Made in Bangladesh: crunching numbers
Made in Bangladesh' is not merely a label. It has been and continues to be a slogan that has driven the people and the economy for the last 33 years. Today, all the success stories seem to be lost in the rubble of Tazreen Fashions and Rana Plaza. The industry's reputation seems to be walking towards uncertainty, and the never-ending walk to improve the situation seems to be even longer at this point. The deaths related to the garment industry have numbed us and have created a wall between our civil society and ourselves, the manufacturers, where mistrust happens to be playing out all its cards.
This industry must be understood properly before it is subjected to extreme critique. What needs to be clearly understood is that without this industry, our economy risks coming to a halt. Without this industry, many people, many industries and many segments of our daily lives would perish. I have penned this article just to emphasise the major impact of the garment sector on the economy.
Understanding the industry by a mere four million workers, 5,000 entrepreneurs, or by $20 billion exports is not enough. The contribution of the sector to the country's gross domestic product stands at 10-11 percent. The contribution of other industries evolving around this trade is also no less than 14-15 percent.
The industry started its journey in 1980s. Today, 80 percent of the workers are women. There is no denying that the sector has empowered these women. Had the sector not developed, our total population, according to experts, would have had an additional two crore simply because of early marriage and a lack of awareness and birth control. Out of the 4,882 factories that are registered with the BGMEA, 2,092 are export-oriented. Apart from this fact, 2,790 factories belong to tier 1 and tier 2. The BKMEA has 1,870 factories out of which 900 export directly. The rest of the factories of the BGMEA and BKMEA have no operation and have been subjected to bad debts owing to the political and economic turmoil in the country.
The garment sector's export earnings stand at $20 billion a year, while its imports are more than $10 billion. Value addition in knit is around 90 percent and in woven nearly 40 percent. If at the minimum, 35 square feet is allocated for a worker's working space at a factory, and if the construction cost of a factory is estimated at Tk 1,000 sft per worker, then the construction cost of the total industrial space would be Tk 14,000 crore. If the per sft rent is taken as Tk 7, then only Tk 98 crore is spent per month on renting these industrial spaces.
There are 7,000 trucks plying on the Dhaka-Chittagong roads everyday. Out of these, 5,000 are only used to carry garment exports and imports. In 2012 alone, 1,205 container ships berthed at the port, out of which 845 have solely been used for garments; 1,343000 containers have been handled. In 2000, the port earned Tk 353 crore; in 2012 the revenue figure jumped to Tk 1,563 crore, and much of the revenues came from the garment sector.
If a worker earns at least Tk 5,000 a month, including overtime, then the garment manufacturers pay Tk 2,000 crore as salary every month. Apart from salaries, let us now consider the supporting industries that have thrived due to the industry including cosmetics, clothing, lungi, tiffin carrier, umbrella, coconut oil, mirror, hotels, shops, etc. If a female worker spends Tk 400 per year on toiletries, sandals, etc, then Tk 160 crore is spent only towards this account. Around Tk 300 crore is spent only on clothing if a worker buys four saris a year. One million male workers spend Tk 70 crore on lungi and shirt if they buy only two of these every year.
Accessories industries that have all centered the garment sector have investment of at least Tk 8,000 crore. With the sole purpose of supporting the garment sector, 721 textile units with 30,750 looms, 385 spinning mills with 87 lakh spindles and 233 dyeing plants have been set up. Only these have an investment of Tk 40,000 crore.
Unfortunately there is not much research on the positive contribution of the sector. If only a little bit of constructive criticism was done, then the industry would have gained substantially.
The total capital investment in garment and its auxiliary industries has been more than Tk 100,000 crore at the rate of 12-18 percent bank interest for over a period of 5-7 years.
Imagine the revenues of banks, insurance companies and other financial institutions. Import and export turnover of garments and auxiliary industries stand at around $40 billion per year, which incurs multiple bank charges and commissions.
Isn't it obvious that many banks, insurance companies and financial institutions survive and thrive because of the garment sector? It's also obvious that a two-day shutdown halves economic activities and we take years to recover from the blows of political unrest.
Yes, we drive the economy. And yes, without these workers, we would have been nothing. But time has come to efficiently engage in a study of efficiency, which will help the sector along with its workers. Man-machine ratio stands at 2.7:1 in our country indicating a clear lack of productivity. Cambodia with its 309 factories and 335,432 workers exported $4.047 billion in 2011, with the export figure per worker being $12,070 (source: commerce ministry of Cambodia). On the other hand, we have four million workers exporting products worth $20 billion, indicating that each worker in Bangladesh contributes $5,000.
It is now time to engage in constructive criticism to help the industry to focus on time-bound planning and graduate to the next platform of transparency, efficiency and prosperity. For that we need the support of all including the brands, retailers, and civil society. Without support from the government, civil society and professionals, the garment industry will cease to exist and along with its exit, majority of our economy will evaporate into thin air.
The writer is a former president of BGMEA, FBCCI and Saarc Chamber of Commerce and Industry.