The country’s apparel exporters — both woven and knitwear — have demanded a ban on Foreign Direct Investment (FDI) in ready-made garment (RMG) sector outside the Export Processing Zones (EPZs), sources said.
The government withdrew the ban in 2006 to woo FDI in RMG sector.
Bangladesh Garment Manufacturers and Exporters’ Association (BGMEA) and Bangladesh Knitwear Exporters’ Association (BKMEA) made the demand to the government recently.
The Ministry of Commerce (MoC) feels the demand of apparel exporters is logical to a great extent, while the Board of Investment (BOI) seems interested to go by the existing rule that has no restriction on FDI in RMG sector.
BGMEA President Abdus Salam Murshedi in a recent letter to BOI said the competitiveness of local garments would be hit hard if the foreign investors with their global expertise and reputation invested in local RMG sector beyond the EPZs.
“Many small and medium size garment factories will face closure as they would fail to compete with foreign investors,” says the letter of Salam, written to BOI Executive Chairman MA Samad.
“It is fully undesirable that government allows further FDI in RMG sector under the given situation where small and medium RMGs have been struggling to survive.”
The BGMEA president said the government should rather encourage FDI for backward linkage industry, instead of FDI or joint venture investment in RMG sector outside the EPZ areas.
On the other hand, Salim Osman, President, BKMEA, said they have been repeatedly asking the government to put a ban on FDI in RMG sector.
“We will raise the issue to Prime Minister Sheikh Hasina to impose a ban on FDI in local RMG sector,” Osman told the FE on Saturday.
He, however, said Commerce Minister Faruk Khan has assured them of his help in putting ban on foreign investment.
Another top RMG exporter, Anwar-Ul-Alam Chowdhury (Parvez), Chairman, Evince Group and former BGMEA President said the trend of foreign investment in RMG would be discouraged if clearance from BGMEA or BKMEA is made mandatory before BOI okayed FDI proposal in RMG sector.
“We would not recommend for any FDI proposal in RMG,” said Salam.
The country’s total RMG export was $12.6 billion in 2009-2010 fiscal year. Currently, about 3.0 million workers are employed in about 0.30 million garment units.
A top MoC official said they are sympathetic to the cause of BGMEA and BKMEA. Their demand will be forwarded to BOI soon, the top official said.
He said the BOI stopped giving permission to FDI in RMG to be established outside the EPZ area for a brief period of two years from 1998 at the insistence of BGMEA and MoC.
The BOI Executive Chairman could not be contacted for comments despite several attempts. However, a member of BOI, requesting not to be named, said the current provision of FDI has no restriction in giving ‘No Objection Certificate’ for FDI in RMG sector.
Industry people said over 10 foreign investors — Indian, Canadian and German— are now doing RMG business in the country outside the EPZs. A good number of ailing small and medium garments factories are expected to be bought soon by a number of Indian buyers.
It is learnt that the salary package and other facilities in foreign owned garments are better than those of local garments.
The local garment owners would feel extra pressure in paying more packages to their workers if many foreign investors invest in local RMG, a labour leader said terming the demand of apparel exporters and associations an effort to serve their own interest.
-FE, Sun, 24/10/2010
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