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Panel Estimates Cost of Revamping Bangladesh Apparel Sector

The government urgently needs to invest over $380 million to improve safety and working conditions within the industry.

The Bangladesh government urgently needs to invest over $380 million in the country’s apparel industry to improve safety and working conditions within the sector, according to a panel of experts debating the issues in Dhaka last week.

This story first appeared in the June 4, 2013 issue of WWD.  Subscribe Today.

In a session titled “Post Rana Reform Roadmap,” the panel said the government needs to budget 30 billion takas, or $385 million, to improve the ready-made garment sector.

The seminar was spearheaded by the Policy Research Institute, a leading think tank in Bangladesh, which works closely with The World Bank, USAID, the International Monetary Fund and the United Nations Development Programme, among other groups. The seminar also had the Metropolitan Chamber of Commerce and Industry, which is one of the oldest trade bodies in Dhaka, and the Bangladesh Employers’ Federation as partners. BEF claims to have more than 90 percent of private company employers as its members.

That investment would be only a fraction of the amount needed, however. Noting that more than 1,000 factories needed to be relocated, the panel estimated that would cost an additional 100 billion takas, or $1.28 billion. According to the road map proposed by the panel, the government and property developers could initially fund that cost, with the amount paid back by the factory owners over time.

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The relocation could be done in phases and in varied clusters, the recommendations noted.

Another solution might be for a small export tax of 1 to 2 percent freight on board, which could be earmarked for the factory refurbishment program.

Other recommendations included a continuation of unannounced fire drills after initial on-site fire training to the factories for at least three months, higher minimum wages for labor, a bimonthly exchange of ideas and training centers for skill improvement.

The discussion of funding for industry improvements came shortly before the Norwegian government stepped forward with a financial package to support labor.

The agreement for $2.5 million, signed between Heikki Eidsvoll Holmås, Norwegian Minister for International Development, and Srinivas Reddy, country manager, Bangladesh for the International Labor Organization, aims to promote workers’ rights and labor relations in export-oriented industries in Bangladesh. Although the money signed is for labor relations across export-oriented industries, the ready-made garment industry accounts for more than 70 percent of exports from Bangladesh. It is also the second largest exporter of apparel in the world, after China.

The presence of Secretary of Labour Mikail Shipar, Fazlul Hoque of the Bangladesh Employers Federation and a representative of the National Coordination Committee for Workers’ Education ensured local involvement in the agreement. Norwegian Ambassador Ragne Birte Lund was also present at the Ruposhi Bangla hotel, where the event was held Monday.

Reddy observed that the support of the Norwegian government was timely. “This support directly contributes to implementation of one of the commitments, on workers’ education and training of midlevel supervisors and managers on occupational safety and health and fundamental principles and rights at work,” he said.

A primary objective of the Fundamental Principles and Rights at Work in Bangladesh, to which the money will be available, is to have labor issues compliant with the ILO conventions on freedom of association and the right to collectively bargain.

The support for Bangladesh labor comes even though few Norwegian companies source from Bangladesh. The biggest Norwegian company importing textiles and ready-made garments from Bangladesh is the Varner Group.