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April 2, 2000

Bangladesh Garments Manufacturers and Exporters Association (BGMEA) on Saturday put forward a set of proposals including formation of a high powered Apparel and Textile Development Authority to look after the export oriented readymade garments sector (RMG).

The proposed authority would act as a strategic policy-planner and coordinating body to solve the critical problems of the industrial sector related to port, shipping, customs, civil aviation, labor, backward linkage industry and infrastructure. Possibly led by a Secretary, the authority would be turn under the Prime Minister's Secretariat.

The idea of such an authority, alongside taking of innovative steps, was mooted to face the challenges of the country's RMG sector which might be confronted with in the work of 2004, when Bangladesh would have to compete in a quota-free international market as per the rules of the World Trade Organization (WTO).

BGMEA President Anisur Rahman Sinha became explicit with his worries about the future of the sector and afterward some of the timely suggestions at a lunch offered in honor of Finance Minister Shah AMS Kibria at the Pan Pacific Sonargaon Hotel, Dhaka. Governor of the Bangladesh Bank Dr. Mohammad Farash Uddin, Chairman of National Board of Revenue Abdul Muyeed Chowdhury and high officials of the banking sector were among the guests.

"If the export market for the readymade garments is shifted somewhere else, hundreds of garment industries will face closure, leaving 1.5 million workers completely unemployed," Sinha said adding that the supportive industries would also be stagnant and closed in some cases.

He gave statistics that the annual growth rate at the RMG sector was 15 to 20 per cent during the first five years, but it fell to only 6 per cent in the 1998-99 fiscal, which he said, "is a matter of concern."

Emphasizing on long-term policies to make RMG sector viable, the BGMEA leader pointed out that the country's foreign exchange earnings would come from three major sources - remittance, foreign aid and RMG which alone would contribute 75 per cent of the total. "Any damage to this sector will have a disastrous impact on the government's expenditure as well," he cautioned.

Giving his view, the finance minister said if the country rightly got well prepared for the anticipated reality of the 2005, the garments sector would remain still the major source for the country's export earnings. "We in the government are taking initiative to protect the RMG as a huge Sector," he said. He reiterated the government's export-led policy and mentioned that export would be the cutting edge of the economy.

He called upon the garment owners to come forward with investment, including joint venture if needed, in setting up of backward linkage industries, and assured of necessary cooperation from the nationalized commercial banks (NCBs). He urged the authorities of the NCBs to devise syndication to finance the large projects.

The minister warned that private banks especially foreign ones would not expand unless they financed long-term local industrial projects side by side trade financing.

In his speech, Bangladesh Bank Governor Dr. Farash Uddin stressed the need for policy support and establishment of backward linkage industries for survival of the RMG sector. He also suggested that the garment owners should properly assess and increase value addition in RMG.

He strongly felt that the BGMEA should take long-term plans to ensure fundamental rights of the working people - food, good living conditions, healthcare and education - to increase their level of productivity.

The BGMEA chief proposed for accumulation of a fund amounting to 500 million US dollars for opening letter of credit (LC) on sight basis to save at least 200 million dollars that are now being paid for foreign exchange as interest of two billion dollars of the back-to-back LCs against export volume.

In response, Kibria expressed his readiness to consider accretion of the fund, saying if contribution was available from the BGMEA or other sources, the government could also provide with something in so doing.

About the functioning of the proposed Apparel and Textile Development Authority, the minister thought that initiatives like that required political leadership rather than bureaucratic one which he said would have traditional mindset. Besides, he said, the Prime Minister, who has had already a political support for the RMG sector, might not have scope to get involved in the process. "Yet this could be discussed."

Sinha later told the newsmen that formal discussions in this respect would be held with the government leaders. He cited the example of success of the Jamuna Multipurpose Bridge Authority (JMBA) in this regard.

The BGMEA leader further sought permission of the government through the Finance Minister to form an apex body of the exporters styled as Federation of Exporters Association of Bangladesh to promote the country's export.

Source : The Bangladesh Observer