The Ready-Made Garment (RMG) sector in Bangladesh, the lifeblood of the country’s economy, is currently navigating one of the most difficult periods in its history. Factory owners are working tirelessly to make up for production losses caused by months of nationwide protests, labor unrest, and curfews. These disruptions, exacerbated by the ousting of the previous government, have placed immense pressure on manufacturers, particularly during the peak shipping season for Western orders ahead of Christmas. Factories are running 24/7 to recover lost time from July, August, and September, which are critical months for securing bookings for autumn and winter collections.
Despite the sector’s resilience over the years, the recent unrest—culminating in the tragic death of a worker in Ashulia on 30 September—highlights the fragility of labor relations within the industry. The clash that led to the worker’s death and the injury of five others is a stark reminder of the deepening tension between factory owners and workers. Although many demands have been met, including the much-publicized 18-point list, instability persists.
BGMEA Director Shovon Islam noted that despite the efforts to meet worker demands, protests continue, often fueled by rumors and the exploitation of law and order weaknesses. He also suggested that some trade union leaders might be benefiting financially from external conspiracies aimed at destabilizing the industry. The situation has become untenable, with daily factory closures in areas like Ashulia, Zirani, and Zirabo, resulting in the loss of an estimated $6.5 lakh daily.
Current Challenges for Factory Owners
Today, many factory owners are caught in a storm of rising bank interest rates, unmanageable loans, and labor unrest. Salaries need to be paid at the end of each month, but with high-interest bank loans looming over them, many owners are finding it increasingly difficult to meet these obligations. While workers’ demands are understandable, the financial realities of running a factory amidst unrest are dire.
Additionally, the unrest is causing severe shipment delays, which lead to canceled orders. Over a month of halted production has exacerbated the problem, with factories closing daily in industrial belts like Ashulia, Zirani, and Zirabo. BGMEA Director Mohiuddin Rubel noted, “Our image is getting tarnished for sure alongside huge financial losses. If the situation continues, this will cause further problems. The industry has so far lost $3 billion due to the month-long demonstrations.”
At a recent press conference, Abdullah Hil Rakib, Senior Vice President of the BGMEA, called for enhanced security in these areas to protect factory operations and ensure the safety of workers.
Bangladesh’s Progress in Fire and Building Safety
Bangladesh has made significant progress over the years in addressing fire and building safety issues within the RMG sector, especially after the tragic Rana Plaza collapse and other factory disasters that garnered global attention. Stylish Garments Ltd. Chairman Salauddin Chowdhury emphasized that although there have been improvements, more needs to be done. He noted that “Bangladesh has some of the safest factories now, but further progress is needed.” The country has been striving to regain Generalized System of Preferences (GSP) facilities from the United States since they were suspended, but has not yet succeeded in doing so. Restoring these facilities is crucial for maintaining the competitiveness of Bangladesh’s garment industry in the global market.
Shams Mahmud, Managing Director of Shasha Denims, whose buyers include multinational giants like H&M and Marks & Spencer, also shared an optimistic view of the improving situation. “The labor situation has now stabilized and almost all factories are back in production. We are part of a global supply chain. Most of the orders we take are time-sensitive. Hopefully, with the improving law and order situation, we will be able to deliver goods on time,” Mahmud said.
The Need for Stability and an Exit Policy
While meeting workers’ demands is essential, the current unrest shows there are deeper, systemic issues at play. One of the critical gaps in Bangladesh’s RMG sector is the absence of a structured exit policy for businesses. As someone who has experienced the devastating effects of such a shortfall firsthand, I understand the need for this reform. When our buyer went bankrupt, our family business of 40 years was forced to close despite its capabilities. Without buyer protection or risk mitigation, we were left without a lifeline.
An exit policy would provide businesses with a framework for closing operations smoothly when necessary, ensuring fair treatment for workers, settling financial obligations, and allowing owners to transition without enduring financial and emotional ruin. For many factory owners currently facing overwhelming bank loans, shrinking margins, and labor unrest, an exit policy could be a lifeline.
The lack of such a policy leaves businesses like ours vulnerable to unforeseen challenges. My family lost two brothers in the aftermath of our company’s collapse—a toll that still haunts us today. Unfortunately, other owners in Bangladesh are now facing similar struggles, without the policy support to navigate their difficult situations.
The Importance of an Exit Policy
The absence of a structured exit policy in the RMG sector is a critical flaw that needs to be addressed. An exit policy would provide a clear framework for companies facing crises, allowing them to close down operations in an orderly manner. This includes ensuring fair treatment of workers, settling financial obligations, and providing owners with a pathway to mitigate losses. Without it, businesses are left to struggle, often leading to devastating financial and emotional consequences. For my family, the weight of these pressures took the lives of two of my brothers and left lasting scars that still affect us today.
A Call for Urgent Reforms
The RMG sector needs urgent reforms to address these challenges head-on. The government and policymakers must act quickly to introduce an exit policy that protects businesses from collapse while ensuring workers’ rights are upheld. This policy could provide the stability needed to prevent further unrest and allow the industry to recover.
Business owners cannot continue bearing the weight of unbearable loans and operational pressures without support. If the situation does not improve, more owners will face closure, affecting the livelihoods of millions of workers and the broader economy. It is essential that both investors and workers are protected through better financial safeguards and a more structured business environment.
To the Next Generation
This is also a message to the younger generation and industry experts. You are the most dynamic and talented professionals the RMG industry has ever seen. While I may not have all the answers or knowledge to guide you, I hope my experiences and thoughts can offer some insight. The future of the RMG sector is in your hands, and I believe you have the strength to lead it towards a brighter future.
I apologize if my words hurt anyone’s feelings, but I felt compelled to share my perspective. I am just a small boat in a vast ocean, sharing my thoughts. May Allah (SWT) bless us all and save this industry. Together, we can build a more resilient, stable, and fair future for Bangladesh’s RMG sector.
Md Salauddin
Director, Reaz Garments Ltd.
Advisor, Garments and Textile Merchandiser Blog
