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WASHINGTON — Bangladesh commerce minister Tofail Ahmed talks with WWD about the changes that have taken place and the next steps.
This story first appeared in the June 16, 2014 issue of WWD. Subscribe Today.
WWD: Has the situation actually changed in the garment sector at this time, or is it merely tokenism?
Tofail Ahmed: The situation has totally been changed in the garment sector. It has become far more congenial and business is also picking up. The government has taken a lot of actions in Bangladesh, perhaps more than in any other place. So within a few years, you will see that the garment industry in Bangladesh is really excelling. The worker salary has gone up — in the last five years it has increased 219 percent from 1,600 taka to 5,300 taka; the labor law has been amended; the first TICFA meeting has taken place last month, and [U.S. Trade Representative] Michael Delaney led a delegation to see how to increase volume of trade between Bangladesh and the U.S. Meanwhile, factory inspections have been going on and 1,500 industrial units have been inspected and only 19 of these have been found vulnerable, less than 2 percent.
We have a lot of factories that are very well done. If anyone sees these, they will be amazed. So there are also compliant factories.
WWD: In the budget last week, there were a few introductions for the garment sector.
T.A.: Yes, the garment sector is the first to get a benefit from the budget. We have decreased the source tax from 0.8 percent to 0.3 percent. We introduced duty-free imports of products for fire safety. But over this entire year, there have been many benefits for the garment industry.
Last week, in our budget we waived the duty on fire safety equipment, which will encourage the owners to install fire-fighting measures cost effectively. We have given a tax holiday — if you set up a factory out of the city limits, the company will get a tax holiday for up to seven years — in our last budget. We have selected five special economic zones for this.
WWD: Did you find appreciation of all of these changes in your meetings in Washington?
T.A.: They were good meetings, more so because the people we met were also satisfied. They have started realizing that Bangladesh is doing an excellent job.
My meeting with Congressman [Sandy] Levin and USTR were very good, and also with Nisha Desai. I also met the undersecretary for labor. One of the important changes in terms of labor has been the fact that there are now 160 trade unions that have been registered in less than a year. For many years it was eight to 10 trade unions.
They said yes, we have seen that Bangladesh is definitely progressing and the action plan seems to have been taken after suspension of GSP [Generalized System of Preferences]. With the 16 point preconditions, most of those points we have already addressed, some will take a little time.
WWD: Can the growth of the Bangladesh economy sustain and help this change along?
T.A.: Altogether we are on the path of change. We are going for compliance in the industry, we are taking special care so that there is no accident like Rana Plaza, and the way Bangladesh is growing economically — our GDP has been more than 6 percent over the last three years, our growth of export is also very high, 13.1 percent. Our export is $30.5 billion, our reserves are more than $20 million. These are the things we explained as well as what actions we have taken for the safety of the workers, building safety and fire safety. It is a fact that we have taken a lot of action.
WWD: Do you fear the threat from other Asian countries in terms of the growth in the garment segment?
T.A.: No, rather we are going in for regional cooperation and growth in the name of BCIM — Bangladesh, Cambodia, India, Myanmar. Japan and China have expressed their interest in Bangladesh. We have just signed an agreement with China. They are investing $1.2 billion to set up a garment industrial park, so 300,000 workers will work here and we will get $3 billion from this part. This will happen within three years.
WWD: One of the concerns in the U.S. has been about the harassment of workers, especially when they set out to form or join trade unions.
T.A.: Whatever they have heard about the harassment of workers, etc., is not correct. They have started realizing that, too.
They do not want to see workers lose their jobs. They are interested to see that compliance is happening, that factories are well organized, well established, if there are any vulnerable factories, they should be relocated, so that the workers should not lose their jobs.
WWD: Political stability of Bangladesh continues to be a concern for some business heads, as well.
T.A.: After the elections there has been stability. There is no political unrest in Bangladesh. There is occasional violence — a day or two back, there was killing in Las Vegas, so this type of incident takes place. It doesn’t mean that Bangladesh represents political unrest.
WWD: Are factory owners themselves restless about the imposition of all these changes by the government and by outside agencies?
T.A.: The owners of factories in Bangladesh have also become careful. They don’t want to see a repetition of Rana Plaza. We are also improving the situation for factory owners: we have given that duty-free opportunity for the investor and we have also made zero duty for importing prefabricated building materials so that factories can be relocated more easily.
WWD: How do you see the tension between the Accord for Building and Fire Safety and the Alliance for Bangladesh Worker Safety affecting this process of change?
T.A.: There is a lot of change taking place with the accord, the alliance and the Tripartite Action Committee. The alliance is cordial and sympathetic. The alliance is doing a very good job because even if factories are closed and workers become jobless, the alliance is sharing the burden of the wages. Unfortunately, we are having a little problem with the accord — we are telling them that they must pay. Accord as a whole is not being very sensitive. Between the accord and alliance there is some misunderstanding. It has been decided that if the alliance has inspected a factory, then the accord cannot go and inspect them, but the accord is doing that. We have to stop that.
WWD: Do you fear the fallout from the shutting down of factories?
T.A.: After the factories were shut down, 19,000 to 20,000 workers have become jobless. That is a social problem. They must be given compensation. It is very difficult for a owner to make these kind of payments.
These things are all coming up, but the changes take some time. In another year, things will change radically. It is easy to talk about them, but come and see the challenges we are facing and how we are responding.
WWD: Yet there are complaints that change is happening too slowly.
T.A.: Facilitating formation of trade unions, strengthening relevant government agencies, including the appointment of inspectors, comprehensive assessment of fire and building safety, adoption of National Occupational Safety and Health Policy 2013, launching Better Work Program, establishment of hotlines, reviewing the BEPZA Act and so on. Things are changing. What more can we do?