Amid the Middle East crisis and energy problems, what kind of issues is the RMG industry currently facing?
We have moved away from the assurance that we will receive fuel according to demand. This is happening worldwide.
Everyone is trying to maintain their own energy security; every country in the world is trying.
The big challenge for our industry in Bangladesh is that when loadshedding occurs, we use standby generators for 3-5 hours, this requires diesel. Before this crisis, we could get diesel whenever we wanted. Now, we are not getting it.
On top of that, price hikes have now begun. That also has an impact.
The biggest difficulty—not just for the RMG industry, but from irrigation to transport, from transport to logistics—is that everything is being affected.
Since this is a global problem, we are trying to work around it.
How is your industry being directly affected?
Our direct effect is that when load-shedding occurs, we cannot run generators due to the lack of diesel.
If we cannot run generators, our production doesn't happen. If production doesn't happen, we won't have on-time shipments.
If there are no on-time shipments, there could be air freights or orders could be canceled.
How is this impacting Bangladesh against its competitors?
In terms of pricing, there is no effect. They have increased prices, and we, the competitors, have also increased prices.
But in terms of supply chain and availability, we are lagging behind.
If I talk about India, China, Vietnam, or even Sri Lanka—though Sri Lanka is not our competitor—prices are rising there too.
Their cost of doing business will increase because of fuel prices. But their supply chain has not yet been disrupted in that way.
Bangladesh has gone through a transition over the last two years. How is this transition affecting our RMG industry?
During the interim government, our buyers' reaction was that they would make decisions once an elected government came in.
A good election took place; everyone internationally and nationally recognized it. Just as buyers' confidence returned, this Middle East crisis began, which is not under the control of the government, you, or me.
There was an opportunity to do better, but without a solution to this Middle East problem, it is hard to say if exports will bounce back.
We are trying to see how these problems can be solved. The decline here started last August.
US tariffs were one reason. There was uncertainty because of the tariffs; it wasn't certain for whom the tariff would be how much. Because of this, buyers became cautious about buying goods.
For the consumers, the price of goods increased due to these tariffs. The buying capacity of the consumer decreased. Not everyone has unlimited income.
People with limited income wear the clothes we make. As their buying capacity decreased, consumption decreased. Consequently, our orders also decreased.
However, after stopping at a certain point, there is a possibility of recovery.
This depends on the fact that the tariff has settled at a certain point. After settling, people will buy more if their buying capacity increases.
Alternatively, we have to expand our network to more buyers in the places where we sell. In that case, we have opportunities.
Will it become challenging for small RMG businesses to survive in the coming days?
It’s not a matter of small or big. The issue is that the one with less financial strength will fall into trouble.
The one who doesn't have a contingency plan will also fall into trouble. A small factory can also be financially strong. But in general, small factories are financially weak.
That is why they are called small—because of their size.
But in my experience, I have seen many factories whose size is not very big but are financially very strong because they work with a plan.
Again, I have seen the reverse scenario where there is a massive factory, but the financial situation inside is actually not very good.
The main thing we should concentrate on as entrepreneurs is that after doing business for a certain period—5, 10, or 15 years—each of us must have a contingency plan.
We should have it so that when various shocks or impacts come at different times, we can sustain ourselves at least for one or two months.
A major tragedy like Rana Plaza happened in Bangladesh. After that, many changes were made in RMG industry, including compliance. How much development and reform actually happened in the industry? Or are there still shortcomings?
The accident rate itself tells you how effective the reforms have been since the Rana Plaza incident.
By the grace of Allah and through everyone's efforts, as Rana Plaza passes 13 years and enters its 14th, no major accidents of that kind have occurred.
If there is an industry, accidents will happen, but the goal must be that people are not harmed. There should be no loss of human life.
In industries across all countries of the world, accidents are happening, but there are no casualties; human lives are not endangered. Our situation is the same.
We need to work on fire safety, electrical safety, and structural safety. For instance, we have now started working on boiler safety.
Do you think that the victims of Rana Plaza tragedy actually received the proper compensation they were supposed to get?
To my knowledge, those affected by Rana Plaza—the successors of those who died and those who were injured themselves—have received their compensation nationally and internationally.
Now, how much the compensation should be is defined differently by different people.
As per labour law, it is one thing—that is very minimum. I am sure they have received more than that.
Again, some people calculate it differently because this was not just an accident; it was a disaster or a tragedy, so their compensation must be different. What is "different"? Some say that since a person would work until the age of 60, compensation should be given in light of how much money they would have earned working until that age. Mathematically, it's okay, but the practical situation will not be like that. In our industry, no one works until 60.
They enter at 18 and leave after 30, 35, or 40 years. Women leave even earlier.
The issue is, if someone says, "I still haven't received compensation," then they must say it, provide their name and address, and prove that they worked in the factory that was at Rana Plaza.
Then we will take responsibility to find out why they didn't receive it and arrange for them to get it.
Internationally, the buyers who worked there also provided a type of compensation.
Now, even after providing this compensation, if someone has been left out in the case of distribution, if anyone feels they have been left out, they should inform us, and we will take action.
After Rana Plaza, because of compliance, costs increased significantly. Do buyers compensate for this?
Regarding the work we do for the modernization of the industry—for example, we work with Leed certification—or the safety issues and new investments after Rana Plaza, the buyer never bears these, nor are they supposed to.
What buyers do, or can do, is that if they understand your factory is safe and if it is built according to all international standards, you will get priority in order placement.
If it is seen that 10 factories are of the same standard, then they might divide the work equally among the 10.
If it is seen that there is a difference in standards among the 10 factories—that one factory's safety standard is better, production standard is better, or a factory is ahead in using renewable energy—preference can be gained in order placement.
Other industries get bank support regarding interest rates or other areas. Do you think that is adequate for RMG industry? Or does it need revision?
The biggest challenge for us has become that the bank's cost of fund has increased because non-performing loans (NPLs) are huge, 35% to 36%.
Thus, the interest rate has reached a point which is 12%-14%. With such high interest rates, it is very difficult to make your industry feasible.
For this reason, we have approached the government saying that low-cost funds must be provided, which are refinanced by the Ministry of Finance or Bangladesh Bank, where there is an opportunity to invest using those funds.
In addition, regarding working capital, it was closed for a year and a half in between. After we took the initiative, it is going to start again.
It will start from next week. There we will get pre-shipment credit (PSC) at 5% interest. For this, Bangladesh Bank is making separate agreements with banks. I hope this fund will be available from next week.
But in general, our cost of fund is still very high compared to our competitors.
As BGMEA president, what are your expectations from the new government?
We want the execution of the things the government said before the election.
First, BNP has received mandate of running the country with overall majority. The current finance minister used to say before the election that they will initiate de-regulation. This must happen.
Second, a very firm hand is needed to prevent further looting in the banking industry, so that NPLs do not increase. This is lower interest rates.
Energy security must be provided; its supply must be ensured.
The Dhaka-Chittagong Road must become an expressway. Even today, I saw in a newspaper that bargaining is going on about whether it will be a flyover all through or if some parts will go by road. My point is, whatever you do, take a decision, because this is only a 230–240km road.
If done so, it's a win-win situation. Our trucks will commute within three hours. That same truck can return with goods on the same day.
What do we do now? The one that goes today returns tomorrow.
The number of vehicles will also subsequently decrease. Fuel costs will decrease. And my lead time will be faster.
You are in BNP’s central committee, as well as in the top position of BGMEA. Is there any conflict of interest?
When I speak as president of BGMEA, my words must obviously be in the interest of my members. When I speak from the party's position, I speak in the interest of the party.
But in most cases, one supplements the other; they don't conflict.
The main thing is the interest of the country and the interest of the people. When you and I speak about the country's interest, when I speak about the people's interest, then it will not conflict; it will supplement.
There should be no personal ill-motive. But if I think that I want to get something using this position which is not right, then the conflict will arise.
Are RMG workers getting fair wages? Should it be revised considering inflation and rising living costs?
In our industry, according to the law, we are bound to give a 9% increment every year. In that case, inflation does not have an impact on our workers.
Second, this 9% is the minimum. If someone gives 10% or 15%, there is no obstacle. This depends on the financial strength of that specific factory. Every 5 years, we change the baseline. This year, our baseline will also change.
What we want to discuss is whether we are following the law that has determined their wages. Most of our factories are abiding by them.
Even then, we see unrest in some factories. Unrests happens when there isn't enough business in that specific factory. Due to lack of business, when they terminate workers, often the workers don't want to accept it or they don't want to understand the law.
After taking charge of BGMEA, we spoke with the Ministry of Labour and Employrment. We spoke with the Finance and Commerce Ministries.
Our point is that everyone must follow the law from their own position.
Then there is the issue of capacity.
I was doing well in business, then suddenly my business turned bad. That is why we have asked for an exit policy.
If someone goes bankrupt, there must be a policy so that within that policy, workers get their legal dues and officials as well. It is a work in progress.
Bangladesh leads in number of green factories. What is the current state and prospect of these eco-friendly factories?
We are building green factories because there is a kind of healthy competition among us.
Second, we want to build environment-friendly factories. Third, by doing this, we get some priority in getting business even if we don't get higher prices.
Fourth, sooner or later, we have to reach the environmental, social, and governance (ESG) goals. Fifth, to do business in the European Union, you have to use a certain amount of renewable energy, which is 30% by 2030.
But it's not necessary that every factory has to be Leed certified. A factory can use sustainable energy or renewable energy without being Leed certified. There is no obstacle.
