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Environmental and social compliance to boost RMG industry in Bangladesh

A research by New Danish has estimated that industry-wide environmental and social compliance in Bangladeshi readymade garment (RMG) industry would cost $2-3 billion. This work was undertaken as a part of the Bangladesh Priorities project in collaboration with Copenhagen Consensus Center and BRAC Research and Evaluation Department.

Carried out by a team of Bangladeshi economists led by Wasel Bin Shadat, Lecturer at the University of Manchester. They examined investments that will improve Bangladesh's RMG sector. Ensuring that companies comply with safety regulations is important not only for worker safety, but also to increase opportunities to export. The researchers claimed carrying out such investments could boost garment exports by around 10 per cent and help ensure the country reaches its export target of $50 bn. Better compliance across the RMG industry would require initial investments to improve physical infrastructure and fire protection, as well as funding for operations costs to maintain high levels of compliance from year-to-year, the report says.

The research evaluated current plans to create a new RMG Palli (Village) suited for garment production. The area would be an industrial park, with significant infrastructure for factories. The paper adds that a separate RMG zone would allow factories to form a cluster in a single geographic location which would reduce production costs, allow for simple transfer of knowledge and technologies, make pollution mitigation easier, and promote other positive spill-over effects. A Chinese firm has already performed feasibility and environmental studies for the 530-acre palli zone for Bangladesh that would include utility services, medical facilities, pollution treatment plants, daycare centres, and other similar infrastructure. The zone would employ an estimated 300,000 people at more than 250 factories. The research analysis estimates that a RMG zone in Palli would lead to additional 142 factories over the next three years, when compared to the long-run growth of the industry.