RMG ACTion Summary Paper Post Rana: A 10-Point Reform Roadmap for Bangladesh RMG Sector

Recommendations have been developed by RMG ACTion, a group of stakeholders and civil society members concerned about the RMG sector in the aftermath of Rana: Rubana Huq (MD, Mohammadi Group); Annis Huq (Chairman, Mohammadi Group); Ifty Islam (Managing Partner, Asian Tiger Capital); Ahsan Mansur (Exec Director, Policy Research Institute); Asif Ibrahim (MD, New Age Garments); Samantha Morshed (CEO, Hathay Bunano/Pebbles); S Faruque (MD, Winners Creations); Masud Khan (Legal Circle); Peer-jada Qureshi (Independent Lawyer, UK); Nazim Farhan Choudhury (DMD, Adcomm); Shariful Islam (Bangladesh Brand Forum); Saif Kamal (Dhaka Tribune). (RMG ACTion) RMG ACTion presented its Working Paper1 to leaders from ready-made garment (RMG), Government, Regulatory, Legal, Finance, Worker Reps and International stakeholders at Lakeshore Hotel, Dhaka on 30 May 2013. Our paper and launch seminar were well received and webcast internationally (please see links below). EXCUTIVE SUMMARY We highlight the current state of the Bangladesh RMG sector and acknowledge recent reform initiatives from various stakeholders. We then outline our 10-point reform agenda/roadmap that we believe cover the key issues, both in terms of immediate safety and compliance, as well as some broader strategic issues that the industry needs to take in order to ensure the next phase of growth. The 10 points are summarized in the table overleaf. We believe that by urgently implementing measures around these key issues, workers quality of life will be improved with higher standards in the workplace; manufacturers will improve efficiency through better compliance and regulation; and the countrys RMG sector will enhance its competitiveness and economic sustainability in the global market. Furthermore, global brands and their consumers can be confident that the Made in Bangladesh products remain affordable and of a high quality, whilst being ethically and responsibly sourced. LINKS - FULL PAPER - WEBCAST CONTACTS - Ifty Islam: E: ifty.islam@at-capital.com - Rubana Huq: E: rubana@mohammadigroup.com - Masud Khan: E: masud@legalcirclebd.com - Asif Ibrahim: E: miton.1965@gmail.com - Sam Morshed: E: samanthamorshed@hotmail.com
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RMG ACTion 2013

RMG ACTion Summary Paper 10-POINT REFORM

REFORM POINT 1. Factory Classification

RMG ACTion SUGGESTION

THREE TIER CLASSIFICATION: - Tier 1: Good Compliance - Tier 2: Some Risks - Tier 3: High / Imminent Risk - FACTORS include: Building structure, Fire Safety, Work Place Health etc - NAP: Set up independent bodies assisted by BGMEA/BKMEA and BUET/DUET - ILO for example can help with international legitimacy and technical expertise - AUDITS: must be carried out in order to rank the factories into Tiers1-3 - COMPLIANCE MONITORING: independent ongoing compliance monitoring must take place by BGMEA, Ministries (Industry, Labour, Environment) - TRAINING: Programs on health & safety, workers rights etc - ENFORCEMENT: require compliance of BGMEA membership - DAWN VISITS: carry out unannounced compliance visits - MEMBERSHIP: only accept Tier 1 and turnover of $.5m into membership - Green relocation of unsafe factories IFC/GIZ could assist - 2 Phase / 2 Zones relocation programme Dhaka and Chittagong - Govt State Aid measures low cost land, favorable loans, export subsidy - Infrastructure development of new industry zones roads, utilities, layout - Domestic lead RMG support fund GoB, BGMEA members 3000croreTks - 3yr FOB reduced export rates to 1%-2% - International prtnrs Sector Transformation Fund (World bank, EU etc) - $1bn - Local banks concessional rates / GoB 3% relocation incentive - GoB / Labour Ministry immediate appx doubling of monthly wages - This should not be retrospectively increased as punitive on RMG sector - Fair wage increases rather than unsustainable knee-jerk reactions - Form supplementary Trade Union/Workers participatory committee - bi-monthly exchange of ideas free schooling training centers - affiliate good practice standards with bodies such as UN Global Compact - Supplier / Buyer matched funds of 0.25% of FOB - funds could also be used to set up contributory pension and provident funds - increasing design/fashion component from T-Shirt culture - improving technology - revamped Bangladesh Fashion Institute of Technology - Quality Assurance marks Made in Bangladesh With Pride - signifies to stakeholders and ultimately consumers that product is ethically and sustainably produced in line with compliance programs suggested above

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Factory Health & Safety Standards/ Compliance Monitoring BGMEA Responsibilities

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New RMG Economic Zones/Unsafe Factory Relocation Financing RMG Reforms

Minimum Wage increase/Increased Efficiency/Productivity Gains Trade Unions/Better Worker Representation, BRIDGE and Affiliation Formation of New Worker Welfare Fund Moving Up the Value Chain/Worker Productivity Branding and International PR/Engagement

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NOTE: RMG ACTion is a collaborative high level management consultancy action group. We utilized our multi-disciplinary expertise gained internationally and nationally, and carried out our own direct fieldwork, to synthesize a distinctively Bangladeshi approach. We also cite reports such as those from the worlds top global management consultancy firm McKinsey & Co (2011, 2012).