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WB stresses continuous efforts to reform garment sector

Star Business Report
Bangladesh must continue its efforts to reform the garment industry to boost higher exports, World Bank said yesterday.
"Progress in improving workplace compliance is on track but more needs to be done in order to fulfil the commitment of raising it to international standards," WB said in a report, Bangladesh Development Update.
The government has made progress in improving worker rights and safety. In accordance with the EU Sustainability Compact and US Action Plan, the government fulfilled many of the commitments made.
"Safety compliance is improving. Only 2.2 percent of total buildings assessed thus far have been referred to a government review
panel for structural issues and only 1.3 percent was partially or fully closed," the WB said.
There has been considerable progress in improving labour safety and working conditions through the joint efforts by the government, buyers and factory owners, the report said.
"However, there is no place for complacency. Sustainable compliant industry warrants constant monitoring and continued action by the stakeholders."
The government needs to expedite enforcement of labour rights. Implementation progress of the amendments made in the labour law is extremely slow with a weak monitoring mechanism, the WB said.
The new EPZ law also needs to be properly enforced. For swift implementation of the new legislations, effective measures, for instance,
preparation of necessary rules and regulations should be completed immediately and appropriate monitoring mechanism should be put in place to ensure proper enforcement.
The publicly accessible database of garment manufacturers launched by the Department of Inspection for Factories and Establishments should be more transparent by including more detailed information on the factories, results of inspection conducted and follow-up measures taken.
Buyers should improve coordination on factory inspection and shift gear towards assisting the implementation of remediation measures. Lack of coordination among the global brands is leading to inspection fatigue for some manufacturers and creating confusion.
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The BGMEA is yet to develop a worker database as per their commitment. The association and its respective members should be more proactive in maintaining the credibility of the commitments made to transform garment manufacturing into a socially compliant industry.
"These reform initiatives will not translate into tangible and sustainable improvement unless implementation is expedited," the report said.
Although Bangladesh still has an edge as an apparel exporter over other competitors, its competiveness may erode in the long run if working conditions do not improve, said Nadeem Rizwan, research analyst at the Dhaka office of World Bank.
The report said Bangladesh is still considered the leading apparel sourcing destination alternative to China. "Despite the ongoing debate on worker safety issues, buyers plan to increase their sourcing share from Bangladesh through 2020."
The advantage of low wage and abundance of labour is still the most important factor in sourcing from Bangladesh, Rizwan said.
Apart from costs, Bangladesh still holds the advantage of capacity and ability to handle large volumes of orders in a timely manner, he said.
With India not being favoured by the western retailers as a replacement of Bangladesh even after the Rana Plaza tragedy because of cumbersome regulations and the uncertain political situations in
Pakistan, Bangladesh remains the best possible option for the buyers’ alternative to China, according to the report.
“Bangladesh’s advantage cannot be taken for granted. So, it is necessary to continue the garment sector reforms," Rizwan said.
In FY14, garment exports accounted for 81.2 percent of Bangladesh's total export, increasing from 79.6 percent in FYI 3.
Garment exports were 14.1 percent of its GDP in FYI4, and the sector is the largest employer in Bangladesh outside agriculture with around 4 million workers, 80 percent of whom are women.
The European Union and the United States remain the primary destinations for Bangladeshi garments as they accounted for 60.2 percent and 21 percent share of the total garment exports from Bangladesh respectively.
“Growth in garment exports in FYI 4 was volume driven. Exports grew by 17.4 percent in the European Union in FY14 compared to FYI 3," World Bank said.
"This was mainly due to the 19.1 percent increase in volume of knitwear products. Overall export volume growth in EU was 14.7 percent in FY14."
However, export performance to the United States was sluggish. Export volumes and value rose by 2.8 percent and 2.9 percent respectively in the US market.
Early signs for the new fiscal year are not encouraging as garment export in the US declined by 8.8 percent in the first two months of FY15 compared to the same period of FY14.