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Bangladesh: Economists wary of RMG sector’s rebound

The Bangladesh’s garment-making sector has rebounded so strongly following the Rana Plaza disaster that the country’s economists and labour leaders are warning it could hold back the country’s economy as a whole. Nearly four years after the Rana Plaza collapse in Dhaka where more than 1,100 garment workers were killed western clothing companies are seen buying more from Bangladeshi factories like before.

While the booming garment industry is contributing to an overall growth rate of 7 per cent, economists feel it is suppressing wages and crowding out higher value sectors. As economics professor at Dhaka University, Rashed al Mahmud Titumir says there is no diversity in the economy. Bangladesh has not been able to produce more lucrative products and there are barely any exports except readymade garments.

As per Bangladesh Garment Manufacturers and Exporters Association, in fiscal 1983-84 Bangladesh garment sales abroad was around 3.9 per cent of its total exports worth $31.6 m. By 1989-90 it rose to 32 per cent, worth $624.2 m. At the time of the Rana Plaza collapse, the country’s worst industrial disaster garment exports had reached 80 per cent or $21.5 bn. Despite the tragedy, the sector has continued to grow, hitting $28.1 bn in the last financial year and accounting for 82 per cent of total exports.

Industry representatives say continued growth is the result of unprecedented action taken in the aftermath of the disaster. In the year after the Rana Plaza incident, the number of clothing factories in Bangladesh shrank by 1,654 — 615 of which were related to the new safety measures. More than 200 foreign brands have signed up to two different safety schemes, the Bangladesh Accord on Fire and Building Safety and the Alliance for Bangladesh Worker Safety and have promised to spend tens of millions to improve factories.