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Bangladesh, at present is the 3rd highest exporting nation after China and Vietnam, currently. COVID 19 has hugely affected the constant development of the exports in BD and RMG sector is no different from that. The nation this year celebrates its 50th Birthday, a much-awaited celebration came in a time when BD is soon to move from LDC (Least Developed Country) to becoming a developing country.
Generalized System of Preference (GSP) is only provided to the countries which are considered as LDCs. This is a mechanism through which the developed nations provide tariff free access on certain trade items, to aid the development of an LDC.
Bangladesh has been enjoying trade benefits under the GSP quota from EU of around 64% of Bangladesh’s total share of exports. However, Bangladesh will soon graduate from LDC status to a developing nation. This will automatically remove the GSP facility that Bangladesh is currently enjoying to many Developed nations.
In the case of the EU, it has assured continuance of GSP for Bangladesh for up to 3 years following graduation to developing nation status, which is 2027. In one study, the BGMEA has estimated that loss of GSP facility will amount to an annul loss of 4 billion dollars in the RMG market. Therefore it is very important for Bangladesh to ensure continuance of the ongoing benefits that it enjoys under the GSP facility and as a member of the current RMG sector, the country must develop an action plan to convince the EU on the ground that Bangladesh well qualifies for the GSP plus facility.
One way to ensure this beyond 2027 is by qualifying for the GSP plus facility provided by the EU, already sought by commerce minister Tipu Munshi. Although the export of RMG in Bangladesh is higher than the existing threshold of allowing GSP plus, the EU should allow it for Bangladesh on the grounds of socio-economic development, employment generation, women’s empowerment and poverty alleviation, opined Tipu Munshi.
This facility is quite similar to the present GSP facility, which shall ensure tariff free access of Bangladeshi readymade garments in the EU markets provided that 27 international conventions are ratified by Bangladesh. These include a variety of policy decisions including various amendments to labour laws, conditions related to workplace safety, formation of trade unions and laws on child labour.
While Bangladesh has made significant progress on nearly all the Conventions through implementation of newly amended labour laws (Latest amendment was made in 2015) and increase in the number of LEED certified green factories (91 factories in Bangladesh), compliance with laws relating to existence of separate EPZ laws, which restrict the full application of labour laws in the EPZ areas.
Belonging from the mainstream RMG sector, the main concern might be the concept of making trade unions mandatory. Bangladesh has a history of unsuccessful and problematic trade union activities, let alone giving rise to any positive functionality. In Bangladesh, at present, there are 80 registered trade unions and 15 trade union federations in the RMG sector where the total number of members is 50,149 (only 2% of the total employed workers in this sector). The entire concept of trade unions is not wholly welcomed even by many workers, who have traditionally worked for decades without any union. However, to match the nations we export goods to; we do have to entertain the idea of trade unions but there is scope for improvements that shall be greatly necessary to enjoy full functionality of the unions.
We shall first need to work on the labour law amendment. As a Barrister myself, from my stand-point, I believe I have more to offer in this case, from both sides. Any amendments made should be such that benefits both labourers and the trade itself. The existence of either is very much interdependent. The most important need of the time is the formation and successful functioning of an industry friendly trade union system. The leaders who are appointed to follow and execute the proper functionality of the trade unions do not often follow the core rules of the union itself. The traditional trade union practices are not only in the best interest of either parties, but they do not mesh well with the changing exporting practices. The RMG sector is the highest foreign currency earning sector of the nation, and whichever system is adhered for the trade unions, it should be done so as to ensure that the economy is benefitted and so are the workers.
At this point it is important to address the challenges that lay ahead of all these above mentioned amendments that we are expecting. The next area for concentration shall surely be diversification, in both products and market. ‘New Markets’ shall be the new catch for both the big established industries and the new comers in this sector. The lucrative orders lying in the new markets shall be the new reason for existence and profitability of many industries mainly as a post COVID means of re-growth. Through rigorous research, we shall be able to short list these markets and reach them before our competitors do. Product diversification shall be another very important resort of market capture, where we shall move to the production of small quantity designer based items in a major proportion.
Another major development shall be in the technology sector. Besides increasing worker efficiency through effective training, automation must be seen as an effective means too. The competitive market around the world requires industries to do price competition management. Survival is a matter of proper and rigorous management.
Bangladesh has come a long way with RMG sector being the major exporting sector of the country. With COVID 19 affecting the sector pretty bad, besides other foreign policies, Bangladesh is not yet ready to implement a full fledged trade union right away, all throughout the RMG sector. It is just a matter of time that the nation shall settle in with the new changes and implement the trade unions, but until then, it shall be a huge blow to the economic development and business growth of the nation if the extended time span is not allowed.
