Bangladesh garment group’s new boss has big agenda

Months after taking the reins as president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), businesswoman Dr Rubana Huq tells just-style of her priorities for the next two years – from factory safety, to exploring new markets, increasing sustainability, and promoting innovation in the world’s second largest clothing exporter.

At the top of her to-do list, Dr Rubana Huq is determined to fulfil her key goal of ensuring the industry effectively monitors its own environmental and health standards.

“Over the years, we did not only make outstanding progress in safety, but also learnt the art of monitoring,” says the new leader of the 4,500-member group – Bangladesh’s largest clothing industry association.

Speaking to just-style in an exclusive interview, the BGMEA’s first female president comments on how the association will be taking over the staff and resources of the Accord on Fire and Building Safety in Bangladesh in 2020. Responsibility for its work will be passed to an RMG Sustainability Council (RSC), in which the BGMEA will play a key role. “This is the time for our nation to rise up and take own responsibility rather than hand-holding,” Dr Huq believes.

Noting that the council is set to be established by the end of this year, Dr Huq stresses the RSC will be an institution that will be governed jointly by the government, industry, workers and western brands.

“The governance structure of RSC ensures full transparency of its operations and it will be accountable to the government and compliant with the laws of the land,” she says.

“We’ve already discussed this format with the brands and retailers, and got a positive response. All we need is to receive the collaboration from our customers to make it functional – safety is more of a concern for us than anybody else.”

The RSC has three major responsibilities under the terms of an agreement on how it takes forward the work of the Accord. These are monitoring fire, electrical and structural safety at factories; ensuring workers’ wellbeing, including promoting efficiency enhancements and handling grievance management; and environmental sustainability, covering pollution control and climate action policies.

“We believe in the spirit of collaboration and we would make every effort to bring coordination among the efforts of all the organisations and agencies,” the BGMEA head notes.

With all the demands and work that have been undertaken by the industry since 2013, Dr Huq says she sees “a serious project fatigue concerning capacity building within the apparel industry.” So she hopes that getting all industry partners together onto a single platform will “re-align the development efforts to gain efficiency.”

With that in view, the BGMEA has already formed an advisory council bringing together representatives from donors, the diplomatic community, think tanks, the media and government agencies. This will help clothing sector members and partners to deliver goals jointly, rather than focusing on individual accomplishments, she insists.

Planning for progress

The new president has a lot on her plate. Besides establishing the RSC and local monitoring of health and safety standards, Dr Huq wants to prioritise branding Bangladesh’s clothing industry; exploring new markets; increasing sustainability; and promoting innovation. She also wants to reduce the cost of doing business in Bangladesh by establishing a wage-efficiency-price grid system, guiding manufacturers on appropriate wage levels.

The new president, who is also managing director of the Mohammadi Group, a clothing manufacturer, and also a published poet, says she is leading “a rare mix of youth and experience in a team ready to set a direction for a sustainable apparel industry in the coming decades.”

She tells just-style that her team has started working on all its goals, and she hopes to demonstrate progress on all of them by the end of the first year of her two-year tenure.

One early deliverable is market growth, with the BGMEA planning to launch promotional efforts in markets including South America’s Mercosur region, Europe, Russia and other Commonwealth of Independent States (CIS) countries, Turkey and Southeast Asia.

However, to make such marketing effective, the BGMEA president says the industry needs to deal with immediate challenges, such as soaring costs, weakening competitiveness, a stronger local currency, over-concentration on a limited range of products and markets, insufficient progress in value addition, and preventing labour turnover.

She also notes the sector wants to play its part in enabling Bangladesh to leave Least Developed Country (LDC) status by 2024 (as per government policy), while managing the opportunities and challenges posed by geo-political dynamics in trade, such as the US-China trade war. Meanwhile, the BGMEA needs to foster the health of an industry that employs more than four million workers, 80% of them female.

Trade war opportunities…

The trade war offers obvious immediate opportunities, especially as Chinese clothing products have been hit by additional American tariffs from 1 September

But Bangladesh needs to act proactively to gain more business. Dr Huq notes how China’s clothing and textile exports to the United States have been falling steadily over the last ten years – but other exporters, notably Vietnam, have benefited more than Bangladesh.

The BGMEA is looking to help guide exporters in what to offer US buyers looking for alternatives to China. It has identified the top 30 items currently exported by China to the US and notes that 16 of these are readily available for purchase from Bangladesh manufacturers.

“We believe China [its loss of American export sales] is an opportunity for Bangladesh considering the huge share China has in the US market and considering the position of Bangladesh as a leading global manufacturing hub,” says Dr Huq.

But the free trade agreement (FTA) between the European Union (EU) and Vietnam is something she views as a “serious threat” to the Bangladesh apparel industry since there are similarities in what both countries sell to the EU.

The FTA lists 393 apparel items, which covered US$3.93bn exports from Vietnam to the EU in 2018. The first year of implementation will grant complete duty-free access for 11% of Vietnam’s exports, with affected products representing 12% of Bangladesh’s exports. Within eight years, Vietnam duty free products will cover items representing 62% of Bangladesh’s exports to the EU, she warns.

“This will put Bangladesh under tremendous pressure as we might face slumped prices.” This will especially be the case if Bangladesh does leave least developed country status, which will risk its own duty-free access to the EU under the ‘Everything But Arms’ trading system. Bangladesh could graduate to the low duty GSP (generalised scheme of preferences), or the GSP+ system for exporting to the EU.

Dr Huq says analysis indicates how 73% of Bangladesh’s apparel exports currently benefit from being covered by importing countries’ zero-duty programmes – at risk if Bangladesh sheds least developed country status.

This is a problem, for while 60% of Bangladesh’s export earnings (of all products) come from the EU, its clothing sector’s range of products and fibre composition remains “alarmingly limited,” maintains Dr Huq, weakening its ability to respond to shifts in demand. Poor backward linkages are also a problem, given they could deliver sustainable price efficiencies.

Having relied on one-way trade access rights, Bangladesh has yet to effectively engage in economic diplomacy with its strategically important trade partners, Dr Huq notes. Although she points out that government officials are mulling negotiating economic partnerships that could enable the country to mitigate the impact of losing EU market share.

Core strengths

That said, Dr Huq is bullish on the core strengths of Bangladesh’s garment industry: its trained workers, a large local population from which to recruit staff (165 million people), the strength of its home-grown entrepreneurship and a pro-business government.

Despite rising wages, the ready-made garment industry is still competitive, she tells just-style, adding: “We just need to make a strategic move to make more sophisticated items.”

She considers garment entrepreneurs to be the “unique strength” of the industry as almost 98% of manufacturers based in Bangladesh are Bangladesh-owned, unlike some rival outsourcing centres whose polyglot ownership may have conflicting goals.

Dr Huq equally credits the business-friendly government that runs under the “exceptional leadership” of Prime Minister Sheikh Hasina as well as customers’ trust in the industry, which has been “tested in various crises moments.”

Even so, the next five years will be crucial for Bangladesh’s apparel industry, she says. In particular it needs to make a “breakthrough” in the areas of product differentiation and value addition, diversification in product-mix, especially moving away from cotton-based clothing, diversification of markets, and technology upgrades.

Dr Huq underlines the need for re-skilling of workers when the fourth industrial revolution is gaining root, stoking concerns about low-skilled job losses. If the industry invests in people and technology, however, Bangladesh’s textiles and clothing sector should thrive.

As the first female president to lead the 36-year-old association, she is mindful of the difficulties she could encounter while carrying out her role in what remains a patriarchal society. “It’s undoubtedly challenging to go against the tide,” she told just-style.

Still, she draws inspiration from the example of Bangladesh’s contemporary politics: females have been ruling the country for almost three decades now, with Sheikh Hasina, who doubles as the Prime Minister and the president of the ruling Awami League, and the main opposition leader Khaleda Zia, alternating in power since 1991 except for a pause of two years.

“I think it has got nothing to do with the person sitting on the chair. All that matters is how we steer it,” Dr Huq stresses. “My focus is limited to the agenda I have pledged before my constituency, and delivering those meticulously and religiously is my only focus.”