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Bangladesh: An Update
Avedis H. Seferian, Esq.
President & CEO
Worldwide Responsible Accredited Production
(WRAP)
Ethical Sourcing Forum New York City – March 27, 2014
Agenda
• Bangladesh Overview
• RMG Industry Background & Recent Events
• Political Update
– International Crimes Tribunal
– Latest Elections
– Updated Labor Law & New Minimum Wage
• Industry Update
– ILO Better Factories, Tripartite National Plan of Action, Accord & Alliance
– Accord & Alliance Activities
• Current Scenario & Forecast
• Conclusion
Bangladesh Overview
• 160 million people in 57,000 sq. miles
• Population density 2,500/sq. mile
• Major textiles/apparel sourcing destination (#2 exporter, after China)
• 5,000 factories employing 4 million workers (mostly women)
Background
• History of health and safety concerns
• Poorly educated work force
• Inadequate training, even at managerial/supervisory level
• Many ‘factories’ housed in buildings not meant for industrial use
• Weak building codes
• General lack of enforcement
Tazreen Fashions-November 24, 2012
Fatal Fire in Bangladesh Highlights the
Dangers Facing Garment Workers -The New York Times
Paying with Their Lives: The High Cost of
Cheap Clothing -Solidarity Center
Retailers and
suppliers
hit by fallout
from deadly
Bangladesh
factory fire -CNN
Smart Garments-January 26,
2013
Fire guts Bangladesh garment factory, six killed -Reuters
Another
factory
fire kills
more
garment
workers -ABC News
Global retailers shamed
after another garment
fire in Bangladesh -The Christian Science Monitor
Rana Plaza-April 24, 2013
Building Collapse in Bangladesh Leaves Scores Dead -The New York Times
Big Brands Face Scrutiny
Over Factory Safety After
Bangladesh Collapse -Associated Press
Factory collapse
A ‘wake-up call’
for fashion industry -ABC Australia
Political Update - ICT
• International Criminal Tribunals
– Set up in late 2009 to investigate acts of genocide committed during
Bangladesh Liberation War
– First indictments issued in 2010; first death sentence handed down in
January 2013
– Massive social upheaval, violent hartals
– Jamaat-e-Islami declared illegal in August 2013
– Senior Jamaat leader, Abdul Quader Mollah, initially sentenced to life,
executed in December 2013
• More protests
• Meanwhile, the time for general elections arrived
Political Update – General Elections
• Customary ‘caretaker govt.’ approach abandoned
• Opposition party – BNP – threatened boycott
• Lots of violence and hartals in lead-up to elections
• Infamous phone call between PM Sheikh Hasina and Leader of Opposition Khaleda Zia – Oct. 29, 2013
• Polls held on January 5, 2014
• Voter turnout very low (22%); 21 deaths reported on election day
• Ruling party – Awami League – wins in landslide
– More than 50% of seats uncontested
• Subsequent attempts to contest results; more hartals, but BNP struggling
– Khaleda Zia and other leaders facing April trial for corruption
• Currently, AL seems fairly stable in power
Political Update – New Labor Law &
Minimum Wage
• New Labor Law approved in July 2013 – in part due to ILO pressures
– Union registration system streamlined
• Minimum Wage increased 77% in November 2013 - from 3000 BDT (approx US$38) to 5300 BDT (approx US$68) per month
• Initial resistance on the part of the factory owners, but subsequent implementation seems to be proceeding well enough
– Some talk persists of factories still paying old rate
Industry Update
• Multiple initiatives formed in the wake of Rana Plaza
• May 2013 – Accord on Fire & Building Safety in Bangladesh
• July 2013 – Alliance for Bangladesh Worker Safety
• July 2013 – National Tripartite Plan of Action
• Also, ILO announced:
– Launch of Better Work Bangladesh
• Still in set up stage; looking for Program Manager
– February 2014 - Rana Plaza Donor Trust Fund estd.
Industry Update
• Accord
– 150 apparel companies + unions + NGO witnesses
– Largely European
• Alliance
– 26 member companies + supporting associations
– Largely North American
• Both published updated lists of factories, as of March 2014
– Accord: 1639 factories (with 2 million workers)
– Alliance: 770 factories (with 1.4 million workers)
– 378 units in common
Accord & Alliance Activities
• Inspections: – Agreed on common set of technical standards for building fire, safety and
electrical safety in November 2013
– Accord begun inspections in February 2014
• Ten facilities already covered; reports on website
– Alliance inspections have begun; first reports expected in April
• Training: – Alliance has begun training program
– Accord still looking for a Chief Trainer
• Jointly held first ever International Trade Expo for Building and
Fire Safety in Dhaka, February 23 & 24, 2014
• Both will have Advisory Board meetings in April
Current Scenario & Forecast
• Political situation improving; now largely stable
– But most predict current government will not last full term
• Initial fears about buyers leaving not borne out
– Jan 2014 year-on-year garment exports grew at 6.36%
– Still, this is a slower growth rate than usual for Bangladesh
• Inspections and trainings will soon be in full swing
– Questions remain concerning harmonizing efforts and whether the July 2014 deadlines can be met
• Real test will be around repairs/upgrades
– Who will pay?
– What happens to facilities that cannot be ‘fixed’?
Conclusion
• 2014 will be a pivotal year for Bangladesh
– Upcoming anniversary of Rana Plaza - April 24
• Will likely remain #2 apparel exporter in the world
– But facing increasing pressure from SE Asia, esp. Vietnam
• Should see the beginnings of a shrinking in the number of factories
• Expect facilities to shift out of Dhaka city and into industrial zones
• Increase in cost of sourcing from Bangladesh
Avedis H. Seferian, Esq. President & CEO
Worldwide Responsible Accredited Production Arlington, VA
www.wrapcompliance.org
+1-703-243-0970
Thank you!
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BANGLADESH – AN UPDATE
Intertek Softlines, Bangladesh
Business Assurance
Presented by: Mamun Zaman Senior Manager, Operations
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Common Violation - WCA
- Global Participating Facilities : 11889
- Bangladesh Participating Facilities : 423
- Bangladesh Total Assessment: 565
- Health & Safety Score: Bangladesh 73 & Global 84
Score
Medium Performance Further Improvement Needed
Global 77
Bangladesh 71
Workplace Conditions Assessment:
Top 5 most frequent Non-Compliances in Health & Safety Bangladesh
Non Compliance Frequency Rate %
Fire sprinkler is not properly installed throughout the facility and/ or not regularly maintained. 94%
The facility does not have a documented emergency plan in place and conduct regular emergency drills for all employees who work with chemicals or hazardous materials OR The facility does not conduct regular emergency drills (e.g. chemical leakage, accident drill) for all employees who work with chemicals or hazardous materials.
48%
Access to aisles, stairs and passageways are not kept clear at all times. 46%
Electrical cords and outlets are not in good condition OR Electrical cords and outlets are not in safe condition.
44%
There are no special programs/ measures for pregnant women. 41%
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Common Violation
Health & Safety – Bangladesh Avg vs Global Avg
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Common Violation – Fire Safety Audit
Fire Safety Audit Pictorial Presentation
Wooden Electric Switch Box Emergency Exit Locked
Uncovered and Loose Electric Wires
Flammable Materials Kept in Production Floor
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Common Violation – Fire Safety Audit
Fire Safety Audit Pictorial Presentation
Shared Building Roof Top Not Vacant
Aisles Partially Blocked by Unfinished Goods and Yarn
Flammable Materials Kept in Production Floor
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Common Violations
ESA Audit Pictorial Presentation
Cables are not organized in definite sequence inside distribution board
Cable gland is not installed
Burnt cable is used
Combustive materials are kept in front of Distribution board
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