Will Fashion Ever Move Past ‘Price, Price, Price’?
The two-day Best of Bangladesh conference in Westergas, Amsterdam, which came to a close on Tuesday, was an exercise in global communication. The message was clear: let’s change the conversation between garment manufacturers and buyers.
The most emphasized point was one that manufacturers from Bangladesh have long stressed—buyers should base their decisions on factors other than the lowest price, especially when sustainability, circularity and traceability are in question.
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“It’s about the people and the planet,” Abdul Hil Rakib, managing director at Team Group, told Sourcing Journal. An exhibitor as well as a speaker at the event, Rakib is also a director of the Bangladesh Garment Manufacturers Exporters Association (BGMEA). “The planet discussion comes first, but because buyers want price, price, price, it kills the other part,” he said, adding that it was important to find a way to discuss priorities and not just have “brands and retailers to tell a manufacturer what to do.”
The event was co-hosted by the Bangladesh Apparel Exchange, with support from the Ministry of Commerce and Export Promotion Bureau, the embassy of Bangladesh in the Netherlands and PDS Limited.
It was a first for Bangladesh to take the discussion out of Dhaka, and into the vicinity of many of its buyers. Apparel accounts for more than 80 percent of Bangladesh total exports, and the European Union makes up a large segment of that. Overall, Bangladesh exports were up 10 percent in the last fiscal that ended June 30.
Most powerful, perhaps, was the inaugural session where policy makers from both countries shared their points of view.
Speakers included Shahriar Alam, Bangladesh state Minister for Foreign Affairs, Michiel Sweers, vice minister of Foreign Economic Relations, Kingdom of the Netherlands; Tipu Munshi, commerce Minister, Bangladesh; Siddiqur Rahman, former president of the Bangladesh Garment Manufacturer and Exporters Association (BGMEA); M Riaz Hamidullah, Ambassador of Bangladesh to the Netherlands; Leslie Johnston, chief executive officer, Laudes Foundation; Pallak Seth, founder and vice chairman, PDS Limited; and Mostafiz Uddin, Founder & CEO, Bangladesh Apparel Exchange.
While Uddin was credited with putting together the forum for more forthright discussions outside the country, State Minister for Foreign Affairs, Shahriar Alam stole the show.
Alam did not shy away from addressing some of the glaring issues that have been casting a shadow over the industry the last few months: the deadly assault of trade union leader Shahidul Islam, who was the president of the Gazipur unit of the Bangladesh Garment and Industrial Workers’ Federation (BGIWF) and the impending wage board meeting to review the minimum wage.
“Shahidul Islam belonged to my own party, Bangladesh Awami League. He was a joint secretary of a union in the Gazipur district, so it is our loss. On the first day after his death, two people out of three were taken into custody—a trial is going on. We can assure you that justice will be delivered,” he said, adding that “for mere political gain some people are saying Shahidul belonged to their party—let him not be a tool”.
Labor advocates with the Clean Clothes Campaign protested outside the conference this week. They urged the Bangladeshi government to investigate Islam’s death and want the buyers sourcing from the factory where he worked to give his family 211,00 euros ($226,000) in compensation. They also outlined ways Bangladesh can protect freedom of association and support calls for a higher minimum wage.
Speaking about the issues related to wages, Alam said, “We have agreed with all the labor unions there is a set process for reviewing the minimum wage.”
The minister follows the same process every five years: “The government reconvenes with labor leaders, who are members of the minimum wage body. I’m sure in the Netherlands and in any other countries in the European Union, if you are asked if you are earning enough, everyone would say ‘No, I would be better off if I was earning 20 percent more.’ But the fact of life is that we have a widely accepted procedure to review wages and by November or December they will announce a minimum wage to which everyone will have to adhere. The objective is to make a better tomorrow.”
He also touched on the issues of labor law reform. “We attended the last ILO conference and presented a road map. We have agreed on a mechanism for regular reporting in Brussels, but made a time-bound action plan for Bangladesh to implement all those criteria by 2025. We have achieved a lot of these already. We are a responsible nation, and a responsive nation—and responsive is where partnership truly flourishes,” he said, while adding that the number of apparel factories in Bangladesh have come down substantially.
“We have reduced the number of factories from 5,000 to probably 1,500 to 1,700,” he said.
Siddiqur Rahman, former president of BGMEA, spoke on the factories, and how many are certified as green buildings. “There are 200 certified green factories in Bangladesh, with 500 more waiting in line for Leed certification. The factories are also going through a transformation into the circular economy,” he said.
Leslie Johnston, CEO at Laudes Foundation, a philanthropic foundation based in Switzerland shared an insight from a different perspective. “Bangladesh is such an important geography for our work,” she said. “We’ve invested about $25 million in grants in Bangladesh and that’s very much focused on how we actually improve the worker rights in the factory, how do we accelerate circularity and the sustainability of the industry that needs to happen.”
The sessions on the second day included discussions on the importance of finance and impact investing.
Jaap-Jan Verboom, founder and director at Truvalu, a Netherlands-based company that promotes co-entrepreneurship, noted the fact that Impact investing was still in its infancy stage in Bangladesh. “It is precisely what convinces us to be active in Bangladesh. As an investor, you can change the [lives] of millions,” he said. “Bangladesh has showed a strong and steady growth and a comparative advantage is its large workforce, who are very committed, highly motivated, and can drive growth and productivity.”
It was a point mirrored by several speakers—the strength and numbers of the workforce in the nation of 170 million people as being the Best of Bangladesh.
There are hurdles too, however, Verboom pointed out. These include the “negative image of Bangladesh, and a lot of focus on the garment industry, with other sectors like agriculture [being] underdeveloped.”
“The business case for investing in gender and equality is clear,” he added, as is the growing segment on sustainability. “There are enormous challenges and opportunities because of the EU legislation. Impact investors can support export-oriented companies to showcase their environmental, social and corporate governance (ESG), labor standards, etc. The costs involved are high though, especially in cases where buyer and supplier relationships are fluctuating.”
Both sides agreed more dialogue is needed.
“I think there is a lot of miscommunication about us and about the different segments of the agenda. Having an endorsement from the ministry of commerce of Bangladesh, from the embassy of Bangladesh in the Netherlands, the government of the Netherlands all helps. It shows who we are today,” BGMEA’s Rakib pointed out. “It is nothing like the Rana Plaza days. Everyone starts showing those old maps and old discussions, which hurt the status of our industry. So, consistent sessions like these are a way to welcome the stakeholders and buyers to help talk about both responsible sourcing as well as buying practices, and what can be achieved by discussing the business as a whole.”
