RMG tragedies: BD faces Moody‘s apparel body ire

After the recent incidents of fire at and collapse of factory buildings in the garment exporters’ hub of Bangladesh, the country and its garment units, are facing the ire of international business communities.The Netherlands-based International Apparel Federation (IAF) yesterday passed a resolution, on lack of labour safety and health measures and an inappropriate work environment in Bangladesh.
“The federation has asked buyers, international brands and retail chains that source fabrics/apparel from units based in Bangladesh to ensure that units from where they are sourcing should not overlook compliance factors, like labour safety, health issues and work environment, irrespective of how low is the price they are offered,” Rahul Mehta, an IAF board member, said after a meeting in here.
The apparel sector is very significant for Bangladesh‘s economy – it constitutes 80 per cent of the country‘s exports.
A number of Western retailers that source from Bangladesh‘s garment factories have already threatened to stop orders. Even before the collapse of the factory building last month, Walt Disney Co announced it would end production of merchandise in Bangladesh.
After the collapse, Walmart, Gap and Carrefour, among others, have called for more stringent labour safety standards.
Besides last month‘s garment factory collapse, which claimed many lives, strikes and labour unrest have become a new normal in this small country, which has attracted huge interest from global majors in the apparel business due to cheap labour.
Strikes by labour under political leadership have become a more common tool for political parties to further their interests. This year alone, reports indicate 33 strikes, or hartals, have been held.
“The garment sector is one of the most important drivers of growth in Bangladesh, comprising 80 per cent of total exports and employing more than three million people. The industry is already under scrutiny because of a spate of industrial accidents that point to poor worker conditions and safety standards,” Anushka Shah, an analyst at sovereign risk group, Moody‘s Investors Service Singapore Pte, said today.
“Continued political tensions are credit negative because they may further damage investor confidence in Bangladesh against the background of recurrent industrial disasters in the readymade garment sector,” she added.
The scale of these tragedies will likely prompt the Bangladesh government to reform labour laws and tighten safety standards following pressure from foreign investors.
Measures envisaged by international agencies and the international apparel federation will add costs to the units based in Bangladesh. Banglanews4.com

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