Reform in RMG sector faces political obstacles

Reform measures aimed at improving conditions in the troubled Bangladesh garment industry face new obstacles as political upheaval takes hold in advance of national elections.

The announcement on Monday that the 10th parliamentary election would take place on Jan. 5 set off a series of disturbances on Tuesday, including a 71-hour strike and shutdown of road, rail and sea transportation, and the expectation of more delays in shipments and other disruptions for businesses.

violance BDDissent and protests over the Trade and Investment Cooperation Forum Agreement that was signed in Washington on Monday have also been rumbling on. The new interim government that came into place on Nov. 18, with Prime Minister Sheikh Hasina still in command, is aimed at keeping the country running, but important policy decisions are supposed to be beyond its mandate, according to rival party leaders.

TICFA was held as an example by party leaders holding rallies in Dhaka as a way for the U.S. to support and encourage the present ruling party. Meanwhile, the 18-party opposition coalition, led by the Bangladesh Nationalist Party, has threatened to cripple the nation unless a caretaker government is installed before elections.

“A big question has now arisen whether there will be a peaceful handover of power. There’s even an uncertainty whether the democratic process will continue,” said acting secretary general of the opposition BNP, Mirza Fakhrul Islam Alamgir.

Members of the Bangladesh Garment Manufacturers and Exporters Association and Bangladesh Knitwear Manufacturers and Exporters Association told WWD that the business community has long been able to take the frequent countrywide shutdowns and the frenzied political rhetoric between opposition parties in stride, but were now concerned about the volatile political situation and how it would affect business. The business community was calling on politicians to help them keep the economy stable.

“We have been repeatedly telling the politicians to find out alternatives, but things are not working,” said Atiqul Islam, president of the BGMEA, talking about the repeated strikes that have negatively impacted export orders, shipping and productivity.

Jahangir Alamin, president of the Bangladesh Textiles Mills Association, said political leaders needed to realize that they must keep the wheels of the economy moving. It was apparent that the sharply divisive politics could shatter the economy and it was crucial that politicians understand the stakes, he said.

The Dhaka Chamber of Commerce and Industry estimates that each day of a strike causes a loss of 16 billion takas, or $206 million, with an average of 50 such days of shutdown a year damaging the ability of the industry.

“If there’s no political violence, we can achieve a double-digit GDP growth in the following fiscal year,” said Mohammed Sabur Khan, president of the DCCI.

Kazi Akram Uddin Ahmed, president of the Federation of Bangladesh Chambers of Commerce and Industry, said, “The country is facing a volatile situation because of a lack of understanding between politicians. We want peace to do business.”

The two main rivals on the political scene continue to be Awami League leader and Prime Minister Sheikh Hasina and the leader of the BNP, Khaleda Zia. The BNP has refused to participate in elections unless a caretaker government is formed at the center.

However, the compromise at this time appears to be the formation of an interim government, for which 21 out of 30 members were chosen on Nov. 20. Older ministers have been divested of their portfolios. These include Dipu Moni, formerly foreign affairs minister; MK Alamgir, the former home minister, and Rajiuddin Ahmed Raju, former labor minister, who are no longer part of the new cabinet.

The prime minister had then said that no decisions would be made on key issues and instead the government would only perform “routine work” until the elections.

As many of the issues facing the garment industry have been considered key and urgent, many business leaders are counting the days for a quick resolution to the political uncertainty. The next two months will be critical in determining the economic future of the country and the garment industry in general.

“The upcoming election and the present political crisis has implications beyond the borders of Bangladesh,” said Ali Riaz, Public Policy Scholar at the WoodrowWilsonCenter and professor at IllinoisStateUniversity.

He was speaking at a hearing of the U.S. House Committee on Foreign Affairs Subcommittee on Asia and the Pacific on Nov. 20. At the hearing, titled “Bangladesh in Turmoil: A Nation on the Brink?” he reiterated that the upcoming election was important at both domestic and regional levels with significance for the U.S.-Bangladesh relationship and for the economic interests of the country.

Last week, Nisha Desai Biswal, U.S. Assistant Secretary of State for South and Central Asian Affairs, stressed the need for dialogue at the end of a three-day visit to Dhaka on Nov. 18, after her meetings with government and opposition officials, as well as business leaders.

Factory owners have also been concerned about the continuing protests by workers over the last two weeks in different areas, as they called for a higher minimum wage than the final agreement earlier this month. They have been calling for dialogue and so have international retailers, nongovernmental organizations, workers rights groups and government officials.

As the levels of crisis in the garment sector have escalated over the last year, the government has been at the center of tripartite agreements between employers, workers and the government.

“Even the Accord and the Alliance, consortiums of retailers in the United States and Europe would have to work with factory owners but would need the government to help implementation and inspections,” said Kazi Islam, a manager at a garment factory who told WWD that the sense of frustration is still being fueled by some scattered hopes that international pressure, perhaps even led by the business leaders, would help Bangladesh resolve the election dilemmas.

The role of the government in handling other issues related to the garment industry cannot be undermined.

“Worker safety has been much in the spotlight in the aftermath of the RanaPlaza factory collapse and Tazreen factory fire, and small improvements have been observed in the ability of workers to organize,” John Sifton, Asia Advocacy Director at Human Rights Watch, said at the committee hearing. “But key institutional changes still need to occur. The right to form unions, for instance, cannot be founded simply on new corporate sensitivities and the goodwill of factory owners and corporate buyers. The government must institutionalize labor protections and guarantee effective enforcement of labor laws, which means recreating government institutions that oversee labor issues and making rights enforceable.”

The spotlight now is on political dialogue, which is the only way the entire business dialogue will succeed. The chief election commissioner, Kazi Rakibuddin Ahmad, told the media that while preparation for the elections were being made, they had requested that President Abdul Hamid to try to ensure participation by all parties.

“We want to organize a free, fair and peaceful election that will ensure a level playing field,” he said.

However, business leaders in Dhaka are beginning to realize that there must first be a government before it can institutionalize any plans and procedures and are hoping to find ways to facilitate a dialogue that ensures their survival.