As you are aware, Bangladesh’s manufacturing sector including the readymade garment industry is currently facing unprecedented challenges both nationally and internationally. In this context, the Interim Government has recently given policy-level and final approval to the Bangladesh Labour (Amendment) Ordinance 2025. Alongside this major development, there are a few critical issues affecting the manufacturing sector and the overall economy such as LDC graduation and increased port charges at Chattogram Port which we will also address today.
Trade Union Formation: An Imbalanced and Unrealistic Decision
After extensive discussions in the TCC and Working Committee meetings, a balanced proposal was reached for determining the number of workers required to form a trade union where, in the first phase, a minimum of 50 workers’ consent would allow union formation in factories employing between 50 and 500 workers. However, the Advisory Council later unilaterally changed this decision to allow union formation with only 20–300 workers, dividing the process into five phases.
This decision is detached from ground realities. Allowing a union to form with just 20 workers opens the door for individuals not directly engaged with the industry to influence unions. This could lead to internal conflicts, industrial unrest, and production disruption—undermining investor confidence and discouraging new investments.
International Comparison:
- India: Union formation requires the consent of 10% of workers or at least 100 workers.
- Pakistan: Requires 20% worker consent.
It is evident that, compared to our regional competitors, allowing union formation in Bangladesh with as few as 20 workers will create the weakest and most unstable industrial structure in South Asia—sending a negative signal to foreign investors and discouraging future investment.
Provident Fund and Universal Pension Scheme: Dual Burden and Complexity
The TCC had agreed that an enterprise could choose either the Provident Fund or the Progressive (Pension) scheme. However, the Advisory Council approved a provision allowing workers to participate in both schemes simultaneously. This will force entrepreneurs to manage two different financial systems concurrently, leading to administrative complexity, higher costs, and mismanagement of funds.
Examples from Competitor Countries:
- India: Only EPF (Employee Provident Fund) is mandatory.
- Pakistan: Single Social Security Scheme.
- Vietnam: Unified National Pension and Insurance System.
- Sri Lanka: Single EPF system no dual structure.
While other countries follow simple and unified pension systems, introducing a dual system in Bangladesh will complicate operations and significantly increase administrative expenses for employers.
Ambiguity in the Definition of “Worker” and Administrative Risks
The new amendment includes *officers/employees* within the definition of “worker,” which blurs the distinction between management and labor levels. This could result in administrative confusion, misallocation of responsibilities, and serious operational challenges for enterprises.
Procedural Injustice and Policy Concerns
The most concerning issue is that several decisions unanimously adopted in the TCC and Working Committee meetings—with participation from all parties—were altered and approved by the Advisory Council without further discussion. This not only undermines the industrial sector but also weakens the mutual trust among workers, entrepreneurs, and the government.
Competitive Reality: Bangladesh at Risk of Falling Behind
Our competitor countries have already adopted investment-friendly labor and industrial reforms.
If such impractical labor regulations are implemented in Bangladesh:
- Foreign investment will decline.
- Exports will be adversely affected.
- Industrial instability will rise.
- The national economy will weaken.
BGMEA’s Call to Action
BGMEA firmly believes in workers’ welfare and continues to work relentlessly to improve factory conditions and labor standards. This includes establishing hospitals, schools, childcare facilities, and ensuring safe workplaces. However, we believe that labor laws must be balanced and realistic—serving the interests of both workers and industries.
Therefore, BGMEA urges the government to reconsider the Bangladesh Labour (Amendment) Ordinance 2025 and to draft new laws that reflect the real needs of workers, industries, and the economy—laws that promote sustainable growth rather than hinder competitiveness.
Other Urgent Industrial Issues
In addition to the labour amendment, our industry is also facing the impacts of:
- High interest rates on bank loans,
- A 56% increase in utility costs since December 2024,
- A 9% annual increase in worker wages,
- Rising gas and diesel prices, and
- A 60% reduction in export incentives since 2023.
All these factors are driving up production costs, reducing profitability, and threatening the survival of our export-oriented industries. The Ministry of Shipping recently stated that Chattogram Port fees have not been increased in 40 years. However, a clarification is needed here:
Chattogram Port charges are collected in USD. When the exchange rate rose from BDT 29.89 per USD in 1986–87 to BDT 122 today, the cost in local currency terms has already increased by 308% even though the nominal charge in dollars remained unchanged. Chattogram Port has consistently been a profitable state-run entity. As a public service organization, its goal should not be profiting maximization. Raising charges despite exporters’ concerns is therefore unjustified.
According to the World Bank, among 403 container ports globally, Chattogram ranks 357th in efficiency making it one of the most expensive yet least efficient ports compared to regional competitors. As Bangladesh moves toward LDC graduation, what we need most is to reduce business costs and strengthen competitiveness.
BGMEA’s Requests to the Government
We urge the government to:
- Ensure a business-friendly environment to sustain competitiveness during LDC graduation;
- Resolve the gas crisis on an emergency basis;
- Simplify Customs and NBR procedures;
- Improve infrastructure and logistics for investment and trade;
- Ensure access to low-cost financing; and
- Extend the LDC graduation transition period by at least three years to allow industries adequate preparation time.
Final Remarks
The readymade garment sector and indeed the entire manufacturing industry remains the backbone of Bangladesh’s economy and social progress. We deeply appreciate the interim government’s efforts since August 5 to stabilize the economy and introduce reforms.
However, the issues we have highlighted labour law amendments, LDC graduation, and increased port charges are not short-term challenges. These are long-term policy matters that will shape the future of our economy and impact generations to come.
Therefore, through this press conference, we respectfully call upon Dr. Muhammad Yunus, the Chief Adviser of the Interim Government, and the Advisory Council to take prompt, positive, and effective steps that align with the real needs of the productive sectors and the realities of international competition so that together we can ensure a stable, sustainable, and prosperous economic future for Bangladesh.
