Wednesday, May 29, 2024


Dhaka Tribune

Experts: Value-chain-based solution key to recovery of apparel sector

A support mechanism for suppliers to access financing through banks by acting as an informal guarantor is also crucial, they say

Update : 20 Apr 2021, 10:05 PM

A value-chain-based solution that encompasses manufacturers, retailers, brands, and social safety nets for garment workers can help the apparel sectors of Bangladesh and Sri Lanka attain sustainable recovery, experts said at a webinar yesterday.

They underscored the importance of a wider social safety net that commits to ensuring a living wage for RMG workers. 

A support mechanism for suppliers to access financing through banks by acting as an “informal guarantor” is also crucial, they said.

A value-chain-based solution that integrates all variables of the supply chain process — suppliers, manufacturers, buyers, brands, as well as governments of sourcing countries — would contribute to the recovery process through a better distribution of orders from brands and buyers based in Europe and the US, they added.

The international webinar titled “Recovery of the Apparel Sectors of Bangladesh and Sri Lanka: Is a Value-chain-based Solution Possible?” highlighted the findings of a joint study conducted by the Centre for Policy Dialogue (CPD) and Institute of Policy Studies, Sri Lanka (IPS). 

Dr Fahmida Khatun, executive director of CPD, chaired the webinar moderated by Professor Mustafizur Rahman, a distinguished fellow of CPD. 

Dr Khondaker Golam Moazzem, the research director of CPD, and Kithmina Hewage, research economist of IPS, made the keynote presentation.

Bangladesh can supply products that have shifted away from countries like China, thus tapping into a potential $2 billion worth of orders, the panelists said.

Governments of sourcing countries, as well as buyers and brands, could extend long-term support in developing social schemes targeting workers of the apparel sector, they added.  

Inadequate short-term measures alongside fiscal constraints prevented the provision of adequate support to the workers of the sector, according to the keynote presentation. 

Additionally, medium-term recovery measures implemented by market players were not impactful across the value-chain, found the joint study on the recovery of the apparel sector from the coronavirus pandemic.

Although measures such as $1.2 billion subsidized credit to RMG enterprises were disbursed in the form of workers' wages with the extension of letter of credit (L/C) usance and waiver on the interest of loans, the support has not been received by all factories. 

Furthermore, most of the laid-off workers — about 0.36 million as of October 2020 — did not get the due benefit. 

Only 14% of the laid-off workers have received their dues so far, the study found.

Global apparel imports during the January-August period of 2020 contracted by 23% compared to the same period in 2019. 

Experts also said that addressing medium-term challenges through national-level interventions alone will be difficult. Initiatives of major brands/buyers were limited to inventory smoothening, re-shoring, and over-concentration of orders to a limited number of sources.

Prof Rehman Sobhan, chairman of CPD, said that ILO could consider playing an entrepreneurial role in bringing together international buying countries with supplying countries to restructure global demand management. 

Tripartite exercises should be carried out, including government, employers, and workers to produce a mutually accommodating system of unemployment insurance to address not just the immediate impact of the Covid-19 crisis but a longer-term crisis, he added.

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