INTERVIEW

 

MD. Shafiul Islam (Mohiuddin)

President, BGMEA

 

One of the biggest assets of the country, the RMG sector, is facing new threats while dealing with the after-effects of the last global recession, and the fresh influence of the national budget that was declared recently. Many are predicting a rather dark future for the previously booming industry, and the new president of the BGMEA sheds light on the matter.

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Faria Ahmed

 

Cotton Bangladesh (CBD) : Readymade garment (RMG) alone earned about 78% of the yearly foreign exchange earning of the country reflecting on how it is an important contributor to our national economy. How has the government been facilitating this revenue-generating sector?

MD. Shafiul Islam (SI): Government has been very supportive to BGMEA for a long time. We started the journey in 1980s. All throughout we had different types of support, but in the last ten months especially, we have experienced a phenomenon growth. Behind this achievement, there are a lot of factors involved, a lot of problems which had to be overcome, and a lot more that we have been faced with this year.


Recently, there was an unprecedented price hike of raw materials, which lead to an increase in our importation cost by 75%. So, even though our export has increased by nearly 42%, the increase in importation cost, transportation costs, port charges, banking charges, and the overall cost of doing business has gone up, leading to an increase in the risk factor has gone up by 30 to 35 %. Currently, we are experiencing a clear decline in our RMG export.

CBD: How many locals are currently employed in the RMG sector?
SI: 3.5 million people of the entire population of Bangladesh are currently employed in the RMG sector.

CBD: What is our current amount of export?
SI: We have already crossed 14 billion dollars, and we are expecting to shift to 16 billion dollars by the end of this year. As mentioned earlier, the scope for development is immense, but there are certain factors that need to be overcome.

CBD: What percentage of the global garment demand is Bangladesh satiating at this point?
SI: 3-5%

CBD: What is the role of BGMEA is primary, secondary and tertiary levels of production, and in the ultimate export of the goods?
SI: We are providing service to our members, and we are giving facilities like regulating certain authorities of the government. We mostly engage ourselves for the welfare of our workers, safeguarding the industry, co-operating with the government with the making of policy, and suggesting when not to adopt certain policies that affect the RMG sector.
 

CBD: How did the recent Budget reflect the problems of the RMG sector, and is it facilitating the growth of this sector?
SI: In this year's budget, we have been noticing the reflection of this present situation. The unsold inventory, the high competition with neighboring countries like China, India, etc., who are trying to grab their buyers, are leading to a decreased export for Bangladesh, as buyers are shifting to the countries with the competitive edge. Moreover, the recovery from recession of USA has not taken place, and economists are suggesting chances of a double-dip recession. If we compare with last month, their unemployment rate had risen and is now at 9.1%, and this is indicating a scary situation in the US economy which is bound to affect our RMG exports. Then, there's the issue of world fuel price, and the volatile political conditions in the Middle-east, we can not expect the fuel prices to go down any time soon.
If we look at Europe: Greece, Portugal and Ireland are in debt, and the other wealthier countries like Germany and France are trying to rescue them. So, the overall world consumption of apparel has gone down, unlike what we had expected for this decade. At the same time, Turkey has imposed a safe guard duty, which was a potential market for us. Japan has opened up for us bilaterally, but India has the same access to export their goods with zero duty, so we may lose to the competition. So, the proposed budget has imposed duty from 0.40 to 1.5, which is a very dangerous step for the government to take, which may become suicidal for the RMG sector.

CBD: How can we overcome these hurdles and gain a competitive edge over neighboring countries?
SI: In Bangladesh, we have a resilient entrepreneur, and hard working workers. These are the only two things that we have. We do not have uninterrupted electricity or gas supply, we have numerous infrastructure, the Dhaka-Chittagong Highways problem, traffic in the city, and so on. Every single day, we are fighting these hurdles and remain competitive. But ultimately, these elements will stand in the way for future growth.

Positive Steps From The Government:

1. Development of Infrastructure is being dealt with by the government. They have allocated a higher budget for electricity and gas.
2. Dhaka-Chittagong highway is being changed from two lanes to four lanes. We think that current requirement is nearly six lanes, but still it is a good improvement.
3. 1400 MW has been added in national grid of electricity

Negative Thing about the Government:

1. Huge budget deficit is around 45 thousand crores, and we did not see any sort of proposal as to how they are going to negotiate the present inflation.
2. In the future, there will be a huge pressure on the foreign currency, especially on two sectors: RMG industry and remittance. However, in the near future, we do not see any chance of these sectors blooming.
3. Gas sector is still a big failure for the govt., affecting the RMG sector, and very soon investment will decrease, because infrastructure is of utmost importance.

CBD: RMG is a controversial sector when it comes to labour rights. What is the role of the BGMEA when it comes to protecting the rights of the RMG workers?
SI: The wage board has announced the new wage, which is an 80% increase in their salary, so the question of financial deprivation does not arise anymore. And like I said, the BGMEA is always looking out for its workers by suggesting policy changes.

CBD: as the newly elected president, what new policies do you plan to implement to help BGMEA and the Bangladeshi garment sector move forward?
SI: Just like my predecessors, my goal is simply to serve the industry, remove the barriers of industrialization, pursue and lobby the government regarding our sector, and help in designing policies which will make a business friendly environment. So, we act as a facilitator and service provider for our members.
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