The Garment Trade May Unravel...But a New Port Would Help

The only hint there's a garment factory nearby are two guards on the pavement, in khaki uniforms with blood-red sashes, who snap to attention when Luman Group's boss shows up with a visitor. Upstairs, more than 100 young women fill up a 20-by-12-meter former office stitching baby jackets for Wal-Mart Stores Inc. At a monthly minimum wage of $16 for a 48-hour week, this is cheap labor. But the money is enough for Maksuda, 18--who, like most co-workers, recently ditched the rice paddies for a Dhaka slum--to help keep four younger siblings in school and tuck a bit away for her dowry. "After I get married, I will stop working because my husband will not want me to, unless we really need the money," says Maksuda.

With the industry's future clouded, Maksuda may be getting out just in time. She's also fortunate she's not in one of Bangladesh's many dank, dangerous sweatshops, where periodic fires kill dozens. Luman Group's work area is well-lit and ventilated, with fire extinguishers and emergency evacuation plans on the walls. The real threat looms a few years off: Free global trade in ready-made garments will arrive on Jan. 1, 2005, when the Multifibre Agreement (MFA) that has governed clothing trade since 1974 is scheduled to expire. With Bangladesh enjoying U.S. and European quotas, its garment exports have risen from $32 million in 1983 to $4.4 billion in 2000. The industry now employs 1.5 million and pulls in 75% of the country's foreign exchange earnings.

The prospect of unbridled competition has Bangladeshi garment makers scrambling--mostly for government help. The industry is asking Dhaka for massive subsidies to restructure: first to move from crowded "cottage industry" urban sites to industrial estates, where they can offer better working conditions. More ambitious--and controversial--is the industry's push for state-supported, capital-intensive textile production. "Definitely, we need our own fabric industry. Otherwise we may face shortages if [current suppliers] China and India decide to really develop their own garment industries," argues Kutubuddin Ahmed, president of the Bangladesh Garment Manufacturers & Exporters Assn. The pitfalls are plentiful: Bangladesh lacks domestic cotton and synthetics to support such industries, not to mention the huge public funds that would be risked. "The whole idea seems ill-thought-out at best and an invitation for catastrophe at worst," says Josephine Bow, a consultant hired by the Asia Foundation to do a report on the local industry.

AGE-OLD. A major shakeout lies ahead. The Asia Foundation study concluded that half the country's garment factories will close after 2005. Bangladesh has to move into better-quality garments, where margins are meatier, and away from reliance on cheap labor--but that requires better facilities and training, and more computerization. So far, just 10% of the country's 3,300 factories are planned production sites, as opposed to converted living or office spaces; only 15 boast computerized production.

The stakes are not just economic. Many see the industry undermining age-old gender inequality. "The industry has probably done more for Bangladeshi women in the last decade than all the [aid agencies] put together. First, it gets them out of the house, and then they come back with a paycheck. It gives them more power in families," says Karan Swaner of the Asia Foundation. "It'll be a disaster if half the industry collapses."

The lights go out several times while Chittagong Mayor Mohiuddin Chowdhury explains his opposition to a $450 million private port project proposed by Seattle-based Stevedoring Services of America. "We should not give a green light to foreign projects that are detrimental to the sovereignty of Bangladesh," says the politician, whose power base is the 60,000 workers at the local port, the country's main gateway, where it takes seven days to turn around a ship--vs. one in Singapore.

Acknowledging the need for better service, the mayor insists he opposes only the location of the new port, at the mouth of the river. But to exporters, his obstruction is holding the nation's economic health hostage, because Chittagong's delays will be lethal for a no-quota garment trade. Bangladesh will have to decide soon if it's ready for the next step into the world of global trade.

By Ken Stier in Dhaka

Edited by Harry Maurer

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