Policy Research Institute - PRI Bangladesh

The Policy Research Institute of Bangladesh (PRI) is a private, nonprofit, nonpartisan research organization dedicated to promoting a greater understanding of the Bangladesh economy, its key policy challenges, domestically, and in a rapidly integrating global marketplace.

PRI dialogue sets 10-pt agenda for smooth growth of RMG industry

News Published: Sunday, Jun 09, 2013

PRI dialogue sets 10-pt agenda for smooth growth of RMG industry

Tk 30b budgetary allocation sought for executing reforms

Published : Friday, 31 May 2013

FE Report

FEThe country's ready-made garments (RMG) industry will require 10-point reform agenda for implementation in order to ensure the next phase of growth of the industry after the deadliest industrial tragedy of Rana Plaza that left over 1,100 people killed, mostly garment workers.

The suggestion came from a dialogue on post-Rana Plaza RMG roadmap organised by the Policy Research Institute of Bangladesh (PRI) in collaboration with the Metropolitan Chamber of Commerce and Industry (MCCI), Dhaka and the Bangladesh Employers' Federation held at a city hotel Thursday.

The 10-point reform that covered the key issues both in terms of the immediate post-Rana Plaza safety and some broader strategic issues, include factory classification, factory health and safety standard, responsibilities of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), new RMG economic zones and financing of the reforms.

The reforms also include minimum wage increase, trade union, formation of new workers welfare fund, moving up of the value chain and branding as well as international public relations. Commerce Minister Ghulam Muhammed Quader joined the programme as the chief guest while Dr Mashiur Rahman, advisor to the Prime Minister on economic affairs, attended as the special guest.

Ifty Islam, managing partner of Asian Tiger Capital Partners, presented the keynote paper on the post-Rana Plaza RMG roadmap.

Mr Islam suggested the government to allocate a minimum Tk 30 billion in the next budget for financing RMG reforms.

He said the government might request multilateral and bilateral development partners for a multi-donor fund of US$ 1.0 billion on concessional terms that can be accessed by the BGMEA members to finance either relocations or other necessary compliance and safety measures.

The government could provide 3.0 per cent relocation incentive for three years to (a) the factories which are relocated to any new zone and (b) to the factories which are unable to obtain concessional funds from elsewhere, Mr Islam said while presenting his paper.

Mr Islam said a review of the structural integrity of factory buildings needs to be carried out urgently and classified accordingly.

He said in terms of ongoing compliance monitoring, there is a need to establish independent inspectorate.

Mr Islam said a national action plan team could be formed with coordinated inspection initiatives from the global buyers requiring compliance with industry-recognised ethical and regulatory standards.

He said the BGMEA could play a complementary role in strengthening self-monitoring and ensuring compliances.

"We believe that the BGMEA itself should seriously consider incorporating internal reforms, particularly the factories, essentially paper-based or ghost factories must be eliminated," Mr Islam added.

Speaking at the programme, Commerce Minister Ghulam Muhammed Quader said there are a number of issues of the proposed roadmap to be in practice in the country.

Quoting number one point about classification of factories, the commerce minister said there has been a committee on the issue since 2007.

He said the committee sits every three months and takes actions after physical visits to the factories.

He said there is a question whether it is adequate to conduct all factories or not.

Mr Quader said the proposal of imposing 1.0 per cent tax on exports is praiseworthy noting that for the benefits of the workers, this should be done."

He said the government has acquired 500 acres of lands in Munshiganj for relocating RMG factories.

The commerce minister said the garment workers are getting the lowest wages in the world. "We've formed a wage board and the wages will be enhanced", he added.

He said trade union activities should be allowed in the RMG factories.

Dr Mashiur Rahman said blaming only the local makers is not justified. "It is not fair to blame the Bangladeshi manufacturers."

He said there is a responsibility of both exporters and importers.

Mr Rahman said there is a need for further enhancing productivity.

He said there is a scarcity of lands for industrialisation. "If there is land crisis, there should be vertical expansion."

Ahsan H Mansur, executive director of Policy Research Institute (PRI), said the government might think of imposing tax on RMG exports.

He said the buyers will pay the tax at a rate of 1.0 or 2.0 per cent for the welfare of the workers.

"Suppose, a buyer gives an order for US$100 clothing to a local garment maker and the government should take $1.0 on the amount if the rate is fixed at 1.0 per cent," he added.

Md Atiqul Islam, president of the BGMEA said this is not time for blame game. "We should work together on how to grow", he said.

Mr Islam was critical of differing codes of conduct being placed by many buyers after the Rana Plaza tragedy.

Mr Islam said: "GAP has issued a set of codes of conduct and H&M another set. So we need a uniform code of conduct to implement."

He said the BGMEA will suspend memberships of those members who had installed generators on top of their factory buildings.

"We've instructed all members from May to bring down their generators from the top of the buildings."

Mr Atiq claimed a BGMEA team is inspecting factories randomly as to whether they comply with safety and other standards.

"We've given power to the committee to suspend the memberships if any one is found guilty of refusing to accept compliances with different issues," he added.

Mr Atiq said the BGMEA is also in favour of enhancement of wages of the workers on a yearly basis.

He said the Association will welcome only 'constructive' trade unionism in the sector.

President of MCCI Rokia Afzal Rahman in her welcome address said this is high time to consolidate efforts to ensure safety of the workers.

"We must ensure that incidents such as Rana Plaza tragedy never happen in the country," she opined.

She said Rana Plaza is the outcome of negligence over the industry. "Rana Plaza is not accident, rather it is negligence,"

MCCI vice president Kamran T Rahman said there were many incidents in the garment industry in the past from Tazreen to Rana Plaza.

Mr Rahman said there is no significant change despite a number of tragedies in the industry.

President of Bangladesh Employers' Federation Md Fazlul Hoque said double standard of the buyers is also responsible for many troubles.

Mr Hoque was in favour of a comprehensive policy to guide the RMG industry.

He said special zones for RMG is also necessary for growth of the industry and strict compliances.

Rubana Huq, managing director of Mohammadi Group said the-10 point agenda should be implemented with full cooperation between workers and owners.

She said such type of cooperation should aim at enhancing productivity.

She said the BGMEA should review its voters' list and include those who have minimum RMG exports each year.

Kalpana Akter, executive director of Bangladesh Centre for Workers' Solidarity, said the media has rightly focussed the Rana Plaza tragedy. "It was not negative propaganda."

She said workers should be allowed to exercise their rights to freely organise associations.

Ms Akter said the cost of living and house rents must be considered while fixing wages for the workers.

Garment labour leader Md Aminul Hoque said labour law which is at the final stage must be labour and industry friendly.

He said garment village or cluster village without the rights of trade unions should not be allowed.

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