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RMG Makers Unwilling To Make Fresh Investment At Ashulia

Bangladesh

Apparel manufacturers at Ashulia off the capital city are no more interested to make any fresh investment in this industrial belt because of frequent labour unrest there, industry insiders said.

Rather some of them are planning to relocate their existing factories from the agitation-prone Ashulia garment manufacturing hub to other suitable places while many others have put on hold their factory expansion plans, they mentioned.

According to them, many readymade garment (RMG) makers are in a dilemma as to whether they can run their businesses at Ashulia as workers' unrest has become a regular phenomenon there.

The last year's devastating fire at Tazreen Fashions Ltd and the latest Rana Plaza tragedy have also forced the manufacturers to seriously think over the relocation issue mainly to avoid production losses, they said.

A number of garment exporters and manufacturers expressed their views on their future investment and factory relocation plans at a meeting, held at the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) on Monday at its headquarters, where the BGMEA office-bearers and a number of owners of Ashulia garment factories were present.

They sat together to share their concerns and find a way out of the ongoing crisis as the industrial belt is witnessing frequent labour unrest in support of various demands. The Tazreen blaze deepened the crisis while the Savar tragedy has made it a full-blown one.

"Ashulia is no longer a suitable place for investment. Existing garment manufacturers at the industrial belt have decided that they would not make any new investment. They would rather opt for any other suitable place outside Ashulia," BGMEA president Atiqul Islam told the FE.

Many of them are in favour of shifting their units to places outside Ashulia while some are planning to relocate their factories to new places like the proposed garment village (palli) at Bausia, he added.

Following unrest despite the government's declaration of wage hike and steps to amend the existing labour law, frustrated manufacturers have taken the decision, he disclosed adding: "The Association also discourages new entrepreneurs to set up factories at Ashulia."

"I want to shift my manufacturing plant from Ashulia to Gazipur or Bhaluka due to the workers' unrest as it seriously hampers production," Abdus Salam Murshedy, managing director of Envoy Group, said.

Due to labour unrest, suspension of production for a week or for a longer period forces the owners to make air shipment which costs much, he said. He admitted that many owners were now thinking about shifting their factories to suitable places though the relocation cost is huge.

"Every year we plan some expansion with installing new machinery or BMRE (balancing, modernisation, rehabilitation and expansion)," he said adding almost all have decided not to go for this.

There are many owners who have secured the government's permission for constructing high-rise buildings. But they are yet to go for expansion of their units at Ashulia for fear of labour unrest, Ismail Hossain, managing director of Sharmin Group said. "I am one of them."

The group has four factories including one washing plant, he said adding: "As I have no factory building outside Ashulia I have little scope to relocate. But I have decided not to make fresh investment in Ashulia."

Sources said a few are also planning to shut down garment businesses as their factories could hardly maintain the necessary pace of production during the last one month especially after the Rana Plaza collapse.

"Buyers also feel insecure placing orders in the units located at Ashulia. Many of them have already suggested shifting from there fearing a serious disruption in production," another manufacturer, who also runs business at Ashulia, said.

"Some big brands have informed the manufacturers that they will not place further new orders to the factories located at Ashulia," Md Shahidullah Azim, vice president of BGMEA said.

The buyers have expressed their concerns over labour unrest and are now closely monitoring developments including the political situation, he said. Most of the foreign buyers have their liaison offices in Bangladesh and they instantly get the information, he added.

All are at a loss over the repeated labour unrest at the garment factories at Ashulia although they strictly maintain high labour standards and are giving reasonable wages to the workers, Reaz-Bin-Mahmood, managing director of La-Belle Group, said.

The buyers are losing their confidence and no new entrepreneur will join us, he noted.

He said 25-30 per cent of the total exportable garments are manufactured in the region which works for big brands of the European Union and the United States including Walmart, HandM and Inditex.

The unrest has a negative impact on buyers, production and image of the sector, he said adding that most of the time it becomes difficult to convince the buyers if there is unrest without any specific reason.

The garment sector is the major foreign currency earner of the country that fetched over US$ 19 billion in the fiscal year (FY) 2011-12.

Source: The Financial Express .

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