The garment-sector apex trade body has urged finance ministry to provide a 1.0-per cent cash incentive for joint-venture apparel manufacturers, officials said. The Bangladesh Garment Manufacturers and Exporters Association (BGMEA) made the plea in a recent letter to finance minister AHM Mustafa Kamal. It has sought to incentivise the factories located in export-processing zones and economic zones as they ship products to the European Union, the USA and Canada. Currently, there are three types of units in the export-processing zones. ‘Type A’ company is 100 per cent foreign-owned (including Bangladeshi expatriates). ‘Type B’ is a joint venture between foreign and local entrepreneurs. On the other hand, ‘Type C’ companies are owned by 100 per cent Bangladeshi residents. BGMEA president Dr Rubana Huq in the letter thanked Mr Kamal for providing 1.0-per cent incentive to the apparel sector recently. The stimulus will help recover the crisis situation prevailing in the ready-made garment sector, she said. Ms Huq said the special incentive is not provided to the ‘Type B’ entrepreneurs, although the joint-venture companies are largely contributing to the country’s economy and employment generation. She thinks the same facility should be in place for joint-venture investment, as local-foreign investors produce high-value apparel items that local entrepreneurs alone do not make. “Foreign investors may feel frustrated at the dual policy. Even local investors may be discouraged in joint-venture investment,” the BGMEA chief cited. The government should provide similar incentive for ‘Type B’ investors, she asserted. The current fiscal budget proposed a 1.0-per cent cash incentive for the rest of the RMG sector except those who are getting cash incentive at 4.0 per cent. It mooted a significant rise in the allocation for the garment sector, taking into account its growing contribution and potential. The budget also set aside an additional allocation of Tk 28.25 billion for the sector.

Clothing makers and Accord have finally reached a consensus over the retailers’ group’s transitioning into the proposed Readymade Garment Sustainability Council (RSC). The consensus came along with a host of conditions such as maintaining existing transparency with full public disclosure of inspection results, remediation activities and the continuation of Accord’s safety and health complaints mechanism independently and autonomously. As part of the process, the Bangladesh Garment Manufacturers and Exporters Association, or BGMEA, and Accord on Wednesday signed an agreement agreeing to the articles of association for the council after a meeting held in the city. BGMEA president Dr Rubana Huq, acting president of the Bangladesh Knitwear Manufacturers and Exporters Association Mohammad Hatem and Accord deputy director Joris Oldenziel, among others, were present at the signing ceremony. The Accord, a platform of more than 200 global apparel brands, retailers and rights groups mostly based in Europe, was formed immediately after the Rana Plaza building collapse to improve the workplace safety in the country’s apparel industry for a tenure of five years, which ended in May 2018. The RSC is “an unprecedented national supply chain initiative,” uniting industry, brands and trade unions to ensure a sustainable solution to carry forward the significant accomplishments made on workplace safety in Bangladesh, according to a joint statement. The council will be governed by a board of directors consisting of an equal number of representatives from the industry, brands and trade unions, it said. It will operate within the regulatory framework of the laws of Bangladesh, closely co-operating with and supporting the regulatory functions of the Bangladesh government. It will also retain all health and safety inspections, remediation, safety training and complaints handling functions currently carried out by the Accord, it said. According to the agreement, decisions, policies and protocols developed by the Accord will be carried over to the council as these proved to be effective and expedient. “All existing transparency features of the Accord will be maintained, including full public disclosure of inspection results and remediation activities,” it said. Accord listed factories would be carried over to the RSC retaining their remediation status and any outstanding remediation requirements as per the factory’s corrective action plan. All operations, staff, infrastructure, and functions of the Accord Office in Dhaka will be transferred to the RSC while it would appoint a Chief Safety Officer, retaining the same independence, autonomy, authorities, and reporting requirements practiced by the Accord. The BGMEA, Accord brands and trade unions look forward to working together in the RSC towards the joint goal of protecting garment workers in safe factories, the statement noted. Asked, Dr Huq said, “Accord will cease their function in Bangladesh and is handing over to a national collaborative committee formed by us, in which brands, unions and industry will be together to monitor factories.” “We are taking over from Accord all of its resources and will follow their protocols along with inserting a national context,” she added.

The Accord on Fire and Building Safety in Bangladesh, the platform of more than 190 mostly Europe-based retailers formed after the Rana Plaza building collapse, is finally leaving the country this May. Originally scheduled to leave at the end of its five-year tenure in May 2018, the platform wanted to stay on for three more years, which the government was opposed to. Accord took the matter to court and managed to win an extension until February 13, 2020. But it will depart for good in May. A national collaborative committee with representation of brands, unions and industry leaders will take over Accord’s monitoring duties, according to Rubana Huq, president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA). “We are taking over from Accord all of its resources and will follow their protocols but it will be based on the national context,” she added. The agency essentially checked and recommended Corrective Action Plan (CAP) for fire, electrical and structural loopholes in the garment industry of Bangladesh after the deadly industrial accident that claimed 1,134 lives and injured another 2,000. It recommended CAP to more than 1,600 garment factories and ensured remediation for the workplace safety. Many of the garment factories failed to remediate as per the recommendations by the Accord experts and engineers because of their bad financial condition. Some of the factories were closed down, too. But, most of the companies in Bangladesh followed the CAP and remediated their factories as per the recommendations. However, the Accord experts and engineers recommended some unnecessary or repeated remediation and expensive ones to the factory owners in Bangladesh. As a result, many garment factory owners were not happy. This prompted a host of factory owners to file a case against the inspection agency with a court in The Hague, where the headquarters of the Accord are located. However, the case was transferred to Bangladesh as it was too expensive for the owners to frequently fly to the Netherlands and engage lawyers. Finally, the case was moved to the Supreme Court, which extended the Accord’s tenure in May last year to February 13 this year. However, the Accord and BGMEA came to a mutual understanding in September last year to form the RMG Sustainability Council (RSC) to continue the remediation and monitoring of the factories. The RSC is a tripartite compliance and safety monitoring body of the apparel sector, formally formed by brands, union leaders and factory owners. Both the Accord and BGMEA yesterday signed a joint communique to form the RSC. The RSC will operate within the regulatory framework of the laws of Bangladesh, closely co-operating with and supporting the regulatory functions of the Government of Bangladesh. It will retain all health and safety inspections and remediation, safety training and complaints handling functions currently carried out by the Accord, the communique said. All existing transparency features of the Accord will be maintained, including full public disclosure of inspection results and remediation activities. All operations, staff, infrastructure and functions of the Accord Office in Dhaka will be transferred to the RSC and the RSC will appoint a chief safety officer, retaining the same independence, autonomy, authorities and reporting requirements practiced by the Accord.

The apparel apex body, BGMEA, has identified 51 readymade garment (RMG) items having potentials in the international market, sources said. They said the entrepreneurs could invest to manufacture the diversified items for widening their product base and grabbing a larger share in the growing global market. Bangladesh Garment Manufacturers and Exporters Association (BGMEA) chose 31 items with potentials for next five years and 20 others with potentials for next 10 years. The BGMEA initially selected the items based on global clothing imports, Bangladesh’s annual export, nature of complexity to make the items and their future potentials, and the industry’s readiness for expansion, they added. The global market for these two groups of products would be worth US$ 132 billion and $ 54 billion respectively, according to a BGMEA’s presentation at a recent meeting. Bangladesh exported products worth $ 7.1 billion in 2018 from the 31-item group while $ 1.2 billion from the 20-item group. The trade body has taken the initiative to identify the products with market potentials due to the sector’s large dependence on five major products like t-shirt, sweater, trouser, jacket and shirt, said the sources. The five items contributed about 73 per cent or US$ 24.8 billion of the country’s total exports earnings of US$ 34.13 billion from the apparel items in the last fiscal year, according to BGMEA data. Most of the RMG items (74.14 per cent) are made of cotton. “The 31 identified items are either made of cotton where Bangladesh has strength or non-cotton items having similar features of the traditional items,” according to the BGMEA presentation. These items – including 19 for women and girls while 17 cotton and 14 non-cotton – are relatively less complicated to manufacture, so the cost of diversification is less, it said. The BGMEA also selected 20 other items where entrepreneurs could invest in next 10 years, according to the sources. Out of these items, 10 are for women and girls and all are made of non-cotton fibre like manmade fibre (MMF), vegetable and other artificial fibres. The trade body also selected some products for its traditional US (two items) and EU (10 items) markets. The potential products for diversification in the US and EU markets have been selected as per the products’ share in Bangladesh’s export, US and EU’s global import and annual import value of more than $ 3.0 million from Bangladesh to these two destinations. When asked, BGMEA president Dr Rubana Huq said since 2014 to 2018, Bangladesh lost 1.61 per cent unit value of its apparel on CAGR basis. “This signifies Bangladesh’s lack of capacity in value addition whereas the priority is to go for high-end market,” she said. The share of global trade of cotton-based apparel is around 35 per cent which is shrinking at 0.5 per cent CAGR between 2007 and 2017. The share of MMF-based apparel is around 45 per cent of global trade which is growing at 5 per cent CAGR in the same period. In 2017, global trade of MMF-based apparel was $ 150 billion, where Bangladesh had 5.0 per cent share of it as compared to Vietnam’s 10 per cent. Only 27 out of 430 local spinning mills are based on synthetic and acrylic fibre and rest are cotton spinning mills. Bangladesh imported 2,052,000 tonnes of fibre in 2018 while 93.57 per cent is cotton based, Ms Huq noted. “Due to changes in lifestyle, consumers are looking for products which are easy to care thus raising demands for MMF-based products,” the BGMEA president said. Citing a PWC report, she said, rise of the ‘Fast Fashion’ is reducing the lead time of order delivery. The ‘Fast Fashion’ category has grown at 20 per cent CAGR between 2015 and 2018 whereas the global apparel retail has grown at 4.0 per cent to 5.0 per cent CAGR during the same period of time, PWC report said.

Since any preferential regime by EU for the middle income countries require ‘double transformation’ process as per its GSP rules of origin, it is important for Bangladesh to consider more investments in primary textiles, especially in woven and non-cotton sectors, Ms Huq said. The diversification of products is the demand of time to get better price and sustainability of the industry, she added. When asked, Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) vice president Mohammad Hatem termed lack of skilled manpower and dependence on imported fabrics as major problems in going for high-end products manufacturing. He suggested further strengthening the government’s skill enhancing programme to generate skilled workers and allow foreign direct investment in fabric manufacturing here in Bangladesh. Local manufacturers will be encouraged to invest in high-end products when there will be some expertise, he noted. Center for Policy Development (CPD) additional research director Dr Khandaker Golam Moazzem said that the government should restructure its existing incentive package given to the sector without reducing the amount to help boost diversification in the RMG sector. Incentives could be given to upgrade machinery or modern technologies, value added items manufacturing or diversified products, he said. Echoing Mr. Moazzem, the BKMEA leader also said the incentives should be given to manufacturers who want to go for products diversification to reduce dependency on the few items.