Just after the Independence War of 1971, Bangladesh had to put up a fresh fight to get rid of the scars that the nine-month battle left on its economy. Like on the domestic front, the country started a modest journey in overseas trade: it logged $348 million by exporting 25 products to 68 countries in fiscal 1972-73, according to the commerce ministry. Of the products, only three — jute, leather and tea — were prominent, with jute alone fetching 90 percent of the total export earnings. But the situation took a turn for the better in late 1970s when a band of educated youths began to try their luck in readymade garment shipment. They even had set up factories on the premises of their home or in shared buildings to rope in buyers and subsequently started to find their feet in the global apparel business.  After a journey of four decades, Bangladesh now is the second largest apparel exporter grabbing 6.4 percent of the global market and creating jobs for 4.4 million of its people, especially women. Bangladesh is also the second largest apparel supplier to the EU and third largest to the US. Bangladesh boasts more than 100 green garment factories certified by the US Green Building Council, while another 500 buildings are on way to receive such certifications. The country exported goods worth $40.53 billion to 202 countries in fiscal 2018-19. Garment products accounted for 84 percent of the earnings, bringing in $34.13 billion. After a journey of four decades, Bangladesh now is the second largest apparel exporter grabbing 6.4 percent of the global market and creating jobs for 4.4 million of its people, especially women. Bangladesh is also the second largest apparel supplier to the EU and third largest to the US. Bangladesh boasts more than 100 green garment factories certified by the US Green Building Council, while another 500 buildings are on way to receive such certifications. The country exported goods worth $40.53 billion to 202 countries in fiscal 2018-19. Garment products accounted for 84 percent of the earnings, bringing in $34.13 billion.

Global brands and buyers are gradually offering lower prices for readymade garment products to Bangladeshi factories although the number of green factories has increased considerably in the country in the last few years, according to the Bangladesh Garment Manufacturers and Exporters Association. The BGMEA on Saturday gave a presentation at a discussion on ‘RMG Industry: Green Growth’ held at the public relations and media centre of the trade body at Gulshan in the capital. BGMEA president Rubana Huq said that although the buyers were not giving additional prices for products, the entrepreneurs were investing additional money to make their units green to create sustainable businesses. ‘Green initiative in the Bangladeshi readymade garment sector has grown on its own and we also need to encourage responsible consumption,’ she said.  Rubana said that there should be a large-scale project in the RMG sector that would help to address environmental issues so that businesses can go green. She also said that government policy and incentive, buyers’ demand, consumer behaviour and availability of technology are the key factors that can enable the industry to become green. Representatives from the International Labour Organisation, International Finance cooperation, buyers, economists and government officials attended the discussion.  The trade body said that despite decrease in the unit price of products by 1.61 per cent between 2014 and 2018, the number of USGBC certified green factories stood at 108 and more than 500 factories had registered for obtaining green certification. The BGMEA research identified lack of skills in assessing investment in green technology, finance and lack of awareness as the major challenges in mainstreaming green growth in the readymade garment sector. It said that although the Bangladesh Bank had green transformation and refinance schemes in place at 8 to 9 per cent interest rate, the need to fulfil a range of conditions had limited the access to finance for many entrepreneurs. Speakers at the discussion emphasised development of a national standard for green industry and adoption of a comprehensive policy to support the industry. They also said that adoption of green technology was a must for sustainable economic growth and Bangladesh needs home-grown solutions to face the challenges faced in building a green industry. Speakers said that it was easy for large-scale factories to arrange green funds but medium- and small-scale factories were not getting access to finance. They suggested that the government and its development partners should introduce guarantee schemes for the SMEs so that they could go green. ILO country director for Bangladesh Tuomo Poutiainen, Centre for Policy Dialogue research director Khondaker Golam Moazzem, among others, spoke at the event.  

Rowshan Ali had everything going for him: a small sweater factory he set up in Demra on the outskirts of Dhaka in 2011 was raking in $2 million in export receipts every year. So well was the humble factory with 350 workers was doing that he began to harbour hopes of expansion. Just as he got off to executing his plan did he starting feeling headwinds: the price that foreign buyers were prepared to give him for knitwear started cratering and at the same time production costs were rising. He started to feel the squeeze, which only intensified over time. Then finally in June last year, with a heavy heart he decided to pull the trigger on his business. “The cutting and making (CM) charge now is unviable for me. So, I decided to shutter my unit for good,” said a rueful Ali. Ali is not alone. The list of such cases is getting longer by the day. Over the last four years, about 1,200 factories of that scale had closed down. The small and medium garment factories mushroomed in the 90s to avail the quota system of international buyers. Such openings started petering out from January 2005, when the quota system in apparel trade was eliminated with the final phasing out of the Multi Fibre Arrangement (MFA). The MFA was an international trade agreement that imposed quotas on the amount of clothing and textile exports from developing countries to developed countries between 1974 and 2004. Bangladesh made the best of this agreement: it was the springboard that sent the country to the number two spot in global apparel trade, grabbing Small and medium-sized factories typically employ between 300 and 600 workers, whereas the large ones have workers to the tunes of thousands. Those that survived in the post-MFA era are now finding the new order in global apparel trade beyond them. Stricter compliance set by the Accord and Alliance after the Rana Plaza building collapse in April 2013 and the discontinuation of garment production in a sub-contracting units and shared buildings meant that these small and medium factories are dropping off from the international buyers’ radar, according to industry insiders. As many as 75 small knitwear factories — including Ali’s — had closed last year, according to Mohammad Hatem, senior vice-president of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA). And another 61 garment factories had closed, rendering 31,600 workers jobless, according to Md. Rezwan Selim, director of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), the sector’s apex trade body. Selim is responsible for labour affairs and monitoring the factory situation in the sector. “The small factories do not have work orders as they cannot follow the strict compliance. So, they are failing to run their business anymore.” Moreover, the salaries of workers are increasing every year. For instance, this January the factory owners have to increase the salary of workers by 7 per cent as per the provision of the labour law. The minimum wage was hiked 51 per cent to Tk 8,000 per month from Tk 5,300 in December 2018. “Sometimes the situation turns so bad that the factory owners flee the country to avoid facing their workers — they cannot pay the salary.” The situation will worsen for small and medium factories in the near future because of the ever-shrinking profits and work orders. However, the bigger units can do good business as the Rana Plaza tragedy was a watershed for them, Selim said. The big garment entrepreneurs remediated their factories to global standards. Now, Bangladesh can boast having more than 100 LEED-certified (Leadership in Energy and Environmental Design) factory buildings. More than 500 such buildings are waiting to be certified by the by the US Green Building Council. Of the world’s top 10 greenest buildings, top six are in Bangladesh. Ahsan H Mansur, executive director of the Policy Research Institute, echoed the same as Selim. The bigger units will ride out the storm of shrinking work orders arising out of economic contraction in the importing countries. “Overall exports will not be affected but the number of small and medium factories will go down further in future,” he said, while calling for a special fund from the government and the BGMEA for revival of the small and medium units. In the face of squeezing profits, the small factory owners are also struggling to pay off their bank loans, the interest rate on which is in double digits. One such owner is Mozammel Haque, who had to forfeit his four small units employing 1,600 in total in July last year. He had a Tk 300 crore bank loan that he was unable to service and the bank took control of the units and auctioned them off.Haque blamed the declining prices of garment and the rising production costs for his current woes. “Still, I continued my business for a few years hoping for better prices from buyers in the near future. But that never happened. Now I am out of business,” an emotional Haque told The Daily Star over phone. The cost of production of apparel during 2014-2018 has increased 30 per cent, said BGMEA President Rubana Huq. In a market economy, an increase in production cost without reciprocity in efficiency or value added would either result in less demand or offering cheaper price, she said. Over the past 4 years, the value addition of the industry has gone down by 1.61 per cent though the apparel export has increased from $28.10 billion to $34.13. This means that the growth is happening in physical terms only, but the value added per piece of garment produced has rather declined over years, she said. “Unplanned expansion is like an epidemic that is silently killing our industry. While we are trying to find our way out from the price-trap situation, we need to look at ourselves and stop unplanned expansion and overcapacity.” Overcapacity is perhaps the weakest point behind Bangladesh’s garment manufacturers’ poor bargaining ability, Huq said. A narrow list of export destinations and little product diversification are the other problems afflicting the country’s garment exports. “EU and North America has been major markets, where almost 85 per cent of our exports are concentrated. Product diversification is also not happening at desired pace. Factories are overwhelmingly dependent on a few product category like t-shirt, trouser, sweater and cotton shirt.” Besides, about 75 per cent of Bangladesh’s garment products are made of cotton whereas the world market is heading toward man-made apparel, she added. “Of course these small- to medium-sized garment industries need to survive,” said KI Hossain, president of the Bangladesh Garment Buying House Association. If the businesses are closed, unemployment will increase at a huge rate.“This will create a great deal of social unrest,” he said, adding that the banks and financial institutions that have invested in the sector will also have to face uncertainty.