513 NI factories to be closed down as they failed to meet required standards

Published in The Financial Express on November 28, 2017

Photo: The Financial Express

Some 513 or one-third of the readymade garment (RMG) factories inspected under the national initiative (NI) have faced closure as they might have failed to compete in the market and comply with the required standards, including safety compliance, officials said.

Under the NI, some 1,549 garment factories, which remained outside the purview of Accord and Alliance inspections, have been inspected for structural, fire and electrical integrity under a joint initiative by the government and the International Labour Organisation (ILO).

“Currently the Remediation Coordination Cell (RCC) is looking into the remediation activities in some 780 factories, inspected under the national initiative,” Md Shamsuzzaman Bhuiyan, inspector general of Department of Inspection for Factories and Establishments (DIFE), told the FE on Sunday.

Some 513 units, out of the 1,549 factories, have been closed by the factory authorities, he said, adding that DIFE, however, did not find out the reasons behind their closure.

The officials and sources observed that a good number of the units were closed as they failed to comply with the safety requirements. Besides, owners of some factories thought that the closure of their units is more viable than making fresh investment in flaw-fixing work to ensure compliance.

Some of the units also failed to compete in the market, as buyers stopped placing orders to the factories located in rented buildings or sharing the same building with other establishments where post-inspection remediation is not possible, they added.

The DIFE chief said some 64 garment factories were shifted to new buildings, 14 are located in the export processing zones (EPZs), while a total of 178 garment factories were added to the list of the western retailers’ platforms — Accord and Alliance.

After completion of the initial inspection in November 2015, only 20 per cent of the remedial work has been done in the factories assessed under NI.

Out of the 780 units, 312 factories are housed in their own buildings, while 468 are housed in rented or shared buildings that accommodate other establishments, according to the officials.

DIFE held meetings last week with the factories  located in their own buildings to evaluate their remediation progress, and the factory authorities have been asked to complete remediation by April, Mr Bhuiyan said.

DIFE would go for stern action, including shutting down of units, if any of the factories fails to meet the deadline. The National Tripartite Committee on National Action Plan on RMG in its next meeting, to be held shortly, would decide the ways how to implement the laws, he added.

The Accord on Fire and Building Safety mostly comprises the EU-based retailers, and the Alliance for Bangladesh Worker Safety comprises the North American retailers.

These groups were formed to improve and ensure workplace safety in the country’s RMG sector after the Rana Plaza building collapse in April 2013, which killed more than 1,100 people, mostly garment workers.

Both Accord and Alliance inspected over 2,300 garment factories, and a total of 150 units were referred to the government-formed review panel to take immediate action after finding serious safety hazards, sources said.

Out of the 150 factories, 39 factories were closed, 42 factories were partially closed, and 69 factories were allowed to operate with some recommendations, according to DIFE.

Both the groups, however, terminated business relations with over 250 garment factories due to their failure to comply with safety requirements, the sources further said.

Majority of the garment factories under NI did not have business with big brands and buyers. They remained outside of the western retailers’ list, and many of them would do subcontracting work, said Centre for Policy Dialogue (CPD) research director Khondaker Golam Moazzem.

The scope of doing subcontracting work has declined in recent years due to safety concerns and fall in global apparel demand. Some factory authorities might have closed their units because of scarcity of work orders, while some others did not see any business prospect following fresh investment in remediation work, he noted.

“There is re-arrangement in the sector, which is not negative. Many big and new RMG factories have been set up that accommodate more workers, compared to the closed units.”

But it might squeeze job opportunity for fresh interns, as the new factories create scopes of employment mostly for skilled workers.

The factory owners might take legal advantage, as they do not need to pay any compensation, if the factory is relocated within 30 km, he added.