Published in The Daily Star on Wednesday, 12 November 2014.
Solution in sight to RMG workers’ housing woes
BB offers low-cost funds to build hostels
Star Business Report
Garment exporters will now get funds at only 2 percent interest to erect hostels for workers, a development that would go some way towards improving the beneficiaries’ quality of life as well as the sector’s image.
As per the agreement signed yesterday between Bangladesh Bank and the Bangladesh Garment Manufacturers and Exporters Association, the central bank will provide 60 percent of the cost for building the hostels under the government’s housing fund at 2 percent interest.
The respective factory owners will have to foot the remaining amount. The hostels will have to be set up on the factory owners’ own land though, according to BB officials.
If implemented, the initiative will help solve the acute housing problem that the sector’s 40 lakh workers face.
Garment workers spend at least 13 percent of their wages for housing, said Khondaker Golam Moazzem, additional research director of the Centre for Policy Dialogue.
Speaking at the signing ceremony, Bangladesh Bank Governor Atiur Rahman said due to the high housing costs, workers are compelled to live in unhygienic slums or in houses far away from their factories.
“The women workers face the most difficulty. So, the government and the central bank have extended the support to solve this problem.”
Under the agreement, the BGMEA will select the recipients of the fund after much scrutiny and issue guarantee in favour of the borrowers.
The BGMEA will be liable if any borrower fails to repay the loans, Rahman said.
The governor said the housing fund has already sought Tk 200 crore from the finance ministry to expand its activities. “I think there will be no shortage of money if we can get the allocation from the government.”
Finance Minister AMA Muhith, who was present at the signing ceremony, said that steps will be taken to ensure that the fund faces no capital shortage.
BGMEA President Atiqul Islam termed the new initiative a noble one.
The BGMEA has applied to the Prime Minister’s Office and the land ministry for five acres of land in the industrial belt of Ashulia at a nominal price to set up the hostels.
“We will start setting up the dormitories once we get the land,” he said, adding that there are many government-owned lands sitting idle in various industrial belts.
The lands could be handed over to garment sector entrepreneurs strictly to build hostels for workers, Islam added.
Moazzem of CPD welcomed the government move, saying that it would pave the way for a solution to the workers’ housing problem.
However, the initiative should not be symbolic and needs to be extended to all garment workers in the country, as they are living in “inhumane” conditions.
Often, four or five workers are found living in a single, dilapidated room. As for workers who have families, each family lives in a single room as well, with facilities such as kitchens and bathrooms shared with other similar units.
Every time there had been a wage hike in the sector, it was accompanied by an instant rise in housing costs, Moazzem said. “So, there would be no tangible improvement in the workers’ quality of life after the wage rise.”
“These workers are part of a global chain that produces world-class products. They don’t deserve such appalling conditions,” Moazzem added.
In 1998, the government led by current Prime Minister Sheikh Hasina rolled out the housing fund to solve the housing problem of the poor.
The central bank manages the fund, and the non-government and microfinance organisations have been included in the fund as stakeholders.
As of September this year, the central bank has provided Tk 175 crore to 512 MFIs in 450 upazilas. So far, 60,000 houses have been built with support from the fund, according to M Mahfuzur Rahman, an executive director of BB and an adviser of the housing fund.
The government has contributed Tk 161 crore to the revolving fund, with the size of the fund now standing at Tk 327 crore, said the governor.