Bangladesh Clothing Industry Collapses

by Tabibul Islam

Jamila is now working as domestic help and is bracing herself for hardship ahead. She was among the hundreds of thousands of garment factory workers laid off in the last two months, and it seems likely that more will be joining their ranks soon.

Global recession coupled with the Sept. 11 terrorist attacks in the United States have dealt a heavy blow to Bangladesh's garment sector, with at least 1,000 ready-made clothing factories (almost 30 percent of the total) already forced to close in Dhaka and Chittagong.

But experts fear more will be forced to shut down if the situation does not improve -- with serious repercussions for the country's economy.

The garment sector is one of Bangladesh's key export earners, earning at least 76 percent of the country's annual foreign exchange revenues that reach more than $5 billion.

It is also one of the country's biggest employers, accounting for nearly 10 million people who depend on it directly or indirectly as a source of livelihood.

But Kutubuddin Ahmed, president of the Bangladesh Garments Manufacturers and Exporters Association (BGMEA) says that now, "we are faced with a disaster. Over 60 percent of the garment factories are lying idle."

The suddenness of the some of the closures left many garment factory workers in shock.

Mariam, 19, is still teary-eyed after losing her job just a few days ago. She says, "It seems to me that somebody has taken away the earth from under my feet. I am at a loss to understand how should I eke out my existence and support my old parents at my village home."

The sector's fortunes began unravelling even before the September attacks in the United States. Ahmed himself admits that the ready-made garments industry has been feeling the pinch since the passage of the Trade Development Act (TDA 2000) in the U.S. Congress in May last year.

The act allowed 72 countries of sub-Saharan Africa and the Caribbean to have duty and quota-free access to the U.S. markets, and presented competition for local exports.

According to garment manufacturers here, the recent global economic slowdown and the September events merely worsened an already dismal situation.

Indeed, for several months now, garment manufacturers have been trying desperately to have their products granted quota-free and duty-free access to the U.S. market.

Said Ahmed in a news conference here last week: "Without having duty-free and quota-free access of Bangladesh's apparels to the U.S. markets, it will be difficult for our garment industries to survive."

The U.S. market is crucial to the sector, having been the source of some 45 percent of Bangladesh's total apparel export earnings of $4.86 billion last fiscal year.

But a study by the Bangladesh garment manufacturers' group now says that Bangladesh's apparel exports to the U.S. market in the current fiscal year could plunge by 60 to 70 percent should the downturn in the global economy continue.

This means the country's total apparel export to the United States may drop by $600 to $800 million in the current fiscal year from the previous record figure of $2.19 billion.

So far, however, most efforts are still being channeled into how Bangladeshi-made clothes can once more occupy thousands of U.S. store racks and shelves.

Just this November, a Bangladeshi garment manufacturers' delegation accompanied the commerce minister in his visit to the United States in a bid to lobby for quota-free and duty-free access for Bangladesh's apparel exports to the U.S. market.

Dhaka has yet to hear a positive response from Washington about its proposal, prompting some local business leaders to say that perhaps the United States would be more sympathetic if Bangladesh agreed to export natural gas.

Representatives of international oil companies as well as Western diplomats -- especially those from the United States -- have been pressing Dhaka to allow the export of some portion of what they say is Bangladesh's "huge" gas reserves.

The majority of the international oil companies now exploring for oil and gas in Bangladesh are from the United States.

In the meantime, the garment makers' groups have put forward some suggestions on how the government can help the sector in the current crisis.

The suggestions include 15 percent cash incentives to the garment factories, reduction of port charges, bank interests, diversification of export trade and withdrawal of the value added tax imposed on different stages of making apparel.

For its part, the Bangladesh Rural Advancement Committee (BRAC) -- one of the largest non-government organizations in the country -- has come out with a program for the rehabilitation of the laid-off female garment factory workers.

Of the 300,000 garment factory workers who lost their jobs so far, 90 percent are women.

The BRAC program offers microcredit ranging from $40 to $400 to get the women started in their own businesses. But the response from the retrenched female workers has been poor, and some are blaming the lack of entrepreneurial skills of most of the women.

Labor activists say the woes of the retrenched garment factory workers have been compounded by the non-payment of their wages along with their other benefits, in violation of local and international labor laws.

Amirul Huq, secretary general of the National Garment Workers Federation, has criticized garment factory owners for laying off workers without paying back wages.