Highlights on RMG resilient and sustainable recovery from COVID-19 crisis

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The RMG export-oriented apparel enterprise in Bangladesh had adjusted astonishing changes during the crisis and made some significant leaps. This also shows the industry’s adaptability and resilience with the emerging challenges to cope with the measures. Progress in tackling the uncertainty is growing higher due to the recovery of the economy and vaccination. Collaborative efforts are now necessary for ‘Reimagining Sustainability’ by the International and National authorities.

Figure: Project by CPD and MiB under the CED of Brac University for understanding the resilience and recovery of RMG sector in the last months.

Researchers are focusing on the level of shocks and vulnerabilities in the ready-made garment (RMG) sector from the beginning of the epidemic by highlighting the resilience and recovery capacity from the novel impediments.

A project titled ‘Vulnerability. Resilience and Recovery in the RMG Sector given COVID Pandemic: Findings from the Enterprise Survey’ was introduced by the Centre for Policy Dialogue (CPD) and Mapped in Bangladesh (MiB) under the Center for Entrepreneurship Development (CED) of Brac University for understanding the resilience and recovery of RMG sector in the last months.


Their approach is to ‘build back better’ risk management strategies that work as protective measures and provide a level playing field for any large-scale crisis.

To mitigate the uncertainties a ‘resilience index’ is intervened including three components: robustness, recovery and resourcefulness, the study focuses on four major industrial clusters – Dhaka, Gazipur, Narayangonj and Chattogram. 3211 listed RMG enterprises, 610 sample enterprises were included in the survey.  Primarily the sample covered 82% member and 18% non-member enterprises, and 54% can be considered small enterprises, 40% medium and 6.7% large.

96.4% of the factories were closed during the “official holiday” period enacted by the government; though few large, medium and small factories were in permission from the Department of Inspection for Factories and Establishments (DIFE). 33.23% of the small factories remained partially closed during the pandemic. The number was higher in the case of medium-sized factories as well. 10% of the large factories were partially closed.

Over 50% of the offices had ongoing business with a limited number of buyers. Around 7.0% of the small enterprises, 7.1% of the medium enterprises and 12.0% of the large enterprises were dependent on a single buyer. Depending on a single source is a major sign of weakness, resulting in catastrophic outcomes.

Most factories scaled down their operations by more than 10%. The average number of workers per factory came down to 790 in September 2020, which was 886 in December 2020. Enterprises laid off 2.7% of their workers that could be as high as 13.95%, making 3.57 lac workers unemployed. 33% of factories have a lower share of female workers than the pre-pandemic period that portrays rising vulnerability for women.

Major shortcomings spread across numerous issues, as maintaining essential functions and alternate sites, result in an overall resilience performance below the average of 43.4% that doesn’t vary across large and small scale factories. Small scale, non-member factories located in Narayangonj and Chattogram are performing poorly.

Table 1: Resilience Index

  Overall (out of 100)
RI: Resilience Index 43.4
Pillar 1: Robustness 38
Redundancy 60.5
Prevention/Mitigation 40.3
Maintaining Key Functions 13
Pillar 2: Resourcefulness 44.9
Training Exercises 54.9
Protective Measures 53.6
Awareness 66.2
Alternative Sites 18.7
New Resources 30.7
Pillar 3: Recovery 47.7
Coordination 75
Restoration 20.1

The financial management of RMG enterprises doesn’t have any financial plan to cope with an emerging crisis so around 232 factories, 6.9% of the total number were forced to shut down permanently during the pandemic. Subsidized credit under the stimulus package and the gradual rise of production orders helped factories to tackle the problem in 70% of enterprises, left 30% were mostly small and non-member factories.

This new reality gave birth to some recommendations that would pave the path better to handle any future crisis in the RMG sector as follows-

  • Diversification of the associations’ supply base by including both large-scale brands and small-scale buyers.
  • Ensuring better buying practices by maintaining regular contact with the suppliers and proactively engaging with small-scale manufacturers.
  • Providing technical and other business-related support to upgrade their value chain.
  • BGMEA and BKMEA should implement the members to develop a financial sustainability plan and follow-up regularly.
  • Stimulus packages need to be more outreaching that discouraged almost 30% of the factories from applying for assistance.
  • Bangladesh Bank and other commercial banks need to reexamine to make it more accessible.
  • Special development programs including technological enhancement, management improvement, financial management improvement, buyers’ networking and online IT investment need to be designed for factories located in Chattogram and Narayaongonj.
  • Emphasizing the incentives of SMEs and non-member RMG factories to facilitate their upgradation.

Emergency preparedness may ensure swift recovery and resilient damage control. The government should bound factories to pay workers’ wages. Foreign direct investment (FDI) can ensure product diversification, a better competitive environment at the domestic level, the transfer of technologies and better industrial relations.

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