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New BGMEA Head Talks Diversification in Bangladesh

Faruque Hassan is known as an even-keeled man, who reflects and takes measured strides. The owner of Giant Group, an end-to-end apparel manufacturer in Bangladesh, he was elected as president of the Bangladesh Garment Manufacturers and Exporters Association, or BGMEA, in April.

Hassan began his two-year term battling multiple headwinds: the Covid-19 crisis looming large, the rapid spread of infections ravaging Bangladesh, and global pressure as the Transition Accord nears the end of a three-year term this month.

He talked to Sourcing Journal about how he plans to drive the industry forward, while safeguarding the welfare of the millions of Bangladesh garment workers.

Sourcing Journal: Is it difficult to be optimistic as you take over this new position heading BGMEA, with the world situation so tense and sourcing being disrupted?

Faruque Hassan: I am very optimistic that the Bangladesh garment sector will maintain and increase its global market share and will continue to lead apparel manufacturing.

The new BGMEA board takes over as the industry is passing through an extraordinary crisis with the global pandemic. Our first priority is to protect the industry and livelihoods of millions of our workers.

We look forward to many positive shifts—of more efficient usage of manpower via automation, innovations in process and products, diversification in terms of products, material and markets. The path forward is to focus more on design development, innovation and digital manufacturing, to explore new markets and products. Although we are the second largest apparel exporters, our export basket is concentrated into five basic items and we want to try to change that narrative. Value addition is one of our prime agendas.

Our commitment is to take the garment industry to the next level of sustainability and we are looking comprehensively to all the possible areas of concern.

SJ: That would require many forms of change. How would you prioritize?

F.H: Facing the pandemic and staying on course is an immediate concern, and our strategy for this is to work toward enhancing collaboration among the stakeholders.

Our second priority is to ensure the economic upgrade of the industry while the move toward safety and sustainability continues and the standards the industry has already achieved are maintained. In parallel, we will continue to increase the backward linkage of facilities and improve the environment for Foreign Direct Investment (FDI) in an effort to establish specialized fabric manufacturing, which is in high demand.

SJ:  How will the dialogue with global brands and retailers change?

F.H: With the backdrop of the COVID-led disruption in the global supply chain, the importance of responsible sourcing and responsible business practices could not be more important.

The power imbalance between the supply chain partners remains a much-discussed issue. The pandemic has further exposed the vulnerability in the global trading arrangement and the affiliated parties, including workers.

The manufacturers and buyers should work in collaboration to ensure that the industry sustains and the millions of livelihoods dependent on this industry are not exposed to economic threats.

We have invested millions of dollars after the unfortunate Rana Plaza tragedy in order to ensure safety and remediation across the industry, and it has already had an impact on our costs; the Covid-19 led disruption has further escalated the situation.

Since we have a number of uncertainties to be cleared like containing the virus and the success of the vaccines/vaccination, and how quickly the global economy responds in the post pandemic era; it is the cooperation and partnership between brands and our suppliers that will help us in finding a way to combat this global crisis and turn around.

SJ:  Is the impact of this second wave of Covid-19 worse?

F.H: The industry is unprecedentedly disrupted by the Covid-19 as far as business operations and manufacturing process are concerned. It’s important to note that the manufacturers are struggling to keep business and even accepting orders below break-even prices as we are facing underutilization of capacity while the cost has increased due to maintaining health and safety protocols at factories. We have lost $6 billion in exports in 2019-20 compared to the preceding fiscal year, and during July-April of the current fiscal year exports declined by 8.72 percent compared with the same period of 2018-19.

The retail industry in the West is heavily affected, causing a disruption in the demand and the supply chain and affecting price. Even orders are coming at smaller batches and with faster lead times.

SJ:  Does that put sustainability on the back burner?

F.H: Bangladesh is home to the most LEED green factories in the world right now. This includes 138 LEED green factories of which 39 are platinum rated; 39 of the global top 100 LEED green factories are in Bangladesh. Around 500 factories are in the pipeline for getting certificates. Bangladesh is showing its maximum commitment when it comes to sustainability.

SJ:  How do you seen the factory safety situation being kept up in the midst of all this, and also the efficacy of the RMG Sustainability Council (RSC)?

F.H: RSC is an independent national safety, compliance and sustainability monitoring regime for the ready-made garment industry. It is a national initiative with global standards and was formed with the motto of bringing an end to the unilateral safety regimes and establishing the route to national monitoring. The RSC has already laid a significant stepping-stone in building Bangladesh’s own capacity to transparently and credibly take care of the safety of its own industries with the highest standards, and has a multi-stakeholder approach. RSC was set up to carry forward the achievements made by the Accord on workplace safety in Bangladesh, and is governed by an equal number of representatives from brands, manufacturers and trade Unions. Among the 18 board members, six are from industry, six from the brands and six from the global trade unions and the local affiliates.

Since RSC picked up steam, the progress is visible as well as appreciated by the brands, and RSC is fully committed to further strengthening its inspection program through accelerated inspections based on global standards and the identified priorities.

After resuming inspections in September last year, RSC has managed to accomplish 1,821 inspections in 904 factories.

SJ: How do you see the situation for Bangladesh in relation to other manufacturing countries like Vietnam, Cambodia etc.?

F.H: It is not a race with other manufacturing countries that we are competing with, rather we are focusing on value addition and diversification. We want to set up our own standard.

However, over the last decades, the Bangladesh garment industry has achieved tremendous growth and as the result of hard work, resilience and the struggles of our manufacturers and workers, we are now the second-largest apparel exporter in the world. Before Covid hit the whole world and introduced an unprecedented situation, Bangladesh exported $34 billion worth of apparel, which was indeed a great achievement. There has been some major disconnects that limit the industry’s potential to expand over high street fashion and we are now trying to change the narrative of our industry. We have opportunities both in the EU and the U.S., as well as in emerging Asian markets that include Japan, China, India and Korea, and other regions like Russia, Australia and South Africa.

Going forward, we will be trying to tap into these potential markets for further penetration and growth.