Published in The Daily Star on Wednesday, 25 June 2014.
Garment makers must be fully compliant, after tax benefits
Analysts speak at a seminar on workplace safety, labour rights
Star Business Report
Garment manufacturers must make their factories fully compliant after the government extended a host of privileges to them, analysts said yesterday.
“Apparel makers will get tax benefits worth around Tk 4,000 crore due to deduction of source tax on garment exports in the next two years. So, they must ensure full compliance instead of minimum compliance,” said MM Akash, professor of economics at Dhaka University.
The government decided to reduce tax at source on garments exports from 0.80 percent to 0.30 percent and waive full duty on imports of prefabricated building materials and fire safety equipment.
Akash’s comments came at a discussion on ‘Macro Review of the RMG Sector: Gains, Challenges and Policy Responses’, held at The Daily Star Centre.
The programme was arranged to showcase the features of a CARE project for garment workers—Solidarity and Empowerment through Education, Motivation and Awareness (SEEMA)—funded by the European Union.
Khondaker Golam Moazzem, additional research director of the Centre for Policy Dialogue, said full compliance is needed for protecting labour rights and ensuring workplace safety.
The compliance cost is not big if the garment owners’ incomes are considered, he said, adding that many apparel owners, however, have already initiated some corrective actions to improve workplace safety.
Rushidan Islam Rahman, research director of Bangladesh Institute of Development Studies, said the sector will not be able to ensure maximum compliance if the government focuses on just “good enough” compliance.
Garment owners will need around Tk 3,000 crore if they want to relocate 1,000 faulty factories to purpose-made buildings, said Binayak Sen, research director of BIDS, while calling for all stakeholders to share the costs.
Fast-moving consumer goods companies should also come forward to share the costs as the garment workers consume huge amounts of toiletries, he said.
Bangladesh’s garment export growth in Europe, especially after the relaxation of GSP in 2011 is stunning, said Zillul Hye Razi, trade adviser of EU.
Between 2010 and 2013, the growth was about 57 percent. Last year, garment exports to the EU stood at around 10 billion euros—about 91 percent of overall exports to the region, he said.
“This exposes the success and importance of readymade garments as well as the extreme dependency on it.”
Khandoker Mostan Hossain, joint secretary of the labour ministry, said the government is sincere about improving workplace safety and labour rights after the Rana Plaza disaster.
A total of 1,590 garment factories have been inspected by three agencies—Accord, Alliance and Bangladesh University of Engineering and Technology, since April last year following the industrial disaster and only 14-15 were found faulty, he said.
Registration of trade unions has also increased significantly, Hossain said, adding that the labour ministry has allowed 187 new trade unions since an amendment to the labour law last year.
Nazneen Ahmed, senior research fellow of BIDS, urged the garment owners to emphasise full compliance for the sake of enhancing workers’ productivity.
“Owners will immensely benefit in terms of productivity if they can ensure a favourable work environment.”
Ayesha Khanam, president of the Bangladesh Mohila Parisad, said garment owners should make their factories fully compliant for the sake of humanity rather than improving the bad image.
She also urged the government to look into the transportation and housing problems of the female garment workers.
Zafrul Hasan, joint secretary general of the Bangladesh Institute of Labour Studies, said the government should allow more trade union registrations as it will give a platform for workers to raise their voice against harassment.
Jamie Terzi, country director of CARE Bangladesh, also attended the event.