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Pakistan Exports Expected To Increase As Apparel Brands Leave Bangladesh

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Plagued by a series of factory fires and the collapse of the Rana Plaza factory complex, Bangladesh now faces another problem — loss of export business as apparel firms are now expected to seek production facilities in Pakistan.

The Walt Disney Company, world’s biggest licenser, has already left Bangladesh, although it is not yet known if the company will now contract with Pakistani factories.  Disney reportedly had less than one percent of its factories in Bangladesh.

Also considering a departure from Bangladesh are Benetton, Gap and the Children’s Place.

To counter the anticipated flight to safer manufacturing venues and to improve domestic working conditions, the Bangladeshi government recently began a program of reforms to achieve that goal.

Among the reforms now instituted by the government are the permission to organize of labor unions, authorization of an increase in the minimum wage (the world’s lowest) and the signing of a legally-binding agreement with some foreign retailers and labor advocates to provide safer and healthier conditions at the nation’s some 5,000 factories.

Despite these measures, Bangladesh will suffer the potential economic consequences of its previous neglect of its labor force.

“We expect to see some of the business shifting to us,” said Shaikh Shafiq Rafiq, Noting Bangladesh’s loss and the likely Pakistan gain.

Rafiq is Chairman South Zone of Pakistan Readymade Garments Manufacturers and Exporters Association (PRGMEA)

“The same thing happened to us when there was a factory fire in Karachi,” he said.  “The buyers are wary of public backlash.”

Pakistan and its manufacturers will additionally benefit from newly-acquired business from Bangladesh because the former will take part in the EU’s GSP Plus Program which offers duty-free exports to its member nations.

Bangladesh readymade garment exports were up slightly prior to the Rana Plaza collapse.  From July-March 2012-2013, exports rose to $1.2 billion from $1 billion from the same period the previous years, according to official data.

No dollar figure has yet been forecast on what Pakistan is expected to gain  from Bangladesh.

The likelihood of a timely return of apparel firms to Bangladesh are currently slim.  But circumstances are always in flux and long-term forecasts can be grossly inaccurate.  If successful, Bangladesh’s program to improve working conditions and make factories safer and healthier may lure back some of the lost business.

Right now, however, “Working conditions in our (Pakistani) factories are far better than what you will find in a Bangladesh concern,” said former PRGMEA chairman Shehzad Salim. “Conditions are inhumane there.”

 

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