Analysis of the present condition of BKMEA

Introduction

Bangladesh Knitwear Manufacturers & Exporters’ Association was formed in 1996 by the all out efforts of few knitwear manufacturers. Soon after the formation it undertook activities to look after the interest of the knitwear sector of the country. Today it is an association of 1131 knitwear manufacturers and exporters that represent the largest export earning sector of the country. Approximately 4 billion US dollar earned from the last year through export. In last F/Y(2005-2006), the  total export growth rate was 35.38%.

History:

The RMG business started in Bangladesh in the 70s but it was then merely a casual effort. The first consignment of knitwear export was made in 1973 and the first consignment of woven garments was made in 1977. In 1981-82 the contribution of Woven garments in the total export was 1.10%. Afterwards it is a story of sustained success for the Bangladesh RMG sector. The knitwear sector has grown over the years in geometric progression and become the prime driving force of Bangladesh’s export earnings. Within a decade the contribution of Woven to the export basket became 42.83% (1990-91) and the knitwear sector’s contribution was 7.64% (1990-91). Now Knitwear has become the largest export earning sector of Bangladesh contributing 41.79% to national export earnings at the end of FY 2008-09 (July-April).

Activities:

u Protect the Interest of the Sector.

u Promotion & Development of the Market.

u Promotion & Development of the Sector.

u Capacity Building of the Sector.

u Social Compliance Status Enhancement.

u Basic Rights Education and Awareness Rising.

Efforts:

BKMEA is putting tireless efforts to enhance productivity of its members, enhance social compliance status and workers welfare, diversify export market, and better market access of the country’s knitwear products to EU, USA, China, and other countries. BKMEA is working with German Technical Cooperation (GTZ), South Asia Enterprise Development Facility (SEDF), European Commission (EC), and other related organizations in this regard. 

Declaration of Child Labor:

• No member unit of BKMEA uses any Child Laborer.
• Through regular inspection, it ensures that no child worker is working in any of the factories.
• Child Labor Standing Committee is very active and frequently meets in this regard to protect the use of child labor.

Law of the Country on Adolescent and Adult workers:

u As per Bangladesh Labor Act, 2006 adult workers are those who have completed 18 years of age.

u Beside the adult workers the Labor Act, 2006 also allows the workers, between the age of 14 and above and below 18 considering them as adolescent  to work for five hours and with other considerations.

Thought to develop the skilled workers’ supply:

Currently, All the member units are facing problem of skilled adult workers seriously; specially, to operate the machines. Skilled and trained workers are required for the development of RMG sector. To provide supply of the skilled workers, training is necessary to the workers of this industry.

u BKMEA in collaboration with Save the Children Sweden-Denmark in Bangladesh wants to strengthen the capacity of its member units absorbing the workers working as the assistants who would receive basic vocational training and would become the trained, skilled adult workers.

u Beside the workers working as the assistants in the garments sector, BKMEA also wants to pick up the workers working in the hazardous working places and the unemployed children (under the age group 15-19, there are 322 thousands persons unemployed. Source: ILO, 2003 ) of the society in the vocational training program as a social responsibility to them.

The adolescent, who are engaged in hazardous work and also looking for new job, it would be beneficial for them if a vocational garments training institute under the joint effort of  Save the Children & BKMEA could be  established for their training and upgrading skill.

Thought to Develop the workers’ supply :

To run the education and vocational garments training activities, BKMEA will help in the following ways:

u Would help to prepare a training module and also training for trainers (ToT).

u After completion the training, BKMEA would help to provide job placement for them.

u They hope, the opportunity for new employment will be created if this plan is implemented in due manner.

Arbitration Committee:

There is conciliation cum arbitration bi-lateral committee in BKMEA to deal with individual grievances. The committee tries to solve the disputes that arise between the owner and the employees of the factory before referring the matter to court which is time consuming and costly. No financial expenses from the owners or from the workers are involved.

Social Compliance Monitoring Program:

To enhance the compliance status of the whole industry, BKMEA with the support of GTZ, is implementing a “Social Compliance Monitoring Program” since 2007. Twenty members competent monitoring cell of BKMEA are working at factory level to check the labor welfare and safety issues regularly.  The  project  has  included the following  activities:  formation of a skilled monitoring  team, development of a detail check  list  including 89  compliance  related  questions   and   grading  system (A, B, C, D)  based on  National  Labor  Law,  unannounced visits to factories, provide Corrective Action Plan (CAP) and follow up   visits to check the progress, comprehensive software  for   storing  field    data   and   systematic evaluation  of  factories. BKMEA takes crash programs for degraded factories for providing special guidance and in extreme case imposing penalty measures. Besides, the compliance cell is organizing trainings for mid level management and factory based training for workers to enhance their skill, knowledge and awareness.

Skill Development Programs:

Mid Level Management Training: Dearth of skilled management is one of the major barriers of developing compliant RMG industry in Bangladesh. To develop true professionalism in factory management, BKMEA is arranging series of training programs for mid level management of factories. The training has started from 10 November 2007. Three training manuals for mid level officers have been published already which are being distributed to the factory people as a ready reference for their day to day work under this to provide a complete reference to the factory management which is being distributed at free of cost during the training sessions. The core contents of Mid Level Management Training -1,2 and 3 are: child labor, appointment letter, ID card, wages, overtime & maternity benefit calculation, salary sheet, using of PPES, fire safety, leave, personal file, disciplinary procedure, service book, health and safety, register maintenance , roles and responsibilities of welfare officer, condition of appointment, workers’ classification, grievance handling procedure, health and safety issues, welfare facilities, industrial relations, ILO codes, offence & its penalty etc. By May 2010, BKMEA has trained about 2000 mid level officers of member factories under this program. The objective of the initiative is to develop at least one competent compliance officer in each factory which will support the factory for maintaining compliance necessities by own effort.

Service Book Implementation:

Service book is long driven demand of Bangladesh RMG sector and BKMEA assures full support towards this. Proper implementation of service book will help for reducing of workers’ migration, availability of workers job related record and ensure workers’ right etc. As per Bangladesh Labor Law 2006, implementation of service book is mandatory for all factories. BKMEA has started distribution of service books to all members since September 2008. Prior to that, the association has arranged series of orientation programs for Narayanganj, Dhaka and Chittagong factories to disseminate information on using and urgency of service book.

Mandatory Group Insurance:

BKMEA has made Group Insurance Mandatory for all of its member units. An agreement has been signed with a govt. life insurance company in this regard. New membership and renewal of old membership are not issued until the applicant complies with the rule. Under the agreement, each member unit has to pay premium of Tk 8,000.00 per annum eligible to have insurance claim of maximum 20 persons. Member factories are getting the insurance claim for its workers/employees for accidental or normal death and permanent disability. BKMEA is very careful to pay the insurance claim to the representatives of worker regularly.

Awareness Raising Programs:

Publication Materials:

To disseminate information on core compliance issues, BKMEA has published a complete guidebook on social and environmental compliance along with structural safety, a handbook on labor law, three training manuals for mid level management, one training manual for workers, a number of posters and stickers. All these materials are in local language and have been distributed already to the member factories at free of cost. Processing for further publication is going on.

TV Advertisement:

BKMEA has developed a series of TV commercials on the following key compliance issues: minimum wage and on time payment, owner-worker relationship, personal protective equipment (PPEs). These are being aired in the prominent TV channels of Bangladesh to raise mass awareness on workers’ rights.

Documentary:

A fastidious documentary has been made by the association including all the ongoing compliance activities for dissemination within national and international stakeholders. It has included the regular monitoring, skill development program, workers’ festival, charity program and other significant activities. The documentary has been distributed to all key stakeholders.

Experience Sharing Session with Factory Owners:

Development of a Compliant Factory is largely dependent on the intention and capability of an owner. To motivate owners and provide them updated information on world compliance scenario, BKMEA is regularly arranging experience sharing sessions with factory owners dividing total industrial areas into particular zones Pioneer owners in RMG business are being invited in these sessions to encourage other entrepreneurs from his/ her practical experience.

Workers’ Training Institute at Rangpur:

BKMEA is running a training institute at Rangpur, the northern remote part of the country where destitute male and female obtains free of cost training facilities with food, accommodation and post-training employment opportunities in BKMEA member factories. By May 2010, already 21 batches have completed their training successfully and are currently employed in the BKMEA member factories. In each batch, around 100 trainees have completed month long training where 70% are female. Besides this technical training, each trainee gets basic training on labor law, social compliance issues, production system and behavior pattern. BKMEA is trying to expand the capacity of this training institute and establish some new training institutes in the northern districts of Bangladesh and around Dhaka city which is very urgent to cover up the 25% shortage of skilled labor force in the industry.

         

Observance of historical May Day :

BKMEA, the one and only trade body with its tradition has observed historic May Day on 2nd May, 2010 like last years The occasion was accompanied with various ingenious programs like: discussion session on worker-owner relationship, awarding of 10 best labor friendly knitwear factories of 2010, unwrapping of anniversary issue of ‘workers news letter-the Shromobarta”, handing over of group insurance cheque to demised workers’ family members and a gala cultural program by first-rated performance solely by the workers. BKMEA will arrange the program in next years also as the association believes that, May Day is not only for workers, but also for owners to bridge “the owner-worker relation” in a new dimension.

Workers’ Festival:

With the hope to swell cordial relationship between industry owners and workers, BKMEA arranged the largest ‘Worker’s Festival’ on 18 December 2009 as a part of its pro-worker activity. Wearing colorful dresses and holding banners and festoons, about hundred thousand workers from different garment factories flocked to the festival premises and enjoyed different events like puppet show, bioscope, merry-go-round, dress as you like competition, musical events, awareness raising trainings etc. Due to overwhelming response from workers, BKMEA has decided to arrange the festival on an annual basis. The 1st Workers Festival was held on 18 December 2009 at the same venue, Narayanganj Stadium which is near the biggest RMG cluster of Bangladesh.

                   

SHROMOBARTA-Special Newsletter for Workers:

The ‘Shromobartra’, is another pioneering endeavor of BKMEA to bring out the cultural intelligence of working class. For the first time in Bangladesh, BKMEA has published this quarterly magazine solely for the RMG workers of the country. The newsletter contains writings from the workers of BKMEA member factories. This quarterly newsletter is a symbol of strong voice of our disciplined and dedicated work force.            

                     

Community Health Care Centre for the Workers:

BKMEA is running a hospital for workers at BSCIC, Narayanganj where about 200 factories are clustered in a single periphery. The hospital is being run from the own resource of BKMEA where workers can get free outdoor treatment and medicine under intensive care of female doctors.        

                       

Centralized Day Care Centre:

BKMEA is working with Metro Group, one of the largest apparel buyers of Germany for establishing a ‘Central Day Care Centre’ in BSCIC, Narayanganj which is the largest RMG cluster of Bangladesh. The agreement signing between BKMEA and Metro Group was held on 26 April, 2010. Mr. Muhammad Faruk Khan, honorable minister for commerce; H.E. Holger Michael, Ambassador, Embassy of the Federal Republic of Germany; Mr. Fazlul Hoque, President, BKMEA; Mr. Anton Knijf, Vice President, Metro Group, other leaders and entrepreneurs from BKMEA; media and Govt. guests were present in the agreement signing ceremony. Primarily, 60 children will be accommodated in the day care centre with nutritious food and all standard facilities for rearing children with proper physical and mental care. Workers will get this facility at free of cost. Gradually, depending on its success, number of children will be increased in the day care centre and some more centers will be established in other clusters of RMG.

Food Rationing for Workers:

The price of rice is a key issue in impoverished Bangladesh, where households are estimated to spend nearly 70 percent of their income on food (AFP, 2008). In Bangladesh, two-thirds of food item of general people contains rice, so inflation in rice price creates acute problem specially for the working class. Conceiving this idea, BKMEA has started to distribute rice at a subsidized price from 2007 which is first from the history of trade body in Bangladesh. In first quarter of 2008, when rice price had gone up to sixty cents a kilogram in retail markets and other food prices became more than doubled, BKMEA distributed rice and other daily essentials at a very subsidized rate to the workers to face this ‘hidden hunger’ phase, Again, during the holy Ramadan of 2007, 2008 and 2009, BKMEA supported the workers by subsidized food items. Presently BKMEA is continuing this rice distribution program almost in yearly arrangement through the member factories with Govt. support.         

                   

BKMEA support during Natural Disasters:

During the devastating flood of 2007 and 2008, BKMEA arranged extensive relief works for the effected workers and in flood vulnerable districts. Again, after the destructing cyclone (SIDR) of 2007, BKMEA rushed towards the effected areas with emergency supports and food materials. Besides, in each catastrophe, BKMEA donates bulk amount in Govt. fund for supporting the restoration works.            

                                       

Workers’ Scholarship:

BKMEA has taken an initiative to reward the good academic performance of workers or close relative of workers in secondary school and college level examination. An official circular has been issued for collecting application from workers of member factories with ‘A+’ or ‘A’ grade result.  Response from workers is praiseworthy and top grade holders have already awarded in a formal program. 

Collaborative Approach with other Stakeholders:

Government Bodies: BKMEA is actively participating the meetings and following activities with National Social Compliance Forum under Commerce Ministry (MoC) and Taskforce on labor Welfare and Crisis Management in RMG sector under labor Ministry (MoL) of Bangladesh Government.        

                   

IAF: BKMEA is working with International Apparel Federation (IAF), the largest apparel trade body in the world international for sharing and networking of knowledge on workers’ welfare and other sector related issues. Mr. Fazlul Hoque, President, BKMEA is the board member of IAF. BKMEA delegation lead by the President Mr. Fazlul Hoque participated in the half yearly meeting of IAF Global Responsibility Committee (GR) on 21st April 2009 in Cologne, Germany where he presented the latest development of Bangladesh apparel sector on compliance aspect with the international stakeholders.

ILO: BKMEA participated in the ‘Multi Forum 07’ of ILO held in Geneva, Switzerland conference on 15-16 November 2007. The conference was on “Better Business: Managing Labor Relations for Productivity and Growth” where BKMEA President, Mr. Fazlul Hoque was the only participant from Bangladesh RMG sector. Participants from different countries, United Nations, Universities and Labor Ministries of Different countries joined the conference. BKMEA has also close relationship with the local office of ILO in Bangladesh.        

                       

MFB: The  International  Multi  Fiber   Agreement  (MFA)  has facilitated  the establishment  of  a  Bangladesh  Working Group  (MFB)  to  work  with  all  the  stakeholders,   i.e. Government,  Association,  Buyers,  Labour Unions  and Civil  Society.  MFB is  identifying the  core  areas   and develop  the  scope  for  a three year  project  to increase  the social  compliance   and   competitiveness  of   the  RMG sector of  Bangladesh. BKMEA is working closely with MFB for strengthening the capacity of Bangladesh apparel sector.

Changes in combination of Export Products over time:

The growth of knitwear sector is increasing at an increasing rate. The cumulative average growth rate of the sector is 20%. And it is continuously grabbing more portions in the export pie of Bangladesh. This is mainly attributed to the facilities provided under the EC GSP and ROO. The knitwear sector is heavily driven by the favorable policies and took the opportunity to develop a st The entrepreneurs of the knit sector stepped forward with their expertise in the late 80's. With their earnest efforts they were able to export US$ 14.84 million in 1989-90. Out of this, US$ 12.22 million was exported to EU and US$ 2.02 million was exported to US. The trend continued in the knit sector because of the market access opportunities provided to the LDCs under the Generalized Systems of Preference (GSP) benefit. rong backward linkage for the sector. The EU is the main export region of Bangladeshi Knitwear constituting 76% (US$ 4.2 billion) of total knitwear export followed by the USA (14.59%, i.e. US$ 807 million) in the year 2007-08. This is mainly attributed to the facilities provided under the EC GSP and favorable ROO. The knitwear sector is heavily driven by these favorable policies and took the opportunity to develop a strong backward linkage for the sector where the value addition is about 75%. The two-stage transformation requirement of ROO in 1999 boosted market penetration in the EU further; it contributed a growth of 101.19% since 2000-2001.

In FY 2003-04, knitwear for the first time exceeded woven wear and became the leader in terms of quantity exported with 91.6 million dozens. Knitwear is still leading in terms of quantity exported and is widening the gap day by day. Export quantity of knitwear items increased to 241.59 million dozens which is 163.74% higher than the year 2003-04 to 2007-08. On the month of December of the FY 2008-09, total knitwear export was 146.5 million dozens which is 30.58 million dozens higher than the same period of last year.

Bangladesh knitwear is performing a well increase in terms of quantity which is a clear indication of increase of capacity in this sector. In the year 2007-08, the contribution of Woven wear to the export earning was 36.17% and in Knitwear was 38.97%. In the current year, the performance of both the sector are as follows:         

                                   

            Knitwear Export US$ 5,231.01 million FY 2008-09 (July April)

            Woven  Export US$ 4,902.48 million FY 2008-09 (July April

             

 Therefore the contribution of knitwear in national export increase is 57.82%.

Recent programs

Recently from 29 to 31 March, 2010 Prime Source Forum Meeting took place at Hong Kong Convention and Exhibition Centre (HKCEC) in Hong Kong. Since 2006, the Prime Source Forum meeting has been arranged in Hong Kong annually. The forum meeting is the perfect ground for bringing together senior management from across the globe to discuss the challenges and opportunities facing manufacturers, suppliers and retailers involved in the production and sale of garments/textiles. This year the global economic meltdown dominated the meeting as echoed in the welcome address by Michael Duck. The key note was presented by Andrew Y. Wu, Group Director of LVMH China.

Along with BKMEA, 400-plus participating companies included such well-known brands as adidas, Ann Taylor, AWI, Bossini, the Crystal Group, Fountain Set, H&M, Jockey International, Jones International, Li & Fung, New Balance, Nike, Pacific Brands, Polo Ralph Lauren, Target, VF and YGM thronged in the prime source forum meeting . The 6th edition of PSF, the definitive meeting place for the global apparel industry, will be held in Hong Kong from 30 March to 1 April, 2011. 

BKMEA, the largest export earning sector of the country participated in the Bangladesh Development Forum (BDF)-2010 which took place at Bangabandhu International Conference Centre, Dhaka from February 15 to 16, 2010. BKMEA was the single representative of Bangladesh apparel sector participating in the fair. The Forum is a consortium of donors for Bangladesh. They met for the last time in 2005.

Mr. Md. Fazlul Hoque, President of BKMEA has been elected as one of the respected Board Members of world’s largest apparel trade body ‘International Apparel Federation (IAF)’. The declaration came in the grand opening of the 24th World Apparel Convention at Maastricht of Netherlands on October 29-31, 2008. Trade associations and companies from about fifty countries (like USA, Germany, France, Turkey, and India etc) are actively participating in this prestigious federation. This is the first time in the history of IAF, through BKMEA; Bangladesh is being able to place the representation in the governing body of IAF. It’s recognition of Bangladesh Apparel Sector which is high potential in all respect. BKMEA expresses heartiest congratulation to Mr. Fazlul Hoque for guiding the sector with excellent leadership quality and being elected as a director of 16 members’ IAF executive committee. The next conference of ‘Growth Summit’ will be held on March, 2010 in New York.

BKMEA send second delegation to Japan on September 2009, on the eve of the 5th Knitwear Exposition, as a follow up mission. The second visit was intended to promote Bangladesh knitwear market to Japan, make further examinations of Japanese apparel market, attract Japanese knitwear buyers and investors to visit Knit Expo 09 and learn more about the nature and taste of Japanese consumers. During the visit, they had eight separate meetings with textile business teams of Hong Kong and Japan. In one of the meetings, two reputed companies from Japan expressed their interest to invest around TK 500 crore in the knitwear sector in Bangladesh. To the end, as he put, that they had already completed the primary feasibility study. Besides, top business groups expressed their keen interest to import knitwear products from Bangladesh

BKMEA’s Market Promotion Visit to South Africa & Botswana

A delegation of the country's knitwear manufacturers made a week-long visit to South Africa and Botswana from October 04 to 10, 2009 in search of new markets as the local companies are now exploring potential markets from abroad for their products.

During the visit, they held 39 meetings including with the leaders of Johannesburg, Pretoria, Durban and Minara Chamber of Commerce and Industries, and Cape Town Regional Chamber. The team also met with the leaders of Botswana Confederation of Commerce, Industries and Manpower, Export Manufacturers Association, and Export Development and Investment. Most importantly, Botswana Exporters and Manufacturers Association (BEMA) and Bangladesh Knitwear Manufacturers Association (BKMEA) signed a MoU as a joint effort to promote trade between Bangladesh and Botswana.

Currently, China is the major apparel supplier to the South African markets with a share of 70.8%. Bangladesh apparels accounts for only 4.3 % of the South African $1.2 billion annual imports, while it is 5.5 % from Mauritius and 4.7 % from India.

The value of Bangladesh garments that were exported to South Africa in fiscal year 2008-09 was US $43 million. Import concentration of South Africa from Bangladesh is mainly on cotton items where the major imported items are Sweater, T-shirt, and Men’s Polo shirt etc. Pointing to a 71% growth in apparel exports to South Africa from Bangladesh, the BKMEA President Md. Fazlul Hoque mentioned that there is prospect of around $500 million apparel exports in the next two years.  However Mr. Hoque identified some major problems in apparel export to South Africa such as 54% tariff (40 % duty and 14 % VAT), no offer for any preferential treatment to the country of origin for RMG products etc. He added that Bangladesh government's strong lobby could help to tap the unexplored markets in the developing African continent.

Bangladesh Knitwear sector has the necessary skill and capacity to be at the top position in the global apparel market. With timely and effective supports from government, this vision could be materialized in the near future.

Advantages of Bangladeshi Knitwear Sector

                                   

            Knitwear is a near self-sufficient sector in all respect; currently BKMEA members are supplying 90% of the knit fabric requirements of the sector.

            Local yarn suppliers provide around 75% of the total requirement of the sector.

            We have more than 250 composite factories; besides the composite units many garments have their own dying and finishing units. A separate dying and finishing industry also has grown up over the time to support the sector.

            Bangladeshi Knitwear is exported to 90 countries of the world. But the EU and the USA are the major importer.

            Capacity is increasing at a good rate to cope with the future demand of this sector.

            Bangladesh provides labor forces unparallel in stitching capability and skill at our level.