The survival of RMG beyond 2004: A big question mark

Today, this industry contributes 76 per cent of the total national export earning. The growth of backward linkage industries like fabric, accessories is due to the RMG sector.

The country's growing sectors like Banking, Insurance, Hotel and Restaurant and Tourism, Transport, Telecommunication including consumers' industries are the gifts of the RMG. Thus the sector indirectly employs over 10 million people of Bangladesh.

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The vibrant growth over a period of two decades has been possible, principally, due to the preferential treatment of quota protection in the US and GSP facilities in the EU enjoyed by Bangladesh.

BGMEA, a conglomerate of 3600 Garment Manufacturers and Exporters directly employs over 1.8 million workers, 80 per cent of which are women and most of them are from the downtrodden rural households who would otherwise have been the net burden to the society. RMG has turned them into income generating members of their families on one hand and critical parts of the engine-of-growth of Bangladesh on the other. Their employment in the garment sector has enshrined the women empowerment in Bangladesh and has changed their attitude to modern life.

The contribution of RMG to the national economy can hardly be over emphasized. However, the remarkable contributions of the industry may be summarized as:

-In 2001-2002 fiscal year, total export earnings from garment industries was US$ 4583 Million which was 9.5 per cent of Bangladesh's GDP.

-Readymade Garment (RMG) Industries have generated direct employment opportunities for 1.8 million workers of which 80 per cent are female workers. Besides, more than 0.8 million workers are engaged in accessory industries related to the garment industries.

10 million people are indirectly dependent on this sector.

-With the growth of RMG industries, the business of banks, insurance, hotels, tourism, transport, buying houses, C&F, shipping and many other accessory operations, have flourished to a great extent.

-Share of RMG industries in the manufacturing GDP of the country during the fiscal year 2001-02 was about 29.7 per cent.

-The sector disburses US$ 302 million as remuneration of workers and employees.

-Garment Industries pay US$ 35.50 million as interest and L/C charges to the banking sector.

-In insurance sector, the premium earnings from RMG sector amount to US$ 5.83 million.

-The sector pays US$ 62.33 million to the shipping business.

-It pays US$ 26.17 million to the domestic transportation sector.

-RMG generates revenue earnings in the forms of postage, license and renewal fees to the tune of US$ 6.17 million.

-The sector contributes US$ 1 million to the Export Promotion Bureau.

-It contributes US$ 2.33 million as direct tax to the national exchequer.

-An amount of US$ 3.5 million comes as professional service charges from RMG sector.

-The RMG sector pays US$ 13.67 million to the engineering sector.

-It pays an amount of US$ 3.67 million as Gas and WASA bills.

-The information technology sector gets US$ 9.5 million from this sector.

-The sector generates US$ 25 million as earnings for the real estate sector as office and factory rent.

-The hotel and tourism sector earns US$ 4.33 million from the sector.

-0.2 Million workers are engaged in the Waste Recycling Industry, related with the industries.

-The sector has helped growth of many domestic consumer industries in the country.

In addition of its contribution to the national economy the RMG is performing its share of responsibility to social sector development some of which are summer sized below:

BGMEA has set up world-wide replicable model for eliminating child labour from the garment sector of Bangladesh with the active support of Mr. David N. Merrill the then US Ambassador in Dhaka. After retrenching these child labours, BGMEA has been providing non-formal education, skill development, part-time employment and a subsistence stipend to compensate their income loss with the cooperation of ILO and UNICEF.

BGMEA has established ten Medical Centers for the garment workers in Dhaka, Chittagong and Narayanganj in collaboration with UNFPA. The Medical Centers are providing free primary health care, medicine and advocacy services on Reproductive Health issues to the garment workers.

Giving a top priority on prevention of fire and eventual evacuation, BGMEA conducted a Crash Programme in September 2001 to raise further awareness among the workers and the management. Regular fire evacuation drills have been made customary to all BGMEA member factories.

Since October 1998, with the help of the United Nations Population Fund (UNFPA) and Government of Bangladesh, BGMEA is implementing a project titled "Family Welfare and Reproductive Health Education Services for Garment workers" in Dhaka. More than 100,000 workers have been benefited from this project and has contributed to the reduction of population growth in the country.

The United Nations Population Fund (UNFPA) will provide technical assistance worth US$290,000 to BGMEA during the period 2003-2005. The assistance will be used for creating awareness of the garment workers about reproductive health, gender issues, prevention of Aids. Under this project, a total of 300,000 Readymade Garment workers of 375 factories in Dhaka and Chittagong will get services.

It has been mandatory to cover workers under group insurance policy of all member factories.

BGMEA has undertaken construction of a 150-bed modern hospital in its own land at Mirpur, Dhaka to provide effective health services to garment workers.

A three-year project embodying improvement of work place environment, improvement of occupational health and safety and labour standard has been going on with the partnership of BGMEA and ILO.

The contributions of the garment industry as has been outlined above have made the sector "the Engine of Growth" which has been possible due to the preferential treatment in the form of Quota in the US market and GSP facility in the EU market.

But, unfortunately, the engine seems to have been dwindling down with the phasing out of the MFA and introduction of the Free Trade regime under WTO from January 01, 2005. For being the world's one of the least developed countries, the growth of Textile was not enough to feed its rapidly growing Readymade garment industry with required quantity of fabrics. As a consequence the export of Bangladesh garments will be severely marginalized in the Free Trade regime where the Textile producing giants like China, India, Pakistan, Hong Kong, Taiwan and Indonesia will take the market share to their hearts' content as the benefit of the Free Trade World.

In the backdrop of the above, 72 countries of the LDCs in the Caribbean and Sub-Saharan African countries have been offered duty free access to US market under TDA-2000. Unfortunately Bangladesh has been left out of the preferential treatment of US Government.

As an impact of the above, maximum number of garment factories will go out of business throwing 800,000 to 1,000,000 of the workers out of jobs which has been substantiated by international studies and seminars in Europe. This will bring about a socio-economic havoc to Bangladesh the incidence of which might be felt outside. Because the retrenched women workers will find it difficult to go back to the village home of which they have the bitter socio-economic experiences on the one hand and have adopted to the urban life style on the other. The retrenched male workers will not have any possible alternative of employment elsewhere, but to add to the social evils and anarchy, which will go beyond any boundary measures of the government. That means a total socio-economic imbalance might emerge in the country.

Bangladesh, even being an LDC, has been contributing to the world peace and tranquility. For example: Bangladesh is the biggest contributor of peacekeeping forces to the United Nations.

The country has also been called the 'World Leader' by the US State Department in the effort to end the Child Labour from Garment sector which is being replicated in many countries under the supervision of ILO.

In view of the above, it is explicitly clear that the ability to keep the pace of socio-economic development in Bangladesh and to maintain the sustainability of the garment export in the international market depends on its getting the duty free access to the US market.

We have come to know that 18 Muslim countries including Bangladesh are being considered under a new Trade Act providing duty free access of their exports to the US market. If this proposal comes to light, Bangladesh will be able to overcome the possible socio-economic disaster after phasing out of MFA on January 01, 2005.

In fine, we urge upon the Government of the United States of America to allow duty free access of readymade garments of Bangladesh to US market to salvage the industry thereby minimising the forcible socio-economic imbalances in Bangladesh which will not have any significant impact on the US economy.

M Jinnat Ali Mian is the second vice president of BGMEA.