RMG's New Trouble
The readymade garments (RMG) sector has undoubtedly been the major success story of Bangladesh. Its impact on backward linkage industries such as spinning, weaving and other textile industries has also been remarkable. There are still major gaps in the linkage between RMG and textiles, but there is little doubt that, once enough investment is forthcoming to effect integration, the clothing industry could be the vehicle for industrialisation of Bangladesh. Unfortunately, this same industry has also been plagued with some obnoxious malpractices. For instance the government has now moved against 319 RMG units for providing false documents in order to gain export quotas and other facilities.
The action taken by the Export Promotion Bureau (EPB) does not seem much, given that there are over 3,000 RMG units in the country. But it does show that this sector attracts "entrepreneurs" of the "quick buck" variety. This is a dangerous phenomenon, since RMG depends wholly on orders made by buyers in the USA and Europe. As recent experiences have shown, the importing countries are likely to pounce on the faintest hint of fraud or anything they construe to be an unethical or illegal practice. The threatened boycott of Bangladeshi RMG over child labour is one example. The European Union's threat to withdraw GSP (generalised system of preference, which guarantees duty-free exports) facilities following discovery of fraud is another. Although the malpractice cited in the EPB's list of 319 units relates only to national laws and rules, there is little room for complacency.
The nature of the industry's relations with importing countries is pretty delicate, but a trouble-free RMG has a huge potential in the international market. Therefore, it is imperative that both the government and the regulators are unsparing in their efforts to prevent fraud. The responsibility for this does not lie with the EPB alone, since the garments association, the BGMEA, plays a major role in the regulation process. Members' needs and the national interest demand that the association comes down heavily on those who are found to be engaged in fraud. In order to do this, the BGMEA needs to strengthen its monitoring capacity and improve coordination with the EPB. We are now looking at rapid acceleration in backward linkages to enable Bangladesh to compete in the quota-free export environment that will emerge in the year 2005. The last thing RMG needs now is another round of controversy.
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