Financial Express
Anniversary issue
December 23, 2012
M. Serajul Islam
The
country is passing through a very uncertain period; both politically and
economically. In politics, the dreaded hartal is all set again to turn our
lives upside down and bring miseries and misfortunes as the two mainstream
parties fight it out on who will be in Government for another five years. Just
when the people were about to thank their stars that hartal had been condemned
in the dustbin of history following 4
years when the BNP refrained from indulging too much with it for its political
gains, it is coming back with a vengeance. As far as politics is concerned, to
use a cliche, we are just seeing the beginning of what is going to be a long
winter of discontent unless the politicians regain their senses.
There
are dark clouds in the economic horizon as well. For one, the deteriorating
political situation is certain to take the economy in its path. Bangladesh, a
resource poor country, depends on its economic well being to a large extent on
how well it does in its export business as well as in attracting foreign direct
investment to the country. Political disturbances such a hartal and conflicts
between the two mainstream parties are certain to lead to a slow down of
economic production. In case of the RMG business that contributes 60% of the
exports, slow down could lead to cancellation of orders from clients in USA and
Europe and eventually to a breakdown of the industry.
The
political situation is also going to add to the already huge stack of negatives
about how the country is perceived abroad. The poor image and political
instability is a dangerous mix for a country like Bangladesh so dependent on
external factors for its well being. Going by common sense, there is little
reason for foreign investors to risk their money into such a dangerous mix. The
recent fire in Tazreen has contributed to create more apprehensions about the
economy. It received coverage as“breaking news” in the media all over the world.
People in countries that can make or break Bangladesh’s export and foreign
investment potentials saw graphic details of how over 112 workers were burnt
alive under circumstances that helped establish their apprehension that
workers’ working conditions in industries in Bangladesh are sub-standard and
left a lot to be desired.
The
adverse effects of the Tazreen tragedy are far from over. Unfortunately, the
factory was making garments for US armed forces as an outsourcing agent of a
licensed outfitter for the US Army, Air Force, Navy and the Marine. A number of
US Senators and Congressmen led by Senator Tom Harkin have already addressed a
letter to President Barak Obama on burnt garments with US marine logos found
inside Tazreen. The letter was very strongly worded. It urged President Obama
to “..use all tools at your disposal that the federal government does not
pursue or continue contracts or licensing agreements with prime contractors,
sub-contractors, or licensees that fail to guarantee basic and fundamental
rights for their workers and throughout their supply chains, including the
right to a safe workplace.”
The
contents of the letter together with the circumstances under which it has been
written are going to be taken seriously at the White House. The fire at Tazreen
killed 112 workers in circumstances that are horrifying to say the latest. The
letter of the US Congressmen to their President mentioned among other things,
facts such as workers being trapped inside when the fire was raging because
exit doors were locked; workers being forced to remain inside even after the
fire alarms started ringing, and fire extinguishers inside the factory not
working. There is no doubt that the letter is going to start a process under
which the US Government will seriously review the export of RMG from Bangladesh
to the United States.
Readers
may be aware that Senator Harkin is the same Senator who had some years ago
introduced the Harkins Bill in the Congress under which the Bangladesh RMG industry
came under serious trouble on the issue of child labour. At that time, human
rights groups also became involved in the demand of freeing the Bangladeshi RMG
industry of child labour in order to get the benefits that it was receiving to
export RMG products to the United States. This letter that Senator Harkin has
initiated could have serious damaging consequences because the Congressmen have
linked the horrendous state of affairs inside Tazreen linked to institutions
that are linked to their national pride.
The
news of the letter of the Congressmen to the President is the sound of a
threatening cloud for the RMG sector and Bangladesh economy gathering at a
distance. There is equally disturbing news for the sector coming closer from
home. The BATEXPO, 2012, that just concluded in Dhaka brought more depressing
news for the sector. The response of foreign buyers to the fair has been poor.
Sources close to the organizers of the Fair have revealed that “20% of listed
foreign buyers did not attend the exposition because of deteriorating political
conditions.” Nevertheless, BGMEA and BATEXPO officials were optimistic that
despite the worldwide negative publicity that the industry received worldwide
and economic recession in the importing countries, the exposition this year has
attracted more foreign buyers and that the outcome will be positive. Their optimism notwithstanding, in the plea
that businessmen made to the BNP against hartal, the mentioned that foreign
buyers have started cancelling orders for RMG products from Bangladesh apprehending
political disturbances in the coming days, weeks and months and in the wake of
negative impact of the Tazreen tragedy.
There
has been a lot of media discussion after the Tazreen. The BGMEA officials have
spoken defending the state of affairs in the RMG sector in the context of
compliance. When it became apparent due to the media’s investigative reporting
that the compliance at Tazreen was far from what the stated immediately after
the tragedy had occurred; that the industry was being run in violation of the
major issues of compliance, the BGMEA has said nothing substantive in what they
proposed to do in future. Some of them
continued to stress that for them compliance was not an issue; that their
industries are even better on compliance and quality than such industries in
other countries.
Not
one BGMEA official came forward to mention that while some of the RMG
industries are doing excellent; the sector is carrying a very large number of
sick industries that like bad apples in a sack have the potential of destroying
the smaller number of RMG industries that are excellent and perhaps even world
standard. The BGMEA has also not responded to what they and the government
should do to deal with the threatening prospects of the letter that the Congressmen
wrote to President Barak Obama. Instead they have demanded of the Government
the creation of a Ministry for the RMG sector!
The
Government on its part also does not seem to have the right perspective to deal
with the threatening clouds that are descending on the RM sector in particular
and the economy in general. The major problem is of course political. The way
the government is dealing with politics is going to increase political
instability instead of lessening. Thus the government’s current mode is set to
add more problems to those that have descended rather than in any way helping
the economy out of its current predicament. In fact, the way the government is
conducting politics; it is not just the RMG sector and the economy but the
country that could very well fall into a quicksand that could destroy it unless
corrective measure are taken immediately to ensure that the next general
elections for a peaceful transfer of power is held with participation of all
the major political parties and most definitely of the BNP.
Then
there is the problem with the conduct of the country’s foreign policy that is
directly related to economic development of Bangladesh, a co-relation that for
some strange reason is not even considered in Bangladesh to be a serious issue.
Clearly, the future of Bangladesh is directly dependent of increasing exports
led by the RMG sector; sending more people abroad to increase foreign
remittance; and finally creating a favourable image for bringing more FDI to
the country. Yet for again for reasons that do not stand to serious reasoning,
the government chose to rub the United States Government the wrong way;
particularly its powerful Secretary of State on the issue of Dr. Mohammad
Yunus. It is the same US on which our RMG industry depends on its future and
future of Bangladesh. It is the same United States whose President will now be
obliged to take action on the letter of Senator Harkin. Simple common sense should tell us that the
chances of response helpful to Bangladesh’s interests where we are at fault
would be unreasonable to expect.
The
United States is also still the world’s only Super Power. Its power to help or
harm a country like Bangladesh is unlimited and not just restricted to the RMG
sector. Somehow our foreign policy managers give the impression that they do
not believe that the US has any such power. Unfortunately, by such a mindset,
they are harming the country’s interests as well and in a major way. The
complications that have occurred with the WB funding of the Padma Bridge have
been based on a conspiracy for corruption between the officials of the Bangladesh
Ministry of Communications and the Canadian company, Lavalin. The WB put a
spanner over funding the mega project so crucial to the socio-economic future
of millions of people in southern Bangladesh even before it had released a
dollar where the case of corruption against Lavalin officials in a Canadian
court is still being heard.
Bangladesh
government’s negotiations with WB on the Padma Bridge funding after the latter
brought to its attention the Lavalin corruption conspiracy have been grossly
mishandled. Nevertheless, the attitude of the World Bank has also been
uncompromising and tough. Although the WB is an inter-governmental
international financial institution established for assisting the economic
development of the developing countries, the influence of the United States
over this institution is well acknowledged. The post of the President of the WB
has by convention gone to the United States. The US Secretary of State whom
Bangladesh has annoyed over Dr. Yunus had considerable input in the choice of
the current President. Therefore there it may be reasonable to consider that the
WB’s tough stand on the PB loan could be a payback for the way the Bangladesh Government
reacted to the request of the US Secretary of State for Dr. Mohammad Yunus.
That request for a fair treatment to Dr. Yunus and the Grameen Bank also came
from the President of the United States and leading members of the Congress
that the Bangladesh Government turned down. It is same President Obama to which the
Congressmen have written for tough measures on issues of workers’ conditions
and other issues of compliance. Therefore, there is every reason to expect that
the letter will lead to some tough measures on the Bangladesh RMG sector.
The
Prime Minister appears to have sensed these tough times ahead for the RMG
sector. In an address at the BAPTEX Fair, she urged the RMG leaders to seek out
new markets perhaps apprehending tough actions on the sector by the authorities
in the USA. She also asked the RMG sector to pay more to their workers
according to their abilities no doubt in acknowledgement of the regular acts of
violence of the workers on issues of pay and perks. The Prime Minister also stated
many times in public that there is a deep rooted conspiracy against the
successful RMG sector from both within the country and abroad. The Prime
Minister’s public statements on the RMG sector reflect correctly about its current
predicament; that there are dark clouds hanging over it.
However,
her apprehensions of conspiracy to explain the regular acts of vandalism in the
RMG sector may be a bit farfetched. Nevertheless, there are countries that will
benefit if the Bangladesh RMG sector fails in the US market. For these
countries, the much easier way to damage the RMG sector in Bangladesh would be
to work through lobbyists in Washington. In this context, Bangladesh has given
countries interested to damage the RMG sector in Bangladesh enough ammunition.
For instance, these countries just need to activate their lobbyists and if they
do not have, engage lobbyists in Washington to ensure that the letter of the
Congressmen to the President is acted upon that will create serious obstacles
to the RMG sector in Bangladesh and blunt
a great deal of its competitiveness.
The
way out is not what the RMG sector has suggested. Creating a new Ministry for
the RMG sector will be on no real benefit. Instead such a Ministry will only
create new obstacles because the success of the RMG sector has come to a large
extent in spite of the Government. Instead, the need of the hour is to appoint
a lobbyist in Washington not just for the RMG sector but also for the overall
improvement of Bangladesh-USA relations because the bilateral relations between
the two countries are now in an undesirable state and without improving it, the
environment for Bangladesh exports to reach their potentials in the US market
and removing existing and new obstacles will not be possible.
Such
a lobbyist will also be able to advise what the government should do when faced
with new threats that have emerged for the RMG sector in the USA following the
Tazreen incident. In fact, a good lobbyist could advise even on how Bangladesh
could turn the Tazreen disaster to its benefit instead of being threatened with
new obstacles as a consequence of the fire. Sachinta Saxena wrote in New York Times after the Tazreen tragedy that
it is because high tariffs imposed by the US Government that factories such as
Tazreen are forced to cut corners on compliance and unable to pay adequate
wages to the workers. The writer said that in 2011, Bangladesh exported US 5.10
billion in goods to the United States of which only 10% were eligible to
exemption from import duties and for the rest paid 15.7% in tariff and in the
current year, Bangladesh will pay US$ 600 million in import duties. She felt
that Bangladesh could make out a strong case for duty free access like one
given to Mexico to be able to be 100% compliant and stop cutting corners that
affect adversely working conditions. Congressman Jim McDermott had introduced
such a bill for benefit of Bangladesh, Cambodia, Nepal, and Pakistan, Laos and
Sri Lanka in 2009 but the bill never made it to the Committee. This is where two
things would be necessary to disperse the threatening clouds over the RMG
sector and its assured and better access to the US market. First, Bangladesh
will need the best lobbyist in Washington for such benefits. Second, it will
need to have excellent bilateral relations with USA.
To
make matters worse, the concerns on which Bangladesh’s RMG could face threats
in market access in the USA also apply in the other major markets. Any adverse
impact that could come upon the RMG sector in USA as a consequence of new focus
after the Tazreen tragedy could also adversely impact the other markets as
well. The leaders of the RMG sector should put their heads together and take
lessons from the Tazreen on compliance. Instead of making unrealistic demands
such as asking for a separate Ministry, they should put pressure on the
government to seriously consider foreign policy issues in pursuing Bangladesh’s
economic interests that is not happening at all now. The clouds over
Bangladesh’s economic future including the RMG sector would dissipate leading
to a bright new dawn only when bipartisanship returns to Bangladesh politics
and the government starts to deal with foreign policy issues professionally. On
both, the outlook is bleak.
Meanwhile,
the RMG sector and the Government should use the lessons from the Tazreen
tragedy to take serious actions and resolve compliance issues that have come to
light as a consequence of it. It was good to read in the media that BGMEA would
take action to close down about 800 sick RMG units. It is time for them to look
seriously at whether they could do more as the Prime Minister has suggested for
the betterment of the working conditions of the workers.
The writer is a retired career
Ambassador
No comments:
Post a Comment