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84 RMG units lose right to duty-free import of fabrics

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The Bangladesh Garment Manufacturers and Exporters Association (BGMEA) yesterday cut the right of 84 garment factories to duty-free import of fabrics due to poor compliance and safety standards. The BGMEA suspended the units’ Utilisation Declaration (UD), which is a certification determining how much inputs and packaging materials will be used by a factory in manufacturing exportable products.  The garment makers’ platform issues the certification, which is vital for duty-free import of fabrics. Another 54 member factories have been given time to show progress so that they can continue availing their certification as their business record is better than that of the 84, said Rubana Huq, president of BGMEA.  The managements of the 54 were asked to attend a BGMEA meeting this month to inform of their current compliance and safety standards before taking any upgradation measures, Huq said. There are another 35 factories which closed on failing to generate business, for which they need not face the suspension, she said. The BGMEA took the decisions on the 173 as per a January 5 recommendation of the Department of Inspection for Factories and Establishments (DIFE). “Factories, which haven’t been able to comply with the basic requirements even after six years of Rana Plaza tragedy, don’t qualify to be reconsidered. Suspension of the UD is the first step,” Huq told The Daily Star. The DIFE had recommended cancelling the UD of the factories as their conditions were very vulnerable, said Shibnath Roy, inspector general of the department. “Although we have asked those units several times to remediate their safety measures, they did not pay heed to our concerns.” Now, if any accident takes place in those factories, the DIFE will not be held responsible, said Roy. The DIFE also recommended cancelling UD of over 40 garment factories which were members of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), he also said. Financial problems were not barring the factories from upgrading the compliance and safety standards, he said. “Rather, I noticed that they lack interest. They like to operate their factories without upgrading the compliance and safety standards.” Only when the BGMEA, BKMEA and the DIFE are satisfied with improvements in compliance and safety standards will the UD certification be issued anew, he said. The suspended factories are not members of the Accord and Alliance, two foreign factory inspection agencies.  This is why the DIFE engineers under a national initiative monitored and inspected those factories to ensure electrical, fire and structural safety at workplaces. Talking to The Daily Star, owner of one of the 35 factories said he had closed down his unit one year ago for being unable to make profits.  He used to export $2 million-worth sweaters employing 350 workers in the city’s Demra. “So, I do not have any problem whether the UD of my factory has been suspended or not,” the owner said asking not to be named. The cost of production increased a lot over the years for different reasons, but at the same time the prices of the garment items have been squeezing every year, he said. “However, I have a plan to set up a new factory in future if the prices of garment items rebound again.”

Vietnam textile sector calls for industrial parks to improve competitiveness

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Vietnam’s government needs to help improve the country’s textile and apparel export power and competitiveness by building industrial parks specialising in textiles, the Vietnam National Textile and Garment Group (Vinatex) has said. At a conference in Hanoi on 23 December organised by Vietnam’s Ministry of Planning and Investment, Mr Le Tien Truong, vice chairman of the Vietnam Textile and Apparel Association, and general director of Vinatex, said the industry is keen to participate in the global supply chain and maintain growth momentum, while developing sustainably.  Truong added that the common desire of the industry is that the government implements policies to accelerate industry competitiveness, in addition to supporting cleaner production and environmental protection. This could be done by reducing corporate income tax, he suggested.  Truong said there is planning for a textile and garment industrial park on an area of 300-500 hectares, with enough infrastructure to help enterprises invest in fabric production. The vice chairman added that if the industry is to develop, investment needs to be made in modern technology, as well as reducing inland transport costs, warehousing costs, and simplifying goods inspection.  Recent figures show Vietnam’s textile and apparel exports increased 7.7% in the first 11 months of 2019, but concerns are rife that the sector is quickly losing business to other cheaper, developing countries.  According to data from the General Statistics Office, textile and clothing exports in the year to November grew 7.8% year-on-year to US$29.9bn. Footwear exports were up 12.5% to $16.5bn for the same period.  But in a report by Reuters, many businesses say they do not have enough orders for 2020 – with some reporting a 20% drop in orders from last year.

Govt to give 1% addl cash incentive to garment exporters

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The Bangladesh Bank (BB) today issued a circular increasing one percent special cash incentive on export receipts of apparel items from the country, which was pending since July last year.

In the circular, the government also included the terry towel and specialised textile sectors in the cash incentive scheme, apart from all kinds of garment items. The government has delayed in implementation of the special incentive on apparel export as there were some ambiguities in the previous circular, the exporters said. The garment exporters said the order of paying the special one percent incentive on apparel shipment delayed a lot. By this time the sector has lost its competitiveness worldwide as other competing countries like Vietnam and India have already gained a lot of competitiveness in the major markets. A senior official of Bangladesh Bank said, previously, the terry towel and specialised textiles were not entitled in the cash incentives on export receipts given for the garment sector as those two items were not defined clearly. “However, the government widened the areas of sector as the garment and textile sectors have been going through a tough time,” the official told The Daily Star asking not to be named. The garment export has been declining over the last five months because of appreciation of local currency against the greenbacks, rising cost of production, declining trend of spending money by the consumers for garment items and free trade agreement between Vietnam and the EU. The decision of giving incentive to the apparel and textile exporters will come into retrospective effect from July 1 last year, as the government proposed to give the additional one percent incentive to the garment exporters to face the fallouts of declining competitiveness to the global apparel markets.

Factory inspection dept asks BGMEA, BKMEA to stop UDs to 189 members

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The Department of Inspection for Factories and Establishments has instructed the Bangladesh Garment Manufacturers and Exporters Association and the Bangladesh Knitwear Manufacturers and Exporters Association to stop providing the utilisation declarations for export and import to 189 member factories due to noncompliance in fixing safety faults. The DIFE on Monday sent a letter to the BGMEA requesting it to stop providing the UDs to 143 member factories for three months as the authorities of the units had failed to start safety remediation works. Earlier on December 29 last year, the department sent another letter to the BKMEA asking it to stop providing the UDs to 46 member factories over noncompliance. The letters said that a total of 1,549 RMG factories were inspected under the national initiative from 2014 to 2015 and were asked to undertake the necessary structural, electrical and fire safety remediation works. ‘But the factories are yet to take any initiative to start safety remediation works and have not yet even submitted the drawings and designs for such works to the DIFE,’ the letters said. The DIFE requested the trade bodies to stop the UDs of the units for noncompliance as per the escalation protocol adopted at the 15th National Tripartite committee meeting held on July 31, 2019. ‘We have had several meetings with factories where the remediation progress was minimal. During the last meeting in October, 2019, some of the factories sought time extension for starting the remediation works. Although some of the units have started the works, 189 factories have not taken any initiative for remediation,’ DIFE inspector general Shibnath Roy told New Age on Monday. He said that accidents might take place any time at these units due to various safety faults. The DIFE requested the trade bodies to suspend the UDs of these factories so that the factory owners would be forced to shut their risky units, he said. ‘As per round 4 of the escalation protocol, we have requested the trade bodies to stop issuing UDs to 189 factories for the next three months with an aim to expedite remediation in the units,’ Shibnath said. Acting president of BKMEA Mohammad Hatem said that they received the letter from the DIFE that asked to stop issuing the UDs to RMG factories which had failed to start safety remediation. Earlier in September, 2018, the DIFE issued separate letters to the BGMEA and the BKMEA to stop issuing the UDs to 219 factories as the remediation progress at the units was not satisfactory.The BGMEA then temporarily stopped issuing the UDS to 51 member factories while the other errant factories pledged to start fixing the safety faults. Following the Rana Plaza building collapse in April, 2013 that killed more than 1,100 people, a total of 3,780 garment factories were assessed under three initiatives — European retailers’ platform Accord, North American buyers’ platform Alliance and the government-led and ILO-supported national initiative. Out of the 3,780 garment factories, 1,549 were inspected under the national initiative. Of them, 531 were closed, 69 relocated and 193 transferred to the Accord and Alliance lists. Factories that fell under the national initiative had completed 32 per cent of the remediation works while 11 factories had fixed 100 per cent of the safety faults, DIFE officials said.

DIFE asks apparel trade bodies to punish more units

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RMG Bangladesh
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The government has instructed the apparel-sector trade bodies to stop issuing utilisation declaration (UD) certificates to more 189 ‘non-compliant’ factories due to poor progress in their remediation work, officials said. In letters written separately, they said, the government has asked the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) and the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) to suspend the issuance of UD certificates to those units for a period of three months. The Department of Inspection for Factories and Establishments (DIFE) took the move after the RMG factories concerned failed to make required progress in the remediation work despite repeated reminders, they added. Of the units, 143 are registered with the BGMEA and 46 with the BKMEA. DIFE inspector general Shib Nath Roy in a letter written to the BGMEA on January 05 said the 143 BGMEA members didn’t take any move towards remediation and submit any drawing and design for remediation work to the department todate. In another letter sent to the BKMEA on December 29, he also attached the list of 46 non-compliant factories. Referring to a decision taken at the 15th meeting of the National Tripartite Committee (NTC) under the labour ministry, the DIFE chief asked both the trade bodies to suspend the issuance of UD certificates to 189 units. When asked, BGMEA president Dr Rubana Huq said a total of 54 out of 143 factories have taken UD according to their UD status for year 2019. “We are studying all their structural, electrical, fire submissions and checking updated status,” she said, adding that after that they would be in a position to give a decision. Last time, she said, the BGMEA suspended issuance of UD certificates to some 51 factories. Earlier in September 2018, the DIFE requested the two garment trade groups, representing the woven and knitwear sectors, to stop providing the facility to more than 200 factories, sources said. Of the units listed with the DIFE, some 142 were registered with the BGMEA and 74 with the BKMEA while 11 others were members of both trade bodies. Nine months after the DIFE instructions, BGMEA in June 2019 suspended issuance of UD to some 51 out of 142 factories, they added. When contacted, BKMEA senior vice-president Mohammad Hatem said they received a list of 46 factories from the DIFE. “We will comply with the DIFE instructions. But before that we will also investigate the issue,” he noted. While talking about the previous list, he said they received a list of 19 BKMEA member factories and they sought time to complete the remediation work. Immediately after the Rana Plaza building collapse in April 2013, three initiatives were launched in the readymade garment industry to improve workplace safety. A total of 3,780 garment factories underwent safety audits under three initiatives–the European retailers’ platform Accord, North American buyers’ platform Alliance and the government and ILO-supported national initiative. The rate of remediation progress has been recorded at over 90 per cent in factories listed with Accord and Alliance But the progress under the national initiative is relatively poor, industry people said.

RMG export drops 6.21pc in six months: EPB

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Bangladesh’s readymade garment (RMG) export markets witnessed a negative growth of 6.21 percent to $16.02 billion in the first half of the current Fiscal Year (FY). Exports during the same period in the previous fiscal were $17.08 billion. Export Promotion Bureau (EPB) data of July-December released on Sunday show the overall exports earning during this period recorded 5.84 percent negative growth to $19.30 billion. During the same period in the previous year, the amount was $20.5 billion, UNB reports. The data also showed that knitwear products export declined 5.16 percent to $8.2 billion, which was $8.65 billion in same period in 2018. Besides, export earnings from woven garments goods came down 7.28 percent to $7.82 billion. It was $8.43 billion in the previous year. EPB data showed home textile recorded a negative 9.5 percent growth to $3.7 billion. It was $4.8 billion in 2018. Besides, leather and leather products witnessed negative 10.61 percent growth while frozen and live fish export declined 7.7 percent in December compared to last year. Bangladesh earned $3.52 billion in December last year, which was $3.43 billion in the same period of last year, EPD data showed. Agricultural products earning increased 1.21 percent to $523.9 million in December from $517.64 million compared to last year. Jute and Jute goods export earnings increased 21.55 percent to $511.73 million in 2019, which was $421.02 million in 2018. On the other hand, Chemical products export rose 2.31 percent while pharmaceuticals witnessed 5.71 percent growth in December 2019 compared to last year.

Exports still in choppy waters

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RMG Bangladesh
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Export earnings fell 5.84 percent year-on-year to $19.3 billion in the first six months of the fiscal year mainly because of lower shipment of apparel items. The receipt between July and December was also 12.77 percent lower than the half-yearly target of $22.12 billion. Of the six months, shipment rose only in July and December, data from the Export Promotion Bureau (EPB) showed. Export rebounded in December with Bangladesh fetching $3.52 billion in the month, registering a 2.89 percent year-on-year growth. In the first half, the shipment of apparel, which usually makes up more than 80 percent of national exports, fell 6.21 percent to $16.02 billion. Knitwear exports were down 5.16 percent to $8.20 billion and woven declined 7.28 percent to $7.81 billion. However, export earnings from apparel items improved a bit in December in comparison to November. But the increase in December does not signify that the sector is turning around as such, said Rubana Huq, president of the Bangladesh Garment Manufacturers and Exporters Association. “December and January are peak months anyway and compared to that, we haven’t had any significant gain,” Huq told The Daily Star in a WhatsApp message. The first two weeks of December remained negative while the second half picked up slightly. “I am strongly stressing on one point: We are losing competitiveness. And we won’t be able to sustain the general expectation of riding on high tides lest we have policy support,” Huq said. The shipment of leather and leather goods, the second highest export earner after garments, kept up a falling trend, weighed down by lower global demand and lower production at tanneries. Between July and December, export earnings from leather and leather goods fell 10.61 percent to $475.83 million. “There is little possibility of a rebound for export of leather and leather goods over the next two years as the demand for non-leather goods is on the rise worldwide,” said Md Shaheen Ahmed, president of Bangladesh Tanners Association. Non-leather goods are comfortable and less expensive compared to leather goods, he said. Major leather and leather goods-producing countries such as India and China also faced negative export growth last year. Only Vietnam achieved 13 percent growth. According to Ahmed, all the tanneries at the Savar leather estate are not fully ready to tan rawhide. So far, 125 out of 155 units have gone into production. Because of a lack of the vital Leather Working Group certification, Bangladesh receives one of the lowest prices from international buyers from the sales of leather items. Frozen and live fish exports declined 7.7 percent to $290.5 million between July and December. The export of cement, specialised textiles, home textile, and terry towel also declined.

Millers urge govt to stop raw jute smuggling

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Bangladesh Jute Mills Association (BJMA) has urged the government to launch drive against the hoarders of raw jute and strengthen vigilance in the border areas to stop cross-border smuggling of raw jute. They also requested the government to impose appropriate duty on export of raw jute. The leaders of the trade association put forward the demands at the BJMA’s 36th Annual General Meeting (AGM) at its office in the capital on Saturday. The private jute millers at the AGM elected Mohammed Mahbubur Rahman Patwari as its new chairman for the session 2020-21. Sk. Akram Hossain has been elected as vice chairman while Muhammad Shams-uz Zoha, M.A. Raihan , Md. Harunoor Rashid, Mohammad Shahjahan ,Giridhari Lal Modi, Bijoy Kumar Modi, Zahid Miah as the executive committee members. In a written speech, immediate past BJMA chairman Muhammad Shams-uz Zoha said the millers were facing problems in procuring raw jute because of its non-availability and higher prices. According to the BJMA, some 380,000 bales of raw jute were exported during July-November period of last year. The government in 2018 imposed a ban on export of Bangla Tossa Rejection (BTR) and Bangla White Rejection (BWR), but lifted the ban on May 29 last year following a write petition by the traders. It has made the raw jute price unstable again in the domestic market, Mr. Zoha said. He said the sector is passing through a very hard time due to a serious financial crisis. After imposing anti-dumping duty by India, he said, the jute goods export to India dropped significantly. Besides, the export of traditional jute products has reduced significantly in others markets because of political unrest in the Middle East, economic slowdown in Europe and the jute goods market in Africa being captured by India. Under the circumstances, the BJMA has urged the authorities concerned to bring down the rate of interest on bank loans to single digit to protect the interests of the jute goods producers. They also sought necessary fund and proper enforcement of the Mandatory Jute Packaging Act 2010 to increase local consumption of the jute goods. Their other demands included rationalisation of the price of Jute Batching Oil (JBO) and recognising jute products as agro-processed goods for extending facilities to the sector.

Retaining GSP facility: Govt sends draft plan on labour rights to EU

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The government has made a time-bound commitment to address the European Union (EU)’s concerns over labour rights issues aimed at retaining the GSP (Generalised Scheme of Preferences) facility, officials said. The government made its resolve to do so in a draft action plan sent to the EU last Thursday, they added. Earlier in the last week of November 2019, the EU provided the Bangladesh government with a list of ‘suggested actions on labour rights’ to retain trade benefits under its EBA (everything but arms) initiative. The EU also asked the government to develop a draft time-bound roadmap to address the issues and send it to the EU by January 02, they said. The government pledged to complete the amendment to the rules concerned in line with Bangladesh Labour (amended) Act 2018 by June 2020 and amend the BLA further by the end of 2022 as per the recommendations of International Labour Organisation, according to the nine-point action plan. The other issues are amendment to EPZ (export processing zone) labour law in line with International Labour Organisation (ILO) conventions, establishing an action plan to eliminate child labour by 2025 and combating violence against workers. The issues also included increasing the success rate of trade union registration application, clearing the backlog of cases in labour courts, filling vacant posts of labour inspectors, ensuring proper work of the remediation coordination cell and ratifying ILO conventions 29 and 138. When asked, a top government official involved with the process said they have already submitted the time-bound action plan to the EU, setting a timeframe from six months to six years to implement actions on labour rights suggested by the EU. Bangladesh’s action plan for addressing the EU concerns over specific labour issues would be finalised in February next with the support of ILO, he added. The draft action plan sent to the EU specifying the completion time was prepared in consultation with stakeholders concerned, he said. The labour ministry promised to issue a gazette notification on the amendment to the rules of labour law by the first half of this year and formation of a tripartite committee for further amendment to BLA by the third quarter of 2021, according to the action plan. The labour ministry communicated with the authority concerned over the issues related to EPZ Labour Act and Bangladesh Economic Zones Authority would provide action plan on it, sources said. The labour ministry promised to complete the amendment to BLA by the end of 2022 saying that a reasonable gestation time is required to gather implementation experience before further amendment to the labour law. The EU recommended removal of the provision of imprisonment of workers for taking part in the activities of an unregistered trade union and restrictions on the establishment of trade union and prohibiting interference in trade union elections and activity. The government pledged to provide capacity-building training to the inspectors of Department of Inspection for Factories and Establishments (DIFE) by 2023 to eliminate child labour by 2025. According to the plan, it also promised to make newly established labour courts in Sylhet, Barishal and Rangpur fully functional by the end of this year and establish four more labour courts in Narayanganj, Gazipur, Cumilla and Faridpur by 2021 to clear the backlog of cases. The government would fill vacant posts of labour inspectors by the first quarter of next year. The DIFE would consider the possibility to work with RMG Sustainability Council in consultation with Bangladesh Garment Manufacturers and Exporters Association, Bangladesh Knitwear Manufacturers and Exporters Association and Bangladesh Employers Federation by mid-2020. Bangladesh would ratify the ILO protocol 29 on forced labour by the end of this year, it added. Technical mission representing the EU EBA visited Bangladesh on October 14-16 last year to investigate their concerns related to labour rights situation in the country. The EU is the single largest destination of Bangladesh-made exportable goods. About 62 per cent (worth US$21.13 billion) of the total $34.13-billion readymade garment products were shipped to EU from Bangladesh in the last fiscal year (2018-19), according to the BGMEA data.

RMG value addition drops by 3.31pts in July-Sept

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Value addition in the country’s readymade garments sector dropped by 3.31 percentage points in the July-September quarter of this fiscal year of 2019-20 compared with that in last fiscal year as the country’s exporters were losing competitive edge due to overvalued local currency and increasing cost of doing business. According to a Bangladesh Bank review on the RMG sector, the value addition in the sector dropped to 61.01 per cent in July-September of FY20 from 64.32 per cent in FY19. The sector’s value addition, however, was 60.44 per cent in July-September of FY19. Economists and exporters said a slowdown in the global economy due to the US-China trade war also resulted in a slump in consumption of RMG products. The consumption fall also forced the country’s exporters to lower prices, they said. Although economists and exporters have been demanding an immediate devaluation of the taka, finance minister AHM Mustafa Kamal recently announced that the local currency would not be devalued against the US dollar. The country’s RMG manufacturers imported raw materials worth $3.14 billion in July-September of FY20 against export of $8.06 billion in the period. The RMG sector imported raw cotton, synthetic or viscose fibre, synthetic or mixed yarn, cotton yarn and textile fabrics, and accessories for garments as inputs for the production. The import of raw materials represents 38.99 per cent of the country’s export value. In FY19, the country’s export earnings of the RMG sector were $34.13 billion. For the production of the export items, the sector imported raw materials worth $12.18 billion, representing 35.68 per cent of the RMG export value. Mentioning the RMG sector’s 83.52 per cent contribution to the country’s overall export earnings, the BB report said, ‘We need product diversification in our export basket.’ ‘Some of our competing countries have already succeeded in product diversification in last decade. Vietnam emphasised electronics and other value-added export products,’ it said. Due to Bangladesh’s high dependency on RMG in export basket, any instability in this sector in future could result in huge unemployment and trade deficit in the country, the BB report said. The central bank also suggested medium- and long-term measures to tackle challenges in the sector. ‘Factory to port communication should be developed to reduce lead time domestically,’ it said, adding, ‘We have to ensure utilities supply with reasonable price along with one stop service in trade procedure and documentation in product transaction.’ ‘Moreover, for continued progress in RMG export earnings, we can try to expand our market in emerging countries along with the prevailing markets,’ the central bank report said. Due to the global slowdown, the country’s export earnings fell for the fourth consecutive month in November of the current fiscal year. In July-November of FY20, the country’s export earnings fell by 7.59 per cent to $15.77 billion from $17.07 billion in the same period of FY19. Of the total export earnings, volume of RMG exports fell by 7.74 per cent to $13.09 billion from $14.18 billion in the same period of FY19. ‘The EPB data spots another dent in the export growth curve. Such continuing negative growth (for four months in a row) last happened in the March-June period of FY12,’ Bangladesh Garment Manufacturers and Exporters Association president Rubana Huq said recently. She said such decline testified that the competitiveness of the RMG industry in Bangladesh was really in danger and the country was not aligned at all with the global competitive scenario; particularly the exchange rate movement of the taka against the competing currencies remained inconsistent. Rubana also said that shutting down of factories in recent months especially after the minimum wage hike in December in 2018 was taking its toll on the export industry. ‘The latest data from the official source of the US and the EU show that Bangladesh is significantly lagging behind our competitors in terms of growth during the third quarter of 2019, i.e. July-September 2019. During this period, Bangladesh registered 1.70 per cent growth in the US whereas Vietnam grew by 14.23 per cent, India 3.93 per cent, Cambodia 15.56 per cent and Pakistan 6.58 per cent,’ she said.

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