EU's helping hand

At a time like this, it's music to our ears that the European Union (EU) has decided to accord duty-free access to the Saarc LDCs in order that they are able to face the post-MFA challenges. Under the new GSP facility taking effect from July this year, the Bangladesh garments industry will be able to use fabrics and raw materials from the Saarc and Asean countries. The particularly helpful part of the access to the 25-nation European market is going to be the local value addition content varying from zero to 25 per cent in place of the present value addition requirement for the EU market of 51 per cent.

This is a booster dose of support from the EU that we very much appreciate, and would at the same time urge the US to extend in the near future.

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The best practical approach of enduring quality for our garments manufacturers and exporters, however, would be to enhance local value addition to the manufacturing processes by setting up strings of backward linkage industries. We have been trying to do it for the last five years, but the pace of attainment of self-reliance leaves room for acceleration in this vital area.

The government has made a budgetary allocation for crisis management in the event of closures of smaller industries and retrenchment of employees. While the safety-net approach is welcome, although the provision might prove inadequate in the end, the government would do well to incentivise investment in building backward linkage industries.

Competitiveness of our garments products is as much a function of cost efficiency as it is that of gaining lead-time through port efficiency ensured by speeded up clearance formalities. While the government consciously creates an enabling environment for the garments business to thrive in the post-MFA era, the industry leaders for their part must strive to remain in the reckoning by complying with other standards set by major importing countries.