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Published in The Daily Star on Sunday, 31 January 2016
DOUBLING APPAREL EXPORT IN 5 YEARS
Goal ambitious but achievable
Success depends on removing infrastructure bottlenecks, boosting productivity, BGMEA-The Daily Star roundtable told
Bangladesh’s target to double its apparel exports by next five years is daunting but achievable if the country can fix infrastructure bottlenecks, boost productivity and attract investment.
“The target is very simple, but a challenging one,” said Sharif As-Saber, a Bangladeshi professor at RMIT University, an Australia-based public university.
He said the apparel exports were currently growing at nine percent. But the growth should be at least 11 percent to reach the target of $50 billion by 2021 — a goal Bangladesh Garment Manufacturers and Exporters Association (BGMEA) set in 2014.
Garment sector accounts for 81 percent of the country’s overall export earnings, and employs more than four million people, mostly poor women from rural Bangladesh.
Garment exports grew 4.08 percent to $25.5 billion in fiscal 2014-15, according to data from state-run Export Promotion Bureau.
Bangladesh would have to export an additional $5 billion per year for the next few years to reach the target.
Despite being the second largest producer of garment items in the world, Bangladesh accounts for only 5.09 percent of the global clothing market, according to Siddiqur Rahman, president of the BGMEA.
US Ambassador to Bangladesh Marcia Bernicat said setting a goal of doubling apparel exports in less than six years was ambitious. “But I don’t know how you get big results without setting big goals.”
The diplomat expressed her country’s commitment to helping Bangladesh reach the target.
She said Bangladesh’s apparel sector is a major industry leader and is growing to be the top producer.
“It is not because of cheap labour. Buyers have told me there are countries that have lower wages than Bangladesh. What these industries [in other countries] don’t have is skilled workforce that delivers time and again quality product on time.
“That’s what puts this industry on top,” Bernicat observed.
They made the remarks at a roundtable styled “Target $50 billion: We Need Your Support to Reach It” at The Daily Star Centre in Dhaka. The BGMEA and The Daily Star jointly organised the discussion.
The sector has an opportunity to transform itself by adopting the international standards that are increasingly required of this industry and other industries everywhere, Bernicat said.
Talking about the duty and quota-free trade facility extended by the US to its trading partners, the American diplomat said all manufacturing units in every country had to adopt the same international standards to qualify for the trade preference, like the standards Bangladeshi manufacturers were asked to comply.
Ahsan H Mansur, executive director of Policy Research Institute, said the $50b target was very logical, as historically trade grew about the double of a country’s gross domestic product (GDP) growth.
“If Bangladesh wants to grow its GDP by 7-8 percent the apparel exports will have to double the growth.”
He said the economy size doubled from $100 billion to $200 billion in the last five years. “If we can double our national income in five years, why can’t we do the same in case of garment exports in the same time?”
But the task is not easy either, reminded the former economist of the International Monetary Fund.
In the next few years, Mansur said, Bangladesh would have to make the investment it has made over the last 35-40 years, which is a formidable task.
“This time, the investment has to be capital-intensive to achieve the same output.”
He said Bangladesh would have to invest $100-125 billion in the sector at the country’s current capital output ratio of 4.5.
“The BGMEA has to think whether it would be able to make this amount of investment without foreign direct investment,” he said, adding that he did not think that Bangladesh would be able to raise the money from domestic sources.
More importantly, the standards that are being applied in Bangladesh should be applied globally. “If it is ensured, the cost of production in Vietnam, Cambodia and Myanmar will also go up. As a result, we will be able to remain competitive.”
Md Nojibur Rahman, chairman of the National Board of Revenue (NBR), said thanks to pragmatic and facilitative process of the government, Bangladesh’s garment sector was touted as an alternative destination for companies leaving China.
He also said the government wanted to see the RMG industry as a well-governed sector. “If you do that and put in place energy-efficient and environment-friendly technologies, then there would be many more incentives coming from the NBR during the upcoming budget discussions and consultations.”
Daniel Seidl, a representative of the Brussels-based Foreign Trade Association in Dhaka, said more than 70 percent of Bangladesh’s exports reach Europe and the US markets.
“But we can see that China and India are coming to Bangladesh to buy products for their local markets.
“That clearly puts pressure on our factories,” he pointed out.
Pierre Mayaudon, head of the European Union mission in Bangladesh, said that to reach the $50-billion target, Bangladesh would have to fight and win three battles: the battle of technology, international engagement and team spirit.
The battle of technology starts with remediation, and a fund of $200 million has been put on the table for the companies that need the money to implement the remediation plans, he said.
“But things are not moving very fast. So we need to put a mechanism in place so factories that need the fund can take the advantage from the donors,” he said.
Skilled workers, energy efficient machines and modern machineries are also needed, said the EU ambassador.
He also said Bangladesh also needed to invite a lot of foreign direct investment. It will give more chance to local industries to forge partnership with foreign investors. “Please, be more foreign investors-friendly.”
Mayaudon said the recent lifting of western sanctions on Iran opened up opportunity for Bangladesh to export garment products to the country, which have a per capita income of $5,000 and a population of 82 million.
Zahid Hussain, lead economist of the World Bank Bangladesh, said if Bangladesh could increase its export growth by 2-3 percentage points, then it would be able to reach the target.
As per 2015 McKinsey & Company report of 2015, 48 percent chief purchasing managers said they still saw Bangladesh as a sourcing destination, he said.
He said Bangladesh would have to increase productivity, but the lack of industrial land and energy stood as major barriers. And special economic zones have to be set up to ease crisis of industrial land, he said.
He backed BGMEA President Siddiqur Rahman’s view on energy, saying many new factories could not start production as they had no gas connections. “If they can’t go into production, new entrepreneurs would not be encouraged to make investment.”
Siddiqur said although the textile and garment sectors together consume five percent of the total gas production, they contribute hugely in job creation, earning foreign currency and the GDP.
KG Moazzem, additional research director of the Centre for Policy Dialogue, said if the BGMEA could provide a numerical statistics on how much additional power, gas, land and the number of skilled workers and mid-level managers they would need to reach the target, it would help the government to make decisions.
Srinivas Reddy, director of the International Labour Organisation in Dhaka, said respect for labour rights, fixing the safety issues and completion of the remediation process and investing in people were three major areas for the sustainable growth of the sector.
The $50billion will not only bring benefits for the 5,000 employers, but also to the 4-6 million workers if the workers are made partners-in-progress, he said.
Jochen Weikert, a programme coordinator of GIZ Bangladesh, said the garment sector association, the government, and the civil society collectively were no longer a small player in the global garment sector.
“If you raise your voice on the grounds of your enhanced responsibility and sustainability then your claim will be much more heard and credible,” he said while talking about bargaining over pricing issue.
Nazma Akter, a labour activist, said the living conditions of the workers and their wage had to be improved. Besides, trade union rights and freedom of association have to be ensured.
“Without ensuring the well-being of the workers, the sector will not be sustainable,” she said.
Moderating the event, Mahfuz Anam, editor and publisher of The Daily Star, said the garment sector was the growth engine for Bangladesh and had done wonders in the last two-three decades.
“They are now poised, in terms of infrastructure, ability and skills, for vigorous height.”
Published in The Independent on Sunday, 31 January 2016
Achieving $50b RMG export by 2021
‘Infrastructure, investment, labour productivity key challenges’
Bangladesh will have to concentrate on specific areas like factory remediation, infrastructure development, more investment, labour productivity and research and training to achieve the target of US$50 billion Ready-Made Garments (RMG) in 2021 when Bangladesh will celebrate her 50th anniversary of independence, reports BSS.
This was the observation of a roundtable discussion on “Target US$50 billion: we need your support to reach it” held in the capital yesterday.
Bangladesh Garment Manufacturers and Exporters Association (BGMEA) organised the roundtable in the capital yesterday.
US Ambassador to Bangladesh Marcia Stephens Bloom Bernicat said because of cheap labour, Bangladesh garments sector has developed due to adequate skilled workforce and timely delivery of products.
”Lot of works need to be done and we are committed to help you reach the goal as a trusted partner,” she added.
World Bank lead economist at Dhaka office Zahid Hussain said the country will have to provide special priority on land and power as the essential sectors for the industrialisation.
The planned economic zones of the government will have to be implemented as early as possible and the government will have to ensure transparency in Gas price-fixing policy, he added.
Additional Research Director of Centre for Policy Dialogue Khondaker Golam Moazzem said BGMEA can provide a research paper on supporting matters like standard skilled level of workforce and management system and the paper will help achieve the target.
National Board of Revenue (NBR) Chairman M Nojibur Rahman said the government has been giving priority on RMG sector as it is the most important sector to the country’s export.
NBR, RMG and BGMEA are working in unison and the partnership is becoming deeper day by day, he added.
BGMEA President M Siddiqur Rahman said the government will have to ensure various important things like Gas, infrastructure development, especially roads and communication and competitive interest rate to enhance the country’s investment as the key issue of economic growth.
He stressed on forming a joint taskforce with government and private sector representatives to mitigate the gas crisis which has become a cause for concern for the industry now.
Professor of Royal Melbourne Institute of Technology (RMIT) University Sharif As-Saber delivered the key note speech.
Labour and Employment Secretary Mikail Shipar and Ambassador and Head of EU Delegation in Bangladesh Pierre Mayaudon, among others, spoke on the occasion.
Sharif As-Saber said the goal is achievable if concerted efforts are put in place by all concerned.
Published in Daily Sun on Sunday, 31 January 2016
Challenges ahead to achieve $50bn apparel exports
In order to reach the targeted $50 billion earnings from RMG exports by 2021, Bangladesh has to focus on some specific key issues like factory streamlining and infrastructure development, speakers at a roundtable observed on Saturday.
Among others, they listed factory remediation, infrastructure development, more investment, labour productivity and research and training to achieve the magic figure at a time when the country will celebrate its golden Jubilee of freedom.
The observation came at the roundtable discussion styled: “Target US$50 billion: We need your support to reach it” at Daily Star Centre in the city, jointly organised by Bangladesh Garment Manufacturers and Exporters Association (BGMEA) and The Daily Star. Because of cheap labour, adequate skilled workforce and timely delivery of products Bangladeshi RMG sector has developed, US Ambassador to Bangladesh Marcia Stephens Bloom Bernicat said. “Lot of works need to be done and we are committed to help you reach the goal as a trusted partner,” she added. World Bank lead economist at Dhaka office Dr. Zahid Hussain said the country will have to put special priority on providing land and power connections as the essential sectors for the industrialisation.
The planned economic zones of the government will have to be implemented as early as possible and the government will have to ensure transparency in gas price-fixing policy, he added. Additional Research Director of Centre for Policy Dialogue Dr Khondaker Golam Moazzem said BGMEA can provide a research paper on supporting matters like standard skilled level of workforce and management system and the paper will help achieve the target.
National Board of Revenue (NBR) Chairman M Nojibur Rahman said the government has been giving priority on RMG sector as it is the most important sector to the country’s export. NBR, RMG and BGMEA are working and the partnership is becoming deeper day by day, he added.
BGMEA President M Siddiqur Rahman said the government will have to ensure various important things like gas, infrastructure development, especially roads and communication and competitive interest rate to enhance the country’s investment as the key issue of economic growth.
He stressed on forming a joint taskforce with the government and the private sector representatives to mitigate the gas crisis which has become a cause for concern for the industry now.
Professor of Royal Melbourne Institute of Technology (RMIT) University Dr Sharif As-Saber delivered the key note speech. Editor of the Daily Star Mahfuz Anam was the moderator of the roundtable.
Labour and Employment Secretary Mikail Shipar and Ambassador and Head of EU Delegation in Bangladesh Pierre Mayaudon, among others, spoke on the occasion.
Dr Sharif As-Saber said the goal is achievable if concerted efforts are put in place by all concerned.
Published in Dhaka Tribune on Sunday, 31 January 2016
Investment key to achieve $50bn RMG export
Local and foreign investment in ready-made garment sector are key to achieving the $50 billion export target as envisaged by multi-stakeholders, discussants said at a programme yesterday.
They observed that apart from investments, fixation of safety remediation, apparel diplomacy, labour rights, productivity enhancement and figuring out logistical needs of RMG sector need to be addressed in right earnest to meet the target.
The observations came at the roundtable titled “Target $50bn: We need your support to reach it” jointly organised by Bangladesh Garment Manufacturers and Exporters Association (BGMEA) and The Daily Star yesterday.
“FDI is not a matter of competition. Please be more friendly to foreign investment as it is important,” said Pierre Mayaudon, ambassador and the head of delegation of European Union.
Make investment in technology and new machinery to achieve the $50 billion target. There are 200 million funds for the remediation work, Mayaudon said, adding that the government has to take initiative for quick release of the fund to complete the process of safety remediation.
In her address, US Ambassador to Bangladesh, Marcia Stephens Bloom Bernicat, called for investment in RMG remediation.
She said if investment is made in remediation, it will give three rewards – production efficiency, continued tracking of buyers and happy and satisfied workers.
“In last two years, what Bangladesh did in RMG sector is extraordinary and I am urging the manufacturers to finish the remediation quickly,” added the US ambassador.
“Cheap labor always irritates me, but Bangladesh needs skilled workforce and quality products with on-time delivery.”
The sector people have to figure out how much investment RMG sector needs to achieve its export target, said Ahsan H Mansur, executive director, Policy Research Institute of Bangladesh.
He called for twice as much investment as the RMG sector witnessed in last 35 years.
“There will have competitiveness, but we have to face that through quality and experience.”
The sector people have to come up with a statistics of how much skilled workers, mid-level mangers and the capacity of port and other-related issues are needed to meet the export target as it would help the government reach a policy decision, said Khondaker Golam Moazzem, additional research director of Centre for Policy Dialogue (CPD).
The change in safety standards should not only be for Bangladesh it applies to other sourcing countries also, he observed.
BGMEA President Siddiqur Rahman said the key to development is investment, and to keep the investment up, uninterrupted gas supply, infrastructure and communication development, plus low-cost finance are necessary.
ILO Country director Srinivas B Reddy stressed the need for labour rights, fixation of safety issues and investment to train people to create skilled workforce to reach the target set by the RMG sector.
The culture of cooperation and dialogue between workers and employers needs to be prevailing all the time, not just at crisis moment only, said Reddy.
“I am calling for fixation of remediation so buyers and brands can put their investment here,” he said.
World Bank lead economist Zahid Husain said “First, we have to think if there is any opportunity to achieve the $50 billion export target and what the sector needs for that.”
Bangladesh has to increase production but there are two obstacles energy and land. But due to lack of gas supply newly established factories cannot go for production, which discourages new investment, a key element for production enhancement, said Zahid.
“The $50-billion target is also our dream and we are a part of it,” said Najma Akter, president of Sammilito Garment Sramik Federation.
For achieving the target, living wage, freedom of association, safety committee, social dialogue are a must, she suggested.
He urged the government and buyers to take measures to ensure healthcare of age-old workers crossing 40 years.
“Let us know, how many skilled workers you need to achieve the target, otherwise we will not be able to take measures,” Senior Secretary to Labour and Employment Ministry Mikail Shipar said.
NBR will provide more incentives to the RMG sector if the manufacturers use energy efficient and environmentally-friendly technology, said NBR Chairman Nojibur Rahman.
He also urged the sector people to be tax-compliant.