Cover of The Economist (July 1 8th-24th 2009) depicted a melting Economic Theory book with the adage ‘where it went wrong-and how the crisis is changing it’. If carried writings on the financial crisis, whom to blame and what was to be done. The purists and the Keynesians had begun debating the issue. The reputation of Economics was in peril. Today, that debate is still on!
With the global economy still reeling from the shock of the ‘Great Recession ‘, Bangladesh appears to have withstood the turmoil pretty well. The economy has been growing steadily for the past few years. Of late, however, certain events have impacted the economy and it is feared, may threaten the growth prospects adversely.
A reporf by United Nations Economic and Social Commission (ESCAP) in ifs Economic and Social Survey of Asia and Pacific 2013 predicts Bangladesh economy to grow around 6% in the current fiscal, lower than the government’s target of 7%. Inadequacy of infrastructure, global and political uncertainty have been cited as factors that may inhibit growth. The Asian Development Bank (ADB) says that GDP growth in current fiscal may edge down to 5.7% due to global economic crisis and political turmoil. Export demand is expected to slacken slightly as the Euro area economy stagnates and US recovery remains frail. Despite higher remittance, growth in demand for private consumption is expected to weaken.
It is in this context that the severe blow-both humanitarian and economic-to the RMG sector has drawn the attention of all. The Labour Force Survey 2010 of the Bangladesh Bureau of Statistics (BBS) show that of the 22 million people employed — 3.6 million are in the RMG sector alone (nearly 80% are women). Presently, it is the largest employment generating sector. The government and some development partners have made projections showing that a healthy growth of the sector would succeed in lifting nearly 12 million people out of poverty by 2015.
The RMG sector started with a small domestic industry during the 60’s. Prof Mohammmad AIi Rashid in his paper ‘Rise of Readymade Garments Industry in Bangladesh: Entrepreneurial Ingenuity Or Public Policy ‘traces the emergence of the industry. He points out that the limited size of the domestic market was not conducive for further expansion. The rise of RMG, he says, can be ascribed to growing demand in developed countries for cheap apparel. The global trend of relocation of production of garments from high wage countries to low wage countries and the Multi-Fiber Arrangement quota system became a catalyst for expansion of the industry. He further states that if was in the US that the process of relocation of the apparel industry first began when domestic producers found it difficult to compete with apparel imports from low-wage developing countries. The American producers first moved production to low-wage neighbour Mexico, and then subsequently to other low-wage countries like Japan in the 1950s, and a few years later to East Asian NICs, namely Hong Kong, Singapore, South Korea and Taiwan who became large exporters of garments in the 1960s and 1 970s. As wages began to rise in the NICs, production was outsourced to other developing countries where wages were lower, like Philippines, Indonesia, Malaysia, China, India, Sri Lanka and Bangladesh. A similar pattern of outsourcing of production to low-wage developing countries is also observed for the European countries. Like the US, the European producers moved to low-wage developing countries like India, China, Bangladesh and the North African countries.
The industry pioneered by Desh garments, comprised of 22 firms in 1979. By 1980 it rose to 47 and the total RMG export was less than US $ 1 million (as a non-conventional item). Incentives provided by the government for export purposes helped further expansion. Phasing out of MFA quotas in 2004 was thought to bring new challenges. Surprisingly the industry thrived further and today comprises around 5000 firms. Exports stand at around $18 billion and accounts for around 78% of Bangladesh’s exports. The sector is projected to overtake China to become the world’s largest apparel exporter over the next few years.
The EU is the destination for almost 60% of Bangladesh apparel product. The Generalized system of Preferences (GSP) enables Bangladesh to enjoy duty-free and quota-free access to the EU markets. Another major market is USA. Though apparel (being in the sensitive list) is not covered under the US GSP program, Bangladesh is the 4th largest exporter-just behind China, Vietnam and Indonesia.
The competitive edge that Bangladesh enjoys is often attributed to its cheap labour. In an editorial published in the Financial Express, Nilratan Halder points to a US AID study that shows that in factories where management is run skilfully, the productivity of Bangladeshi Labour is as good as that of a Chinese worker. The wages of a Bangladeshi worker, however, is about one third of his/her Chinese counterpart. Efficiency in management counts but wages paid are also important. The rise in RMG sector, as pointed out by Prof Abdul Bayes of JahangirnagarUniversity, has also led to the growth of financial institutions and backward linkage industries.
It is therefore, with a pensive mind, that one has to deal with the fall-out from the string of man-made disaster from Spectrum (64 deaths) to Tazreen Fashion (112 deaths) and now in 2013 the present Savar tragedy (1 100+deaths). It is worrisome to note that even after the catastrophe at Savar another incident of fire at a garments factory (8 deaths) occured in Mirpur. The sector, already hit by recent hartals (costing around Tk 200 Crore a day claimed by BGMEA president), has to deal with the ‘image crisis’. It has been covered extensively in foreign media. The Economist has termed it the second deadliest industrial disaster in South Asia after Bhopal disaster in 1984. It goes on to say that all the paying partners- the producers, buyers and consumers are shirking the task of protecting lives in Bangladesh’s garment sector.
The European Union (a block of 27 countries) is considering trade actions to oblige Bangladesh to improve safety standards in workplace. It has voiced concern over labour condition (including health and safety provision) for workers in factories in Bangladesh. A large buyer has already pulled out. The Bangladesh Labour Law 2006 is in the process of being amended to improve the lot of the workers including the right to form Trade Union. ILO, tripartite partners (government, employers and workers) have agreed on measures for RMG sector including amendments to Labour Law and ensuring safety and also addressing the health issues of RMG workers to avoid further human tragedies in factories. Nobel Laureate Prof Muhammad Yunus has proposed fixing a minimum international wage level. He further advocates formation of a Trust Fund. Implementation, however is the key. One can point to a provision of the present law whereby 5% of profit is to be shared with workers.
Sir Fazle Hasan Abed in an article in The Daily Star (May Day), starts with these words ‘Bangladesh, my country, is again in tears’. How true. The Economics Department of Dhaka College share the sentiment and feel the pain. Students of the department, headed by Muhammad Jamal Uddin Bhuiyan (Shamim) of Red Crescent Unit at DhakaCollege, rushed to Savar on that fateful day. They volunteered tirelessly in the rescue operations.
The department started higher courses by introducing preliminary courses at the post graduate level with 12 students and five faculty members under the leadership of Surma Chowdhury, an associate professor at the time. In the 1998-99 session, honours courses were introduced. Professor Sultana Begum was in charge of the department. Today, with fifteen faculty members and a support staff of three, the department caters to the needs of both HSC level students and around 1300 students at the honours and masters level. Results of our students in the NationalUniversity exams are promising. Students also engage actively in co-curricular activities. A bright and energetic student Sheikh Mohiuddin Mocihu was awarded in the best screen play category for his documentary film ‘Biborton’ by the 12th international independent short film festival ‘13, arranged by Short Film Forum, Bangladesh. Mohammad Salah Uddin, a third year (Hons) student and aspiring young researcher has made his reputation as an essay writer. Among his dozens of achievements he had the privilege of receiving an award from the then President late Md. ZilIur Rahman for an essay on the occasion of ‘World Telecommunication and Information Society Day 2012’. In October 2012, he received another award from Prime Minister Sheikh Hasina for an essay on ‘International Day for Disaster Reduction’. Currently, he is serving as a ‘Goodwill Ambassador’ for UN-WOMEN, Bangladesh. Md. Al Imran Hossain, another third year (Hons), student a budding young journalist, is a staff reporter of Daily Ajker Provat. He contributes frequently to Daily Ittetaq on issues featuring events in educational institutions.
Students have also created a group “Our Leading Students “for interaction between present students and former leading students through facebook for guidance in studies and career planning. A large number of our graduates are found, among others, in the government, banking and telecommunications sector. A number of our bright graduates are engaged in higher studies in the USA, Canada, Australia and England. One student, Md. Mostofa Kamal, currently a colleague, helped in compiling information for this write up. Yes, we, as guardians take pride in our students and if the present is any indicator, the future of the department is bright!
Faculty members of the department of Economics
|01.||Roxana AIam Quadri||Professor and Head of Department|
|02.||Ferdous Arc Zaman||Associate Professor|
|03.||Parvin Akhter Zahan||Associate Professor|
|04.||Md. Rezaul Karim||Associate Professor|
|05.||Shamim Arc Begum||Associate Professor|
|06.||Parvin Sultana Haider||Associate Professor|
|07.||Md. Shahed Au||Assistant Professor|
|08.||Dr.Md, Noor Islam||Assistant Professor|
|09.||Layla Nargis kernel||Assistant Professor|
|10.||Md. Held Uddin||Assistant Professor|
|12.||Lutfun Na her||Lecturer|
|15.||Md. Mahbub Hasan||Lecturer|