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Government must act quickly to lift Western travel alerts, clothing industry urges
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Government must act quickly to lift Western travel alerts, clothing industry urges

They also warned that failure to do so could result in a loss of business to competing countries.

November 25, 2024, 7:00 a.m.

Last modification: November 25, 2024, 7:17 a.m.

Mohammad Hatem (left), president of BKMEA, Nazma Aktar (center), union leader, and Faruque Hassan (right), former president of BKMEA. Illustration: SCT

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Mohammad Hatem (left), president of BKMEA, Nazma Aktar (center), union leader, and Faruque Hassan (right), former president of BKMEA. Illustration: SCT

Mohammad Hatem (left), president of BKMEA, Nazma Aktar (center), union leader, and Faruque Hassan (right), former president of BKMEA. Illustration: SCT

The caretaker government must make concerted efforts to persuade Western countries, including the United States and the European Union, to withdraw their travel alerts on Bangladesh and counter allegations of attacks on minorities, the leaders said of the clothing industry.

They also warned that failure to do so could result in a loss of business to competing countries.

Participating in a panel discussion organized by The Business Standard on Sunday, Abdullah Hil Rakib, former senior vice-president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), pointed out that the influence of chief advisor Prof. Muhammad Yunus, an internationally respected figure, could be used. to remove these travel alerts.

“A letter or even a tweet from him could have a significant impact,” Rakib suggested, adding that Yunus’ global notoriety could help reassure foreign buyers.

Faruque Hassan, former president of BGMEA, highlighted the growing apprehension of international buyers. “They are hesitant to travel to Bangladesh because of the travel alert. While we try to convince them, the process is slow, forcing us to meet them abroad.”

According to Hassan, this undermines the industry’s ability to negotiate competitive prices.

Sirazul Islam Azad, human resources director of Bitopi Group, has recounted how a Spanish designer canceled a planned visit to Bangladesh last week even though he had booked a ticket, citing his country’s advisory against traveling to Bangladesh.

Md Hafizur Rahman, administrator of the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI), revealed that a US FDA delegation, supposed to certify Bangladeshi pharmaceutical products, had also canceled its trip.

“If the travel advisories are not withdrawn, they will have a negative impact on all sectors,” Rahman warned, while noting that the caretaker government is working to resolve the problem.

Participants also cited ongoing unrest and deteriorating law and order as another hurdle for Bangladesh’s textile industry.

After the student uprising that toppled Sheikh Hasina’s administration, it took weeks for police stations to resume operations. Key industrial areas, including Ashulia and Gazipur near Dhaka, have seen months of disruption, made worse by blockades imposed by various groups.

Nazma Akhter, president of the Sommilito Garment Sramik Federation, said the seizure of the president’s residence demanding his resignation and the dissolution of the BGMEA board had further eroded the confidence of foreign buyers.

The panel discussion, moderated by Sajjadur Rahman, Deputy Editor of The Business Standard, brought together industry leaders, economists and researchers. The participants stressed the urgency for Bangladesh to stabilize the situation and rebuild trust with international partners to preserve the country’s economic lifeline.

Infographic: SCT

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Infographic: SCT

Infographic: SCT

Regain buyer trust

Mashur Reaz, president of Policy Exchange Bangladesh (PEB), said that even 115 days after the formation of the caretaker government, foreign buyers are yet to regain confidence due to continued instability in various businesses and industrial zones.

“We are currently addressing issues such as firefighting, but a strategic solution is needed to restore buyer confidence,” he added.

Mohammad Hatem, president of BGMEA, pointed out that the removal of the BGMEA board, driven by “personal vendettas,” could further erode buyer confidence.

Referring to one of Ashulia’s largest exporters, Hatem pointed out that buyers are reluctant to place new orders at the company’s factories.

“This has a negative impact on the employment of workers, on the national economy and on factory owners,” he warned.

Introduce a minimum wage for all sectors

The BKMEA president said there are 44 sectors in the country and asked how many of them have a minimum wage structure.

“The government should establish a national minimum wage for all sectors, allowing factories to add value based on workers’ skills,” he suggested.

Sirazul Islam Azad, Bitopi Group’s human resources director, proposed that the minimum wage for ready-made garment workers could serve as a benchmark for other sectors, effectively functioning as a national minimum wage.

“If implemented, factories could reduce wage gaps between workers based on skills and experience through internal policies, thereby reducing unrest related to wage disparities between levels,” he said. he explained.

Nazma Akhter also expressed support for the introduction of a national minimum wage in all sectors.

Postpone the exit of the LDCs

Bangladesh has the option to defer its LDC status; otherwise, it risks facing significant challenges and losing its current business advantages, Mashur Reaz said.

He noted that the country has failed to build the capacity needed to improve its competitiveness over the past two and a half years, leaving the economy vulnerable to macroeconomic challenges.

“We urgently need to improve our competitiveness as Bangladesh is 7-8 years behind in terms of skills and technological adaptation,” he said.

Citing the example of Fiji, Reaz mentioned that the country canceled its LDC status after five years due to economic difficulties.

Highlighting the results of a survey by the Japan External Trade Organization, he said 61 percent of Japanese companies indicated they would stop trading with Bangladesh if duty-free benefits, such as GSP or similar arrangements, were no longer available after entry into the PMA zone.

He added that exports to the EU could face tariffs of at least 9% after graduation, while competitors like Vietnam will continue to enjoy duty-free access.

Separation of business and politics

Mashur Reaz said there must be a clear separation between business operations and political activities to avoid negative effects on the business environment. “No one should suffer simply because of their political affiliation.”

Mohammad Hatem added that political leaders should not hold leadership positions in business associations, as this could create challenges for the sector during political transitions.

Nazma Akter pointed out that some clothing owners have politicized the industry by leveraging their position to gain power and amass billions in wealth.

“Through their political connections, they shifted their bank loans to state-owned banks, and some are now in hiding due to corruption or legal action. This has created significant risks for the sector, as buyers fear spending orders in Bangladesh,” she explained. .

She added: “Buyers are worried about doing business in Bangladesh because the people they have worked with for over 30 years are now either in prison or in hiding. This raises doubts about the future and stability of the industry. »

Stop False Lawsuits Against Businesses

Sirazul Islam Azad pointed out that false complaints were filed against BGMEA leaders, notably against the director general of his group, while the latter was abroad at the time of the alleged incidents.

Mohammad Hatem added that such fake deals force some business owners to leave the country, disrupting their daily operations.

Sumon Kante Singha, general manager of human resources and compliance at Fakir Group, said that after August 5, false allegations were made against the group’s board of directors, even though it had no political involvement under the previous government regime.

“This has led buyers to question the integrity of our owners, which is very unfortunate and damaging to both the reputation of the company and the country,” he said.

He alleged that these cases were orchestrated by groups active in the jhut (clothing waste), often with political support.

Lawyer Jafrul Islam Sharif noted that the tripartite agreement responding to the 18-point demand during the RMG unrest was a positive step towards normalcy but lacked enforceability. “Only two points – surcharges and night bills – benefit workers,” he added.

Sharif also warned that the new increased holiday circular could create instability in the ready-made garment sector as it does not provide any clear guidelines for the private sector.

Tanim Ahmed, senior research associate at CPD, observed that following the student movement, there is now an opportunity to reduce additional business costs caused by bribes.

Citing data from the RMG Sustainable Council, he said timely payment of wages could solve 80% of factory-related problems. He further highlighted that 33% of factories, employing 55% of workers, could be affected by the EU Corporate Sustainability Due Diligence Directive.

Ahmed also warned that contract factories, which often fail to comply with labor laws and wage board requirements, could face significant challenges after 2026.