Smart policy crucial for apparel export growth

September 01, 2015

Analysts speak at a seminar organized by HSBC

Effective policy and its timely implementation are crucial for the garment sector in Bangladesh to tap the potential that exporters, the government and international organizations often discuss.

“We need smart policies and their smart implementation. Besides, the labour law has to be implemented honestly to ensure the factories are safer and worker rights are respected,� said Prof Mustafizur Rahman, executive director of Centre for Policy Dialogue.

Both KM Rezaul Hasanat, chairman of Viyellatex Group, and MA Jabbar, managing director of DBL Group, said the government has taken a lot of initiatives following the twin tragedies — Rana Plaza building collapse and the Tazreen Fashions fire.

“But our expectations are higher than what the government is doing,” said Hasanat, a leading exporter in Bangladesh. 

Jabbar, another leading exporter, said there are policies and initiatives in place, but implementation is slow. �It should pick up.�

They were speaking at a panel discussion on ‘Sustainable Development of Apparel Export: Priorities and Way Forward’ at the Westin Dhaka yesterday.

HSBC Bangladesh organized the seminar where business leaders, exporters, experts and economists discussed the potential and challenges faced by the apparel sector.

Bangladesh not being included in the latest list of the countries eligible for the US preferential trade benefit is an example of how delayed implementations of reforms could cost a country.

Although the US generalized system of preferences (GSP) used to bring negligible benefits to Bangladesh in terms of export earnings, as only five percent of the country’s exports going to the US market were covered by the duty-break, it was important for the country’s image, as many economists pointed out earlier.

The non-inclusion of Bangladesh in the new GSP-eligible country list is a testament to the problems that the country’s manufacturing sector confronts.  Many of the conditions laid out by the US administration when it revoked the facility for Bangladesh in 2013 were related to the garment sector.   

Jalal Ahmed, additional secretary to the finance ministry, said the government has identified the challenges faced by the sector. Infrastructure, such as port services, transport and railway, are being improved, he added.

The government has also taken steps to train workers to meet demand; it will train 1.5 million people in the garment sector in the next seven years, he said.

The garment factories will also train another 110,000 workers, according to Ahmed.

Francois de Maricourt, chief executive of HSBC Bangladesh, said the apparel sector is extremely important for GDP growth, as it has been helping Bangladesh achieve about 6 percent growth on an average in recent years.

Bangladesh needs to take a sustainable growth path to achieve the $50 billion apparel export target for 2021, he added.

Maricourt said he did not have a positive perception about the country when he came to Bangladesh a year ago. “I soon found out that there was a gap between perception and reality.”

Bhuvnesh Khanna, managing director and country head of commercial banking at HSBC Bangladesh, said the sector should not only think about who are the competing nations today, but also tomorrow.

“The opportunities are clear. The resilience of the sector is amazing, which also needs to be taken into account.”

Syed Ferhat Anwar, a professor of Institute of Business Administration at the University of Dhaka, said international buyers are doing business with Bangladeshi suppliers because of the cost efficiency the latter offers. “We will have to ensure these competitive advantages.”

The professor said the Accord and the Alliance — the two groups of international buyers that inspected their suppliers on safety standards — have inspected more than 3,000 factories but found only 30 faulty.

The country should create more managers to run the factories, instead of hiring mid-level managers from the competitor countries, he added.

Reaz-Bin-Mahmood, vice president of Bangladesh Garment Manufacturers and Exporters Association, said there are questions on ethical buying and whether the buyers are paying the right price.

The sector’s productivity that now stands at 75 percent has to be improved as the country’s competitors are operating at up to 85 percent, he added. 

Bangladesh’s garment exports, the second largest in the world after China’s, emerged as the biggest earner of foreign currency for the country in the last three decades. Over 80 percent of the country’s export earnings come from the sector that employs more than 4 million people.

Garment exports grew 4.08 percent to $25.5 billion in fiscal 2014-15, which is 42 times than the amount in 1984, according to data from the Export Promotion Bureau.

The discussion was part of the sixth HSBC Export Excellence Awards that will be awarded later this year. Companies can file nominations until September 17.

Source: The Daily Star, Star Business Report.


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