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RMG survival hinges on capacity building

Speakers tell dialogue on post-MFA era

Star Business Report
Bangladesh has still chance to sustain in the readymade garment market in the post-MFA (multifibre arrangement) era, but the sector urgently needs capacity building for enhancing export competitiveness.
This was observed by discussants at a dialogue on 'MFA Phase out: Challenges in Bangladesh RMG Sector' organised by The Media for People, a policy research organisation, at the IDB Bhaban conference room in Dhaka.
Mustafizur Rahman, research director of the Centre for Policy Dialogue, said world's leading chain stores are opening their offices in Bangladesh though they know about the MFA phase out. "This indicates that US buyers will not quit Bangladesh in a hurry," said Rahman presenting the keynote paper at the dialogue.
Quoting a recent study of the United States International Trade Commission (USITC), Zillul Hye Razi, economic and political affairs
officer of the European Union in Bangladesh, said after phasing out of the quota system in the next year, US firms are likely to expand their sourcing from South Asia.
Moreover, some US firms consider that Bangladesh could emerge as competitive alternative to China for mass-produced and low-end apparel, he said.
The USITC carried out the confidential study upon request from the United States Trade Representative (USTR). The report assesses the textile and apparel industries of more than 40 countries as of June 2003.
According to the report, low labour cost, a near self-sufficiency in knit fabrics, duty-free access to major world import markets including the EU, Canada and Norway and mass production in basic garments are the major competitive factors for Bangladesh.
However, other speakers stressed the need for capacity building of the sector and urged the government to extend necessary
supports to help attain competitiveness.
They said reduction of leadtime, development of port efficiency and capacity, financing in setting up adequate backward linkage industries, establishing central bonded warehouses and improvement in utility services including gas and electricity are the major issues that need government support and initiative.
Quazi Moniruzzaman, president of Bangladesh Garment Manufacturers and Exporters Association (BGMEA), said the capacity building efforts have already been initiated by the industry stakeholders in cooperation with the government.
He, however, expressed his dissatisfaction over the government's silent position in financing the entrepreneurs of the RMG backward linkage industries with loans at lower interest rate. "Our neighbouring India has allocated 25,000 crore rupees to disburse among the entrepreneurs at only 5 percent interest," he said.
Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) President Monjurul Hoq said China, India and Pakistan would be the major competitors of Bangladesh in sustaining in the quota-free regime.
Another participant Golam Mustafa, former president of Bangladesh Frozen Foods Exporters Association, raised the issue of political unrest and urged the political leaders to give up negative politics for the greater interest of economy.
Citing his experience of a recent three-nation tour as a FBCCI delegation member, Mustafa said after presenting a paper inviting the Japanese investors to invest in Bangladesh, the first question he faced was "When is your next hartal?”