Dr. Rubana Huq is one of the most proficient and leading businesswomen in South Asia. She is the current managing director of Mohammadi Group, a Bangladeshi conglomerate. She was featured in BBC 100 Women in 2013 and 2014. In 2019, she was elected the President of Bangladesh Garment Manufacturers and Exporters Association (BGMEA).
Dr. Rubana Huq took the wheel in April as the President of BGMEA — and became the highest-ranking talented woman in the Ready-made Garment industry. Rubana understands the depth of the challenge. That’s why she says, “The industry has reached a matured stage for quite some time, and its time to re-model our business which requires realignment of vision and strategic action. My whole team is spirited toward gearing up the industry to the next phase of growth and innovation.”
Considering the pros and cons of the RMG industry Dr. Rubana Huq has discussed the genesis, evolution, development, challenges, and prospects of this industry meticulously. We have learned from her the hidden truths; the relation between workers and the employers, the labor law, compliance, collective bargaining, trade diplomacy, and so forth.
We are trying to discover the real scenario of the Bangladeshi Garment sector; hopefully we didn’t fail.
The InCAP:Heartiest Congratulations Dr. Rubana Huq. It’s a matter of great pride that you have been elected as the President of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) with a tremendous turnout of 78.2% enlisted voters. At the same time, BGMEA inaugurated its first female President as well. How are you currently, now that you are the President?
Dr. Rubana Huq: It certainly feels exciting being in the leadership of an industry having such a crucial bearing to our society and economy; therefore, it’s a challenging responsibility as well. The industry has reached a matured stage for quite some time, and its time to re-model our business which requires realignment of vision and strategic action. My whole team is spirited toward gearing up the industry to the next phase of growth and innovation. It’s awesome to try the challenges.
In our observation, ACCORD reportedly generated complications by imposing new terms and conditions on Ready-made Garments (RMG) factories in Bangladesh. As a result, four hundred RMG factories are on the verge of closing down. What is your specific opinion on this regard?
Accord has been a good friend of the industry to complement us in such a gigantic transformation process to restore occupational safety in the RMG industry. Having said that, the importance of national monitoring cannot be overemphasized, especially when we see the foreign initiatives are in a mood to retain their authority by imposing new conditions and the new definition of non-conformity, which is in fact never-ending. We are in discussion with Accord on how to resolve the issues through dialogue, and we organized a view exchange session with the factories, Accord representatives, and technical experts to clarify some of those issues. We have also signed an MOU with Accord to collaborate on a transition plan which is going on the right track. Eventually, all the initiatives of safety monitoring, including Accord and our national initiative will fold into one single regime titled ‘RMG Sustainability Council – RSC’ and we are at the final stage of formation of this single national authority.
We have noticed that BGMEA has brought upon change due to the effect of some variable external factors. A matured industry of four decades of glorious experience has yet to make its own firm decisions. Why is this?
The current Board has sworn in with some clear agenda to push the industry forward from the stereotyped growth. This requires changes and adjustments in the priorities and work process. While we are talking about a dynamic industry that started with a few thousand dollars with a few product range and markets, value addition and diversification are the keys to sustain competitiveness and grow. With the maturity of the industry, expectations grow, and the global voice for sustainability has also been increasingly louder. So changes are inevitable as we move forward.
Do you think Ms. Rubana that this is high time to create several monitoring units dedicated to avoiding or minimizing the unexpected situations of the RMG sector?
I think we need a single monitoring unit at the national level rather than multiple monitoring as far as the focus is on sustainability. We are working toward that through the formation of RSC, and our approach would be industry-wide collaboration so that we all think, speak, and act on the same language and spirit.
We have noted that your voice is in favor of the workers. However, on the other hand, some claim that your position is almost against the trade union. Would you care to specify your specific viewpoint regarding the trade union of the garment industry, please?
I would look at them rationally, rather than bringing any biased or emotional judgment. The tremendous role of the workers to bring this industry up to this stage cannot be overstated, and they are our major strengths going to pursue our growth vision going forward. So we must be more caring about their well being and rights issues. Having said that, we should not ignore the ground realities, like the lack of education, awareness, and motivation among the workers about rights and responsibilities. All I am trying to advocate for is to create an enabling environment for responsible unionism, and I am equally stressing our entrepreneurs to increase interaction with the workers.
Let us be honest with you, before the interview with you, we visited a lot of factories and talked to the workers. We have found a few things in common, such as the workers’ love of their workplace, the work they do, and love for their colleagues, and even the factory owners. To some extent, they even consider this as their second family. Dr. Rubana, the question to you is, under all these positive vibes, what would you consider to be the predominant cause of the workers’ movement?
Lets also be honest in replying to you that this is an industry of around three thousand factories and 4.4 million workers; we cannot be perfect. There are numerous issues which have valid reasons. The industry is always in a transition since our cost of production is going higher, and we have to compete in a price-war situation, so we would always have struggling factories. In a changing society we have typical socio-cultural issues as well which are inevitable to dwell with. As long as the issue is about managing a labor-intensive industry, we would have issues, but our full effort would be to maintain a situation to contain any mass grievance.
According to the latest data of Bangladesh Bureau of Statistics (BBS), the country’s export earnings from the apparel sector registered an 8.76% growth reaching $30.61 billion in FY18; this sector contributes 83% of overall export earnings for the country, which impacts 12.36% of GDP. On the contrary, 17% of garments worker’s standard of living is still grievous. What is the explanation of this contradictory position?
Dr. Rubana Huq: Standard of living is a relative term. We have 160 million people, more than 60 million are working-age population, and we have more than 40 industrial sectors operating in the economy. Can we really define what is a decent standard of living, at least for a young unskilled worker? The wage of entry-level workers in the RMG industry having no skills is 8000 taka per month, and including overtime and other allowances, it reaches over 11000 taka. The wages in the upper grades are much higher and even higher than the official minimum wage. I think we need more transparent dialogue on the wage issues since its just not a matter of paying higher wages, but there are multiple other factors like efficiency, price, competitiveness, socio-economic standards have to be considered in this discourse. We don’t defy the need for a better living of our workers, but it’s just about to strike a balance in the entire food-chain.
Please tell us about your Innovation to Industry (I2I) project?
Innovation to Industry is basically a multi-prong approach to inspire and facilitate technologies in the industry to be competitive and sustainable, and at the same to inspire local talents and homegrown start-ups to serve the industry’s potentials. We are currently working with a few local start-ups, trying to complete a pilot in selected factories, and would scale up according to the findings. We are also exploring ways to inspire product innovation, and we have a plan to hunt local talents and give them global exposure.
The raw material of the garment sector has to be imported, and the ratio is very unpleasant. In Sweater 90%, Woven 80%, and Knit 30% depends on imported raw materials. What are your steps to alleviate this import dependency?
I think the percentages mentioned here need to be updated since significant capacity has been added in our backward linkage industry. But this is a rightly asked question as we are also working with top priority to bring qualitative and quantitative shifts in our backward linkage industry. By saying qualitative change, I mean bringing material diversity in our locally produced yarn and fabrics. The concentration of our apparel is alarmingly increasing on cotton (72%), whereas the share of MMF based apparel is around half of global consumption. Our government is setting 100 economic zones in the country and looking for investment from both local and international origins having strategic priorities to advance our value-added capacity. We are currently working on a few research and data management projects, which I believe would be helpful for our future investors to make the right investment decisions.
In Bangladesh, you’re working on skill development, yet 14% of the factory is still dependent on foreign officials, especially at the managerial level, which is certainly not suitable for the Bangladeshi marketplace. What is the way to get beyond this situation?
The debate of suitability can only be defended by the factories who employ them, but from a general perspective, it is not difficult to understand that people will never opt-out for a costlier and more challenging option if they have a better one available. 14% of factories employing foreign experts should not be termed with an adverse connotation as I said that the industry is dynamic in nature, and we always have some new and innovative approaches ongoing in the industry. Foreign experts are particularly supporting our qualitative growth initiatives. However, we are mindful of this issue since this has been nationally discussed for quite some time. We are also opting for a feasibility study to develop a guideline for foreign employee recruitment.
About 70-80 percent of the total garment items exported from Bangladesh are comparatively cheap products. But customers’ purchase pattern is evolving rapidly, and they are ready to pay the proper price for high-quality products. What are your strategies to attract the attention of this ready market?
We have to get out of the commodity trap if we are to save the industry from the ‘sunset’ situation, and there is no alternative to innovation and value addition to our products. Unfortunately, 74% of our products are still limited within cotton-based apparel and mostly within 5 major items. So every year our unit value is getting slashed through export turnover is growing due to the higher quantity growth of our exports. This is not healthy for this industry anymore. From BGMEA, we have taken few steps – firstly, we are working with the government to establish a Base National Capacity database to assess the product-wise capacity situation in the industry and to avoid unplanned overcapacity. Thus we are encouraging diversification of product basket based on design innovation and higher value addition. We are also encouraging investors to invest in man-made fiber-based textiles. We are planning to organize a fashion contest among local designers having the skills of global design skills in the upcoming Sustainable Apparel Forum. We are also opting for collaborating with the Ministry of Commerce to take up a Design and Product Innovation project.
Once you said in an interview that you want to incorporate the boutique industry with BGMEA, we want to know more about that.
The global fashion retail industry is changing rapidly through the intervention of disruptive technologies, online retailing, and mass customization. So there have been radical changes in buyers’ requirements. Buyers are looking for factories that can deal with small and frequent orders, which is difficult for most of our factories. We apprised the government to allocate 200 acres of land in Bangabandhu Sheikh Mujib Industrial Park, especially for SMEs, so that they can grab the increasing global demand for small and boutique orders. We are also taking up programs to promote local brands and designers and also promote the export of Bangladesh culture through our products. Boutique industry could play an immense role in this respect.
Many small and medium scale factories have closed their operations in the last few years. Do you think this is an alarming message for the RMG industry?
Yes, this is alarming for two reasons. One is their huge contribution to our exports, and the other one is that SMEs are the vehicles through which new entrepreneurs join the industry. If SMEs cannot be protected and promoted, it will not be helpful for the long term growth plan of the industry. There are numerous small buyers who are sourcing from Bangladesh; if we don’t have SMEs, we will lose that market as well. Moreover, SMEs are needed to meet the growing need for small and value-added-added orders as online sales are on the rise.
The industry has attached with more than 4 million workers, amongst whom 85 percent are women! An excellent example for the rest of the world today. Sewing and women have created a wonderful relationship in Bangladesh. But, how much is the garment sector influencing other workplaces for better working experience for women? And how assured is the work-friendly environment in the RMG sector for a woman in Bangladesh today?
I think the RMG sector is playing the role of a pioneer in the industrial sector in Bangladesh. Its creating opportunities for less privileged women workers to join the mainstream of the economy, lead a productive life, become self-aware, and skilled. These days workers are becoming more aware of their rights and safety. So I think the RMG industry is contributing immensely as a role model for other industrial sectors. The RMG factories are operating under the local and global spotlight. Our factories are continuously being inspected by national and international audit teams for occupational safety and health, and compliance issues.
RMG sector is a massive opportunity for the employment of the less educated or illiterate workforce of Bangladesh. How would the workforce be affected by the process of automation? What is the contingency plan in place?
The fourth industrial revolution is reshaping the entire global landscape of industrialization, manufacturing, and production. We barely have any scope to avoid it, and rather we need to embrace it to make ourselves prepared and reap the benefits. It’s true that 4IR will make a lot of low-skilled jobs obsolete through automation; it will have an impact on jobs, especially less-educated workers in the RMG sector. We are working with Government and development partners, especially with a2i, how we can reskill/upskill them to take challenges of advanced manufacturing technologies or at least to train them up for other industries where they will find opportunities.
What are the biggest considered threats and problems in the RMG sector of Bangladesh today?
Overcapacity and over-concentration on products and markets, the impact of LDC graduation and global political dynamics affecting trade, currency exchange rates, lack of innovation, are some of the major challenges for us at present.
What would you consider to be three positive signs of the RMG industry, which could cause Bangladesh to boom within the next five years?
We have all the reasons to believe in our fortune as we are a resilient nation led by the daughter of Bangabandhu Sheikh Mujibur Rahman. Our past is our confidence, yet just to mention three positive signs –
a) Bangladesh’s unparalleled progress in establishing a sustainable apparel industry in all regards, be it safety, workers being, or environment.
b) Transformation is happening in the industry as most of our new factories are state of the art ready to take challenges of the future. We only secure 6.5% of the global clothing trade, so we have clear opportunities.
c) Government is heavily investing in mega projects which is a huge sign of Bangladesh’s preparedness toward more investments and industrialization.
You always encourage entrepreneurs. A massive number of entrepreneurs are growing in Bangladesh, but many of them are dropping out within years. What would you say about this problem? Who is to take the responsibilities, entrepreneurs, or the state?
Business, by definition, is associated with risks and uncertainties. We know it’s difficult for the entrepreneurs in Bangladesh to be successful because we have a lot of challenges and limitations, yet investments must be made with proper plans and studies. We are demanding for safe exit route to those who could not operate their business any further. We have demanded for a Bankruptcy Workup Regume in our budget proposal for the current fiscal. The Honorable Finance Minister has announced in his budget speech that the government will work on bankruptcy and insolvency act to create a route for a legal exit for the borrowers. This will be a huge support to those who are dropping out; at the same time, this will encourage a lot of prospective entrepreneurs to come in.
What’s your specific advice to the young entrepreneurs?
My advice to the new entrepreneurs would be –
a) To focus on innovation, value addition, and diversity.
b) Opt for the small boutique venture with high-value content.
c) Study the market well, look at both demand and supply side, find the mismatch and opportunities, and invest accordingly.
Personally, as a business individual, would you stay with the new entrepreneurs?
Of course, we need many new entrepreneurs with diversified skills and talents, not only for the textile and garment sectors but also for other promising sectors like IT, pharmaceuticals, leather, etc. We have a rich cultural heritage, and this is an invaluable wealth for us. Its time for us to rethink how we can use our culture to add value to our products through designing, use of natural materials, and making the products more functional. So I would rather stay with innovative entrepreneurs.
The InCAP: Thank you so much.
Dr. Rubana Huq: You are welcome. Thanks to the entire team of The InCAP.