According to a new study Vietnam is likely to overtake Bangladesh in the global apparel export market share in next 10 years once the Trans Pacific Partnership (TPP) takes shape. And most of the newspapers were focusing the news in the last couple of days. According to the report the TPP is a proposed free trade agreement, US-led trade pact involving 12 countries – Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the US and Vietnam that collectively account for 40% of the world GDP. It is currently under negotiation and is likely to take effect in 2015. According to a research reported by Standard Chartered Bank that released in January, the agreement is likely to benefit Vietnam’s apparel industry, while hurting South Asian competitors like Bangladesh and Sri Lanka. Report said Vietnam could overtake Bangladesh in global apparel export market share by 2024, raising its share to 11% from 4% currently. Bangladesh’s market share would increase only marginally in this scenario to 7% from current 5%, while Sri Lanka’s would decline from the current 1%. On this basis, Vietnam would beat Bangladesh to become the second-biggest apparel supplier after China when its apparel exports swells to US$115bn.
If no TPP deal is struck at all, Bangladesh and Vietnam are likely to stand neck-and-neck by 2024, each with an 8% apparel export market share.
The news has added additional pain to the local manufacturers who have already been counting heavy losses every day due to the non-stop transport blockade and frequent strikes since January 5 that paralyses Bangladesh.
“It will bring disaster for the country’s apparel industry, the mainstay of the economy, once the TPP is done,” President of Bangladesh Garment Manufacturers and Exporters Association Atiqul Islam told recently. BGMEA president Atiqul Islam said, ‘The US buyers might start to build relationship with Vietnam exporters right now due to the current political upheaval’. So current situation of Bangladesh economy especially RMG industry is not fine.
Besides many news of loss and decay in the sector, some good news also broke out; i.e. DTG gets $200m-plus order, Italian brand donates for Rana Plaza victims, Danida finances for safety projects and Bangladesh Bank declares green finance etc. As a regular section we highlight here some important updates on Bangladesh RMG industry.
RMG makers threaten to launch tougher movement
Strongly protesting the ongoing political unrest, RMG manufacturers have threatened to launch tougher movement if the crisis is not resolved for the sake of restoring a business friendly environment in the country. They issued the warning at a day-long joint hunger strike held in front of BGMEA head quarters in the city on 14th February to put pressure on the political parties to end the ongoing political unrest that already took heavy toll on the sector. Bangladesh Garment Manufacturers and Exporters Association (BGMEA), Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) and Bangladesh Textile Mills Association (BTMA) jointly organised the hunger strike as per their previously announced programme. Professor AAMS ArefinSiddique, vice chancellor of Dhaka University broke the token hunger strike in the evening by offering them water and juice. The businessmen started their token hunger strike at 11 am with national anthem.
“Buyers have already started searching for alternative outsourcing countries for importing RMG products due to our political unrest,” said BGMEA President Atiqul Islam. For more see Dhaka Tribune, 15-02-2015
BB to create $500m green fund for textile
The central bank will set aside $500 million of low-cost funds for textile factories to help them adopt eco-friendly technologies and practices, Governor AtiurRahman said on 14th Feb. The money will come in addition to the existing export development fund (EDF) of $1.5 billion and will be named Green EDF, he told a discussion at the office of Policy Research Institute of Bangladesh in Dhaka.
PRI organised the discussion on “access to finance: environmental sustainability in the textile sector” in association with the International Finance Corporation. At present, Bangladesh Bank is offering the EDF to exporters at a rate of LIBOR (London Interbank Offered Rate) plus 2.5 percent for six months. An exporter can borrow a maximum of $15 million in foreign currency. Ahsan H Mansur, executive director of PRI said inefficient resource use and poor environmental practices are major challenges for the textile sector. The textile factories in Dhaka currently consume 1,500 billion litres of groundwater annually to produce five million tonnes of fabric, with every kg of fabric gobbling up 300 litres against the global standard of 100 litres per kg of fabric. For more see The Daily Star, 15-02-2015
Garment makers demand fair price from EU retailers
Garment makers asked on 17th February to European retailers to pay prices which are proportionate with the rising costs of production at factory level. The exporters raised the issue of fair price at a meeting with the visiting European Union parliamentary delegation in Dhaka. The delegation also wanted to know about the status of factory inspection by Accord and Alliance. Both the agencies have completed their primary inspection of about 1,700 factories in September last year. Now the Accord and Alliance are monitoring the progresses made on the feedback given after the primary round of inspections. The EU is an important trading partner for Bangladesh as 60 percent of the country’s exports are destined to this bloc every year. For more see The Daily Star, 18-02-2015
Italian brand Benetton pledges fund for victims
Italian fashion retailer Benetton has agreed to pay into an international compensation fund for victims of the Rana Plaza factory collapse in Bangladesh in which 1,138 people died, nearly two years ago, the brand said. The decision was reached following an advocacy campaign that garnered more than one million signatures demanding the Italian company contribute to the fund. More than a million people signed a petition on the campaigning website Avaaz urging Benetton to pay up or face embarrassing protests during next week’s Milan fashion week.
Benetton is the last major Western company that had agreed to commit funding to the United Nations-backed Rana Plaza Donors Trust Fund as the company was also used to bought products from one or more of the five garment factories destroyed in the collapse in April 24, 2013, industry sources said.
Other Western companies that had suppliers producing at Rana Plaza include Swedish retailer Hennes&Mauritz AB and Wal-Mart Stores Inc.
Production carried out by suppliers for Benetton at Rana Plaza accounted for less than 5 per cent of the total output produced at the building, according to a spokesman for the Italian company, who has been quoted by a leading western media.
The advocacy campaign was launched as some brands were dragging their heels over financial aid to survivors and families of victims in the run up to the second anniversary of the disaster. Global trade union bodies that have campaigned on the issue welcomed Benetton’s move but criticised the lack of clarity over the amounts. However Benetton said in a statement that how much it would put into the Rana Plaza Trust Fund was still being worked out in collaboration with a “globally-recognised third party”, which was seeking to establish the principles underlying how much international companies who used the factory as a supplier should pay. For details see
Daily Observer, 22-02-2015
Garment exports to Japan likely to decline as consumer incomes drop
Bangladesh embassy in Tokyo has feared that Bangladesh’s garment export to Japan is likely to decline in the coming days as net income of the Japanese people has fallen. Trade councilor Hasan Arif at Bangladesh embassy in Tokyo expressed the fear recently in a letter to commerce ministry in Dhaka. As per the trade councilor letter, Bangladeshi exports to Japan during July-October period this fiscal is less 0.81% or $2.40m than the strategic target which was $296.45m. The net income of Japanese people fell by 16% in April in 2014 while Prime Minister Shinzo Abe’s decision on whether to proceed with the next proposed sales tax hike in October 2015, to 10% from 8%, the letter reads. It said the Japanese consumer spending is 60% of Gross Domestic Product of the country. Meanwhile, Export Promotion Bureau’s recent data showed at end of FY2013-14, Bangladesh’s exports to Japan amounted to $540m. In 2012-13 year it was $519m. For more see Dhaka Tribune, 16-02-2015
BGMEA to assess environmental impact of garment units
Bangladesh Garment Manufacturers and Exporters Association has taken initiatives to assess the environmental impact of small and medium garment factories through extending pilot projects. BGMEA in association with the Promotion of Social and Environmental Standards in the Industry (PESP) of GIZ have extended the initiatives styled Cluster-based approach to improve environmental performance in the factories.
The BGMEA has primarily initiated the pilot project bringing five non-wet garment processing small and medium sized factories into its net to assess the environmental impact, BGMEA leaders said. According to information, the pilot project started on 22 April last year while the five factories, second tire members of BGMEA, were taken into account. The project will end on March next. Meanwhile, the BGMEA seeing the progress of the project sought cooperation of GIZ. It was learnt that GIZ has extended its cooperation and signed a Memorandum of Understanding (MoU). Following the MoU, GIZ will provide technical support to end the pilot project. For more see Daily Sun, 03-02-2015
DANIDA to fund Tk 120m for RMG workers’ safety research project
DANIDA of Denmark will fund a research project of Tk 12 crore (120 million) equivalent to 9.7 million Danish Kroner for investigating and developing workplace health, safety and productivity of garments industries in Bangladesh, which will continue for four years.
Twelve researchers from Bangladeshi Universities and four researchers from Aalborg University will participate in this large research project, according to a press release issued by DANIDA in Dhaka. In this regard a ‘letter of Intent’ was signed in Dhaka between the VC of Ahsanullah University of Science and Technology (AUST) Prof. Dr. A. M.M. Safiullah, VC of Jagannath University (JnU) Prof. Dr. MijanurRahman and the project leader Professor Peter Hasle of Aalborg University. For more see Daily Observer, 08-02-2015
Japanese experts monitor earthquake drill at RMG unit
A team of Japanese experts on 14thFabruary monitored an earthquake evacuation drill at a garment factory here to educate the RMG worker how they will save themselves in a jolt, reports BSS. The drill named “CBDM” (Community Based Disaster Management) was conducted at DK Knitwear Ltd under CNCRP project (Capacity Development of Natural Disaster Resistant techniques of Construction and Retrofitting for Public Buildings), implemented by Public Works Department (PWD) with technical support of Japan International Cooperation Agency (JICA). A high official team of Bangladesh Fire Service and Civil Defense also monitored the evacuation drill. After the tragic incident of Rana Plaza, JICA expert team leader Fumio Kaneko said the Japanese government planned to share its disaster management experiences and technology with the Bangladesh garments industry. He said as part of the initiative, they have monitored the evacuation drill on that day. For more see The Independent, 15-02-2015