Textile manufacturing deciding factor in unrest BD

Widespread violence across Bangladesh will soon enter its third month, extending a stranglehold on the economy that has cost the country billions. The world’s second-largest ready-made garments exporter, Bangladesh began the year courting investment to diversify its manufacturing base, currently focused on textiles, to include low-end electronics and automobile assembly. But opposition political forces led by the Bangladesh Nationalist Party began an extended campaign of social unrest following the anniversary of last year’s disputed Jan. 5 elections. The unrest jeopardizes the growth the national economy and textile industry have experienced in recent years.

Since Bangladesh gained independence from Pakistan in 1971, its history has been marked by deep political divisions, frequent military coups and unrest. This instability has helped keep the country poor and wages low, giving rise to a textile manufacturing favorably positioned within the broader Indo-Pacific region. But Bangladesh is still a victim of its weak political system and deep social divisions that have resulted in violent social unrest that has gripped the country for much of the current year. Domestic estimates place the economic cost of the conflict of the past three months at nearly $10 billion, a staggering sum given that Bangladesh’s gross domestic product is $150 billion.

The military, historically a strong political force, might not be the deciding factor in Bangladesh’s current episode of unrest. During the past decade, professional organizations representing textile bosses have gained influence. Textiles and ready-made garments represent a significant portion of Bangladesh’s economy, accounting for more than 60 percent of the country’s industrial labor force and more than 80 percent of its annual exports by value. They are Dhaka’s primary source of foreign currency revenue, helping to alleviate the country’s negative trade balance.

Recent statistics from the Bangladeshi government’s Export Promotion Bureau show that garment exports are still rising, with year-on-year growth of 7.8 percent in January and 6 percent in February. While industry associations have tracked a nearly 50 percent decline in short-term orders from international companies — to the benefit of competing industries in Vietnam, Cambodia and Laos — Bangladesh’s textile and ready-made garment industries have shown a remarkable resilience in face of the political uncertainties of the past two years. The military is cautious about triggering a widespread backlash against a coup and agitating rising Islamist tendencies. But with the economy still growing and support declining with every Bangladesh National Party call for strikes and shutdowns, there is not enough incentive for the military to get involved in a difficult and chaotic political competition it has not been able to resolve in the past 40 years. With the military repeatedly announcing that it has no plans to end the current impasse, instability in Bangladesh is not likely to be resolved soon.

-stratfor.com