Political unrest: Makers uncertain of RMG future despite BGMEA confidence

Amid mounting political unrest ahead of the country's national polls, coupled with an ongoing dollar crisis and a volatile geo-political situation, ready-made garments business leaders publicly exude confidence in the industry's ability to weather the storm. 

However, privately, some apparel exporters, brands and buying house representatives express concern over the uncertain future, fearing the potential impact of the unrest on the industry.

At least 10 exporters, brands, and buying house representatives told The Business Standard that a national election lacking in transparency, fairness, and participation could significantly impact the apparel business, which has recently witnessed violent unrest over the workers' demand for a higher minimum wage.

They highlighted that if the US government takes any actions in response to an "unacceptable" election, it could lead to renowned brands halting sourcing from Bangladesh due to compliance concerns. This, in turn, would have detrimental effects on their businesses.

Recently, a group of top exporters also expressed their worries to an adviser to the prime minister in a meeting after the US State Department announced the new policy on labour rights.

Their concerns mirror the statement made by Chief Election Commissioner (CEC) Kazi Habibul Awal on Monday, in which he expressed concern over the future of the apparel business, emphasising that it may depend on holding a free and fair election.

"To save me, to save my people, to save my garments, to save my common people…the upcoming general election of Bangladesh should be free and fair," he said during the inauguration of training sessions for the Electoral Inquiry Committee members at the Electoral Training Institute.

"If we want to protect our economy, and our future, the election must be fair, acceptable and credible," the CEC added.

'Situation is not good for business' 

Seeking anonymity, head of business development of one of the leading multinational buying houses in the country told TBS that a representative from a Korean buyer has been on a visit to Bangladesh for the last nine days.

But, due to the disruptions caused by hartals and blockades called by opposition parties, the representative could only spend two days conducting business, while the rest of the time he stayed in the hotel.

"The situation is not good for our business," the buying official said, adding that the buyer representative has been sending daily updates about Dhaka's political climate to their office in Korea.

He further said, "We will now have to travel to Korea to meet two buyers next week, who were originally scheduled to visit Bangladesh. It is also increasing our business costs."

Expressing further concern, the buying house representative predicted a potential 20% to 30% loss in business from January onwards if the current political instability persists.

A representative from a prominent European brand echoed similar sentiments, saying previously, their head office would inquire about the political situation in Bangladesh once a month. Now, the current situation has necessitated daily briefings as concerns about Bangladesh's political landscape have heightened.

He expressed specific concern about potential negative decisions by the USA, noting that such actions could adversely affect their business and potentially result in empty shelves in their stores.

The representative anticipated a ripple effect, suggesting that most countries would likely follow the lead of the United States, with the exceptions of China and Russia.

Adding to this, he mentioned, "Customers purchasing extremely affordable apparel from Bangladesh may remain, but those with more robust buying practices may explore alternatives in other countries.

"If a buyer decides to shift elsewhere, returning to the previous country may take 3 to 5 years."

Business leaders confident

In stark contrast with these concerns of the RMG makers who requested to keep their identity undisclosed, business leaders affiliated with the Bangladesh Garments Manufacturers and Exporters Association (BGMEA) who spoke publicly on the matter expressed confidence that the uncertainty over the upcoming national elections will not impede the growth of the apparel sector.

BGMEA President Faruque Hassan told TBS that in anticipation of the upcoming national elections, the USA has already introduced a new visa policy, but it has not had any adverse effects on our business thus far. He expressed optimism, stating, "Hopefully, it will not have an impact in the future."

Furthermore, Hassan emphasised that the USA is likely to keep politics separate from business matters, indicating that the two realms will not be intertwined.

Siddiqur Rahman, former president of BGMEA, said the positions of the EU and the US on the national election are unlikely to impact businesses, given the government and the election commission's commitment to ensuring free and fair elections.

Siddiqur Rahman, also the Industries and Trade Affairs Secretary of the ruling Awami League, emphasised that business dynamics are inherently tied to demand and supply.

Echoing this statement, BGMEA Senior Vice President SM Mannan Kochi said the apparel business is not driven by charity but by market dynamics. He pointed out that the US and the EU have limited options to source such apparel at a competitive price, emphasising that Bangladesh remains a key player in meeting these demands.

Kutubuddin Ahmed, former president of BGMEA, said the EU and the US are unlikely to take action against garment exporters due to the labour-intensive nature of the industry. He said, "If they take action on garments, it would lead to significant unemployment, causing a ripple effect in their own countries as well."

Call for G2G negotiation, social dialogue

A number of the country's top businessmen met with Prime Minister Sheikh Hasina's Private Sector Industry and Investment Adviser Salman F Rahman last Monday. Their objective was to know the government's position on the new US labour rights policy.

After the meeting, Dhaka South Mayor Atiqul Islam said the government will discuss with the US government officials on this issue.

He said the US visa and labour policies will not be a concern for business, those will be solved through government-to-government negotiations.

Miran Ali, vice president of the BGMEA, said in the recent buyers' forum meeting, some buyers expressed concerns about potential disruptions leading up to the national election.

"We informed them that disruptions might occur for one or two days due to the national elections," he said.

He mentioned that the government is actively addressing political matters such as visa policies and other concerns. He reassured that there are no significant worries regarding the business climate.