BGMEA president-elect asks for separate ministry on RMG

Faruque Hassan, president-elect of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), has asked for establishing a separate ministry on the apparel sector and providing 10% cash incentive for manmade fibre-based products.

This may help to revive export earnings, he hoped. 

"Dependency on a single sector is not good for the economy. But, until a new sector comes up, the RMG industry should be given more attention by the government.  This is why we propose to form a separate ministry led by an experienced cabinet member for the apparel sector," explained Faruque Hassan, also the managing director of Giant Group.

"We will talk to our former presidents and convey this proposal to the prime minister," he continued.  

While talking to The Business Standard, Faruque Hassan who has become the new president of the BGMEA by bagging the highest number of votes on Sunday's polls was talking about priorities for the first 100 days of taking charge. He is scheduled to take over the charge of the trade body on 20 April. 

"My first job would be to revive our export earnings so that factories operate well, nobody loses jobs, and the economy runs well," he said.

The apparel sector contributes about 85% to national export earnings, which declined to $27.94 billion in the last fiscal year from $34.13 billion a year ago due to Covid-19.

"Another priority agenda is to rebuild the members' confidence by making the BGMEA united. We want to move forward, not to look back." 

Claiming that some members tried to create a division among the members by spreading propaganda and sending some unauthorised letters ahead of the BGMEA election, he further said, "I think voters have given answers to all of them. Now my responsibility is to brighten the image of this sector and the association at home and abroad."

He said he wants to serve all members without taking into account who have voted for him and who have not in order to make the BGMEA a service-oriented organisation for everyone. "All directors from my panel want to work together for the development of the garment sector." 

He promised to finish all ongoing initiatives taken up by the current committee. 

"My foremost priority is to ensure financial support and back-up from both the government and the Bangladesh Bank to tackle the ongoing second and third wave of the coronavirus, which is already hitting us badly," he said.

"We will be able to address the challenges the sector has been exposed to due to Covid-19 fallouts."

The Giant Group managing director, who served the trade organisation four times, said they have plans to make a bridge among other associations – including the BKMEA, BTMA, BPGMEA, and buyer's forum – related to the apparel chain. 

The newly elected president of the BGMEA will have to face some major challenges in the first 100 days of his tenure – payment of wages and festival allowances during the forthcoming Eid-ul-Fitr and Eid-ul-Adha and taking budgetary measures necessary for the survival of the industry.

"The sector requires another financial support from the government to pay workers wages during the two Eids. If the government does not provide the support, then it will be more challenging for factory owners to pay workers' wages and bonuses." 

Besides, during Eid factory owners have to pay their local suppliers payment as it is a tradition to clear outstanding payments ahead of Eid, he added.

"The government may announce a new package to pay workers' wages for the next three months," said Faruque.

Mentioning that most of the factories are facing a liquidity crisis as they have a large amount of outstanding payment from their buyers, he said currently factories on an average are running at 70% capacity due to a lack of orders from buyers. "Even some factories are running below their breakeven cost." 

Export destinations are under lockdowns for the last several months and some are in the grip of the third wave of Covid-19, he mentioned, adding that the sector needs some budgetary measures such as source tax waver for next year, reduction of corporate tax to 5% for green factories instead of 10% and 7% for others instead of 12%. 

The new committee will focus on product diversification focusing on manmade fibre-based products as the market share of these products is around 70% but account for less than 30% of the total apparel exports, said Faruque. 

"We will urge the government to give a 10% cash incentive on man-made products, which may help to diversify the export basket". 

"As a new board, we will write letters to all ministries including the finance and commerce ministries and ask for their co-operation in the coming days."  

"We want to work closely with the government and the European Union to retain duty-free market access in the region until 2031, after the country's LDC graduation in 2026. This is possible through apparel diplomacy," said Faruque. 

The newly elected BGMEA president said he would appeal to the government to extend the repayment period of bank loans.

"If the government does not extend the time, most of the factories might turn into defaulters. If that happens, banks will stop opening LCs and the import-export of those companies will stop. Factory production will also stop. That will make it even more difficult to pay the workers," he argued.

Sammilita Parishad, led by Faruque Hassan, won the BGMEA election 2021-2023 bagging votes of 24 out of 35 directors on Sunday night.

Around 86% of 1,996 members of the BGMEA cast votes in the polls. Faruque secured the highest 1,204 votes.

Besides, ABM Shamsuddin-led Forum panel won 11 posts in the election. BGMEA's current President Rubana Huq got the second highest votes.