Govt regulator DIFE starts non-compliance action as Accord-Alliance exits

by Apparel Resources

03-October-2018  |  7 mins read

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Bangladesh government has begun taking actions against non-compliant garment factories in the country against the backdrop of the exit of third-party agencies- Accord and Alliance – which were overseeing and compelling the factory remediation work for the last 5 years.

In the primary phase, the government’s factory inspection regulator- Department of Inspection for Factories and Establishments (DIFE) has written to the trade bodies to scrap Utilisation Declaration (UD) of 219 readymade garment factories – what will be curbing those factories from reaping trade advantages or incentives.

Notably, in the process of manufacturing and exporting apparel items, the manufacturing factories have to seek utilisation certificate from trade bodies like Bangladesh Garment Manufacturers and Exporters Association (BGMEA) and Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA). Without this certificate, the factories will not be able to enjoy duty-free advantages.

Trade associations have swiftly jumped to action after receiving the letter. They have had several rounds of meetings with the factories on the list – trying to evaluate if they can be saved from a closure. But, it is affirmative that they will not be compromising with factory compliance – quite frankly because it is something they cannot afford now.

Md. Shamsuzzaman Bhuiyan, Inspector General at DIFE, told Apparel Resources that his institution has already scrapped the operating licenses of over 1,500 garment factories, including the 219 factories, for noncompliance in structural remediation. “In the last week of September, we wrote to BGMEA and BKMEA to stop their UD certificates. This action has been taken because they remained noncompliant despite repeated warnings,” Bhuiyan averred.

Among the names obtained in the list are knit manufacturers Trasco Apparels Ltd. of Narayanganj and May Fashion of Gazipur, both of which are registered with the BKMEA. From what could be known, among the 219 factories, 134 are registered with the BGMEA, and 74 with the BKMEA. The remaining 11 are registered with both.

According to the DIFE Inspector General, the institution carried out 32 view-exchange meetings with the factory owners and trade bodies, where they issued repeated warnings against noncompliant factories. “Even then, there hasn’t been a progress. We have been forced to take such a harsh initiative.”

Mohammed Nasir, Vice President (Finance) of BGMEA, told Apparel Resources that they have received the letter from DIFE and taken actions accordingly. He added, “We have sat with the factory owners and learned if there is any chance that they can complete the remediation work in time. We have learned there is scope for some of the factories. We will again sit with the DIFE and inform them of the developments and see if we can seek time for these factories.”

He further added, “Scrapping the UD of any factory is like killing it right off. We have to try and save these factories first. If they cannot, we will be forced to take harsh steps. It is necessary for building compliance within our apparel industry.”

BKMEA Second Vice President Fazlee Shamim Ehsan also echoed a similar statement while talking to Apparel Resources. He said, “We haven’t yet received the list of factories from DIFE. When we get it, we will call an emergency board meeting and formulate our next course of action. Also, we will be sitting with the defaulting factory owners individually to evaluate if it is possible for them to remediate within the stipulated time. If they can, we will try to buy them some time if necessary. But, we are not willing to compromise on structural safety and compliance issues. We will shut down noncompliant factories.”

Insiders within the apparel industry have confided in Apparel Resources that the owners and trade bodies are fundamentally against the closure of these factories, but they will do it if they have to. The main reason behind such a stand is the falling state of business, rising global competition, and falling prices; coupled with costly remediation work for the past five years. Additionally, over 100,000 workers are engaged with the factories and the trade bodies will not be tolerating any worker unrest in this scenario.

Following the Rana Plaza building collapse in April 2013 that killed more than 1,100 – mostly garment workers, a total of 3,780 garment factories were assessed for structural compliance under the three separate initiatives — European retailers’ platform Accord, North American buyers’ platform Alliance, and the government-led and ILO-supported national initiative.

Out of the 3,780 garment factories, 1,549 were inspected under the national initiative. Of them, 531 were shut down, 69 relocated, and 193 transferred to the lists of Accord and Alliance. The factories that fall under the national initiative have completed 32 per cent remediation works; among them, 11 factories have completed 100 per cent remediation.

The two third-party compliance regulators Accord and Alliance assessed 809 factories. Over the course of five years, the two watchdogs cut ties with over 200 factories for failing to meet compliance factors. The remainder of the factories has completed about 85 per cent remediation work, on average.

Now, at the end of the five-year contract, Accord and Alliance will be leaving Bangladesh and the Government has made it clear that licenses of the two will not be renewed. A factor in this is also the discontent of the manufacturers who say they have been forced to make costly remediation work under pressure.

After the departure of Accord and Alliance, which is likely by December 2018, a Remediation Coordination Cell (RCC), overseen by the state, will be carrying on the work. Accord and Alliance will be handing over their due and ongoing work to the RCC.

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