During the period 133
garment factories were shut down, rendering around 62,582 workers, mostly
women, jobless in the $34 billion industry that employs close to 40 million
people
Export-oriented apparel makers set up 123 new units in the
just-concluded year, which is expected to generate employment for over 67,500
people.In contrast, during the period 133 garment factories were shut down,
rendering around 62,582 workers, mostly women, jobless in the $34 billion
industry that employs close to 40 million people.According to Bangladesh
Garment Manufacturers and Exporters Association (BGMEA), 78 new garment
factories registered with the association last year, creating jobs for an
estimated 47,500 people.On the other hand, another 70 new units registered with
Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA). The new
units will generate employment for about 20,000 people, hope the association
leaders.Of the new units, 45-50% are by fresh entrepreneurs, while the rest are
by the existing entrepreneurs, who have gone for expansion.The important aspect
of the new investments is that all of them are focused on compliance and
technology to meet the buyers’ requirement and workplace safety. On the other
hand, some of them also are concentrating on producing value added products.“We
are in the apparel business for years. The new unit, Magic Works Limited
located in Bhaluka, is a part of our expansion,” Shah Mohammad Mohit, chairman
and managing director of Magic Works Ltd, an woven products manufacturer, told
Dhaka Tribune.”Since workplace safety and compliance are important issues
now, we have attached big importance to them in the new venture,” he
said.Besides, latest technology and innovation were core in the investment as
the consumers’ behavior and taste were changing very fast in the fashion
industry, he added. Magic Works has made an investment of Tk120 crore, creating
employment for about 4,000 workers. The annual production capacity will be 1.58
lakh pieces.“In 2019, a total of 78 apparel entrepreneurs became our members
but all the new units have not gone for full production,” said Md Rezwan
Selim, a BGMEA director.Of the new members, about 50% were new investors, while
the rest were existing members who went for expansion, said Rezwan, also
managing director, Softex Sweater Inds (Pvt) Ltd. Newcomers were focusing on
safety and compliance issues, he added.Though the trade leaders as well as
economists see the new investment positively, they have called for making the
investment in new and prospective products for sustaining the business.“Amid
negative export growth, new investment as well as expansion are positive signs
for the sector and the economy,” said Khondaker Golam Moazzem, research
director of Centre for Policy Dialogue (CPD. “Right now, Bangladesh has
capacity in excess in some products and segments. So, the new investment and
expansion should focus on new products having scopes to grow,” said
Moazzem.To this end, the economist suggested, the trade body should give
forecast on future direction of markets and demands so that the newcomers could
make proper decision.Besides, the association should provide information on
capacity to discourage investment in products, which already have capacity in
excess, he added.He also discouraged new membership in sectors where there was
already enough entrepreneurs.”New ventures need more investments, modern
technology, enhanced efficiency, productivity, compliance and
environment-friendly measures to be sustainable and competitive in the global supply
chain,” he noted.Why factories are closed In 2019, a total of 63 BGMEA
members closed factories, which rendered over 32,582 workers jobless, while 70
knitwear manufacturers under BKMEA have also shut down factories making about
30,000 people unemployed in the same period. Non-compliance and lack of
implementation of new wage structure are largely blamed for the closures and
the nature of laid off factories are small and medium (SMEs). Losing
competitiveness due to rise in production cost is another big reason for the
factory closure.“It is unlikely that all the factory owners closed their
manufacturing units because of non-compliance. They shut down factories for
lack of enough work orders while manufacturers also lost competitiveness due to
higher production cost caused by the new wage structure implementation as well
as electricity service charge,” BGMEA President Rubana Huq told Dhaka
Tribune.If compliance was the only reason for the shutdown, then it could be
earlier, she argued. “Besides, they are not getting banking support in
improving compliance and meeting other necessary expenses,” Rubana added.
However, there are some factories housed at shared building and run on rent
have been shut on compliance grounds as the building owners are unwilling to
spend for making them compliant.“After the Rana Plaza incident, workplace
safety and compliance have been major challenges for the manufacturers. As a
small factory owner, I could not make investment, while building owners also
declined to make investment,” a factory owner told Dhaka Tribune, seeking
anonymity. “For this, a good number of owners like me have shut factories and
planned to relocate to compliant buildings outside the capital,” he added.He
also argued that for lack of compliance, buyers were not placing orders and the
local companies stopped providing works on subcontracting. How to save the
small entrepreneurs“Most small and medium enterprises failed in compliance as
they were unable to adjust new structure. Being hit hard by cash crunch, the
SMEs were forced to stop production,” BKMEA first vice president Mohammad Hatem
told Dhaka Tribune.The government should come up with financial support and low
cost financing to improve safety standard or relocate from the shared building,
said Hatem.Meanwhile, BGMEA stressed establishing a common compliant place for
the SMEs. “We have pledges to protect the small and medium enterprises. I
think, it is time to save small manufacturers as the taste of consumers is
changing and they are buying less at higher prices,” said Rubana Huq. Small
factories had the capacity to offer specialized and small quantity products,
which would suit the consumers’ new taste, said Rubana.“Instead of taking half
a million orders at low prices, it is better to take small orders at higher
prices. Small model is better than a big one with a big factory,” she said. In
creating opportunity for the small and medium entrepreneurs, BGMEA has sought
allocation of 200 acres land at Mirsharai in Chittagong to build shades for
them with compliance.“If we can do it, they will be able to produce quality
products,” the business leader said.
