,” said a frustrated Rubana Huq, president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA). She said that after the minimum wage hike, prices have not gone up and manufacturers have continued facing overcapacity problems accompanied by a strong currency, she noted. “In January we have had a value decline despite quantity growth, which proves that prices are falling,” said Rubana Huq. Exporters note that the situation may worsen in the coming months with the outbreak of coronavirus in China, from where a country like Bangladesh sources raw materials and machinery for producing apparels. “After seven months of the current fiscal year we saw the country’s export going down by nearly 6 percent. It is a horrible situation for us and the economy as well,” commented Md Siddiqur Rahman, a former president of BGMEA and incumbent vice president of FBCCI, the country’s apex trade body. He said if exports continue to depress in the remaining months, some factories, including backward and forward linkage ones, will not be able to run their operations. If China fails to control coronavirus, there will be further trouble for Bangladeshi apparel exporters, he said, adding that India and Pakistan may increase the prices of their fabrics to cash in on the situation. Mohammad Hatem, first vice president of Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), forecasts that the negative trend in export will continue in the months to come because of the outbreak of coronavirus. He, however, sees a silver lining for Bangladesh. “Apparel export orders may shift from China if the impact of coronavirus continues there. It may create some opportunities for Bangladeshi knit garments manufacturers, as we have a strong backward linkage,” Hatem added. Bangladesh is facing a deep crisis in exports due to its poor competitiveness and high lead time, said Ahsan H Mansur, executive director of the Policy Research Institute of Bangladesh. “Bangladeshi apparel exporters have to improve productivity and efficiency, which may help minimise trade losses,” he added. Mansur said supply chain disruption in China due to coronavirus will immediately hurt woven garment exporters as they are highly dependent on Chinese fabrics. He advised exporters to diversify their sourcing destinations to reduce over dependency on China.

Trade deficit widens
Bangladesh Bank data revealed yesterday that the country’s trade deficit has widened during the July-December period of this fiscal year, while the current account deficit got slightly narrowed. Analysts said a significant fall in exports has extended the trade gap to $8.22 billion in the first half of this fiscal year, up from $7.80 billion in the same period a year ago. But the higher inflow of remittance has mitigated the pressure on the current account deficit, which has been reduced to $1.34 billion this year from $3.38 billion for the same period in the previous fiscal year.  In the first six months of the current fiscal year, import growth fell by 2.72 percent, while export growth dipped by 5.89 percent. However, remittances grew by 21.34 percent. Meanwhile, the overall balance has a surplus of $27 million and that gives breathing space for the country’s foreign exchange reserves. It (balance) was $513 million negative for the same period in the previous year. Foreign exchange reserves, which remained below $32 billion for a long time, crossed the figure in December and stood at $32.25 billion as of January 27.