At a time when workplace safety in readymade garment (RMG) manufacturing factories in Bangladesh is under the scanner, the apparel producers in the country are faced with major impediments in the form of high interest rates and lack of financial literacy, coming in the way of obtaining remediation financing.
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According to report – titled ‘Remediation financing in Bangladesh’s Ready Made Garment Sector: An Overview’, jointly commissioned by International Finance Corporation (IFC) and International Labour Organization (ILO) to analyse the cost of safety remediation for structural, electrical, and fire safety work in RMG factories, as well as the ability of factories to finance this work – interest rates (that can range from 9-18 per cent) have been cited as major barriers to carrying out remediation work, which also underlined the need to extend support to garment manufacturers in presenting audited balance sheets, profit and loss statements and cash flow projections to banks and prospective investors.
“It’s imperative for the RMG sector in Bangladesh to realize the significance of remediation finance and, respective factories ought to look at expenditure for safety as an investment. Once compliance levels are respected, buyers will have more confidence, leading to overall industry expansion,” stated Country Manager of IFC Bangladesh, Wendy Werner, at the launch of the report.
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As per the findings of the study, the cost of remediation, if the factory does not need extensive structural retrofitting work, can range from US $ 20,000 to US $ 900,000 while the total remediation cost for 80 per cent of the country’s RMG factories ranges between US $ 100,000 and US $ 250,000. “Only when remediation is completed will the safety of workers in export-oriented RMG factories be ensured. Efforts are needed to ensure that financing is available and accessible for all RMG businesses; however, those which are already able to self-finance this work or access loans should do so without delay,” underlined Gagan Rajabhandari, Deputy Director of ILO Bangladesh.
