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Weaving reforms

Publication Date : 13-01-2014

 

As soon as Asif Ibrahim graduated from the University of North Texas, he flew back home to Bangladesh to start working. Although as the son of a garment tycoon, he could have stayed on in the United States and enjoyed a comfortable life.

“I didn’t want to waste a single day,” recalls the manufacturer of ready-made garments, who also finds time to be an industry consultant, lobbyist and sustainability advocate.

“There are way too many opportunities to make a change in Bangladesh,” he tells China Daily Asia Weekly, on the sidelines of the Asia-Global Dialogue organised by the Fung Global Institute.

In 1993, when Ibrahim joined his father’s 9-year-old garment business, the Newage Group of Industries, the company’s total export value was just US$6 million.

Soon he was able to introduce new technology and use his business networks in the US to market his products. Since then, exports have grown more than tenfold to $70 million today.

Born in Bangladesh’s capital Dhaka, Ibrahim grew up playing sports, reading literature and enjoying theatre.

Unlike many bosses behind the country’s garment factories, Ibrahim has his own way of doing things.

“A lot of grievances arise when the owners of factories are not involved in the operation directly,” he observes. “I sit down with my workers.”

He visits his factories, talks to his employees, has lunch with them and organises picnics for the company.

“It makes a big difference if you do small things like that,” he says. “But of course, you have to pay your workers on time.”

Ibrahim says fast-developing Bangladesh is at a crossroads. The country’s garment industry has long been notorious for chronic safety concerns and an unsustainable model based on low wages.

Numerous cost-saving decisions have rendered workers vulnerable to exploitation and accidents, such as last year’s catastrophic collapse of the Rana Plaza factory in Savar, near Dhaka, that killed more than a thousand people.

“We haven’t been able to address these issues in a very strong manner — because the industry has grown at such a fast pace,” says Ibrahim, who chaired the Dhaka Chamber of Commerce and Industry, the country’s largest trade body, from 2011 to 2012.

The garment industry started to blossom when a wave of privatisation swept through Bangladesh in the late 1970s, followed by a flourishing sub-contracting business in the 1990s.

Since then, the garment industry has become an important pillar for the Bangladesh economy. It accounts for more than 10 per cent of GDP and 75 per cent of all export earnings, and is a major supplier to high-street Western retailers.

“We have been seeing this growth because our products have been brought out of Bangladesh at US$4 to US$5 but are being sold in retail shops in the West for US$40 to US$50,” says Ibrahim, pointing out the painful reality of the business.

“Population is a big burden for us,” he says. Some 2 million job seekers flood the market every year, and the manufacturing industry is the only sector large enough to provide sufficient employment in a country of more than 150 million people.

A long-awaited verdict from the official wage board in November gave relief to millions of Bangladeshi garment workers producing cheap clothing for Western retailers: A statutory minimum wage of 5,300 takas (US$68) a month, which amounted to a 77 per cent pay rise.

Ibrahim believes the industry can sustain this. Exports will not suffer in the short run and it is a good opportunity for reforms in the industry.

“We’ll be able to grow more,” he says. “What will happen is exporters will try to be more creative, more efficient, and make use of technology to avoid wastages at every microscopic level to cut costs, and pay workers a sustainable wage.”

Labour cost is only one of the many problems facing the manufacturing industry: Power shortages, political instability and labour unrest are ever-present worries.

“These issues add to our costs of manufacturing. It’s not just the labour costs that make us uncompetitive,” he adds.

Today, the Newage Group has mushroomed into a conglomerate specialising in the manufacturing and direct export of ready-made garments, textiles and plastic products. It has an annual turnover of around US$30 million, with 3,000 machines and 8,000 employees.

As his company continues to grow, the ambitious manufacturer has little time to idle. Ibrahim aims to take his garment business beyond Bangladesh and is searching for low-cost manufacturing bases in the region.

He has been looking to establish joint ventures with partners in countries such as Cambodia and Myanmar.

Economic powerhouse China too is a natural partner. Rising wages in China have prompted garment manufacturers to venture across the border. In the long run, Ibrahim says, “they must come to Bangladesh to set up factories and take advantage of the low cost and credibility of our industry here”.

Not long ago, a Hong Kong company that manufactured blazers in Shenzhen in southern China formed a joint venture with Ibrahim in Bangladesh. While the company promises technical expertise, he, in turn, offers local support to his Chinese partners. This is a natural progression, according to Ibrahim.

“An Asian alliance is important,” he says.

Ibrahim believes China, instead of the West, will become Bangladesh’s biggest garment export destination in 10 to 15 years’ time. In other words, China will shift from being the world’s factory to a big spender and customer.

“We will be producing for Chinese brands directly,” he says.

Also speeding up the integration process is the building of the Bangladesh-China-India-Myanmar (BCIM) Corridor — an ambitious highway project running from the southwestern Chinese city of Kunming to India’s Kolkata, through Dhaka and Myanmar’s Mandalay.

Calling it “fantastic” and a “brilliant move”, Ibrahim believes the BCIM corridor will be a win-win solution for the four neighbouring countries.

“Because SAARC (South Asian Association for Regional Cooperation) has failed, this initiative can hopefully do something to improve regional connectivity,” he says.

This is going to be the picture 15 to 20 years down to road, says Ibrahim.

“There will be a big common market when duties are lifted … Bangladesh and Myanmar will become a manufacturing hub for China and India.”

Moving forward, the Asian growth model should be balanced with improvements in social security.

“We have to look into amending labour laws, having a living wage that is sustainable, ensuring a safe working environment and reasonable working hours,” he says.

Now the second largest garment exporter after China, Bangladesh is poised to be a beneficiary of the “China plus one” strategy. This is a plan multinationals have adopted to maintain manufacturing in China, while expanding into Southeast Asian countries to keep costs down.

The way forward for Bangladesh in the long run is to seriously rethink the issue of inequality, Ibrahim says.

In this regard, he looks up to Muhammad Yunus, the microfinance pioneer from Bangladesh and a Nobel laureate.

“Bangladesh is proud to have Dr Yunus as an advocate of social business.”

Despite a hectic schedule packed with conferences, public speeches and lunches with his workers, Ibrahim is joining industry leaders to spearhead a social business institute.

He hopes to use his influence in business circles to experiment and promote the budding concept of social enterprise in the private sector for poverty alleviation.

“This will grow in Bangladesh,” he says. “It’s not that difficult for an entrepreneur with six or seven lucrative businesses to set up one social business.”

BIO

Asif Ibrahim

Vice-chairman, Newage Group of Industries

Career milestones:

2013: Chairman of the Business Initiative Leading Development (BUILD), a public-private dialogue platform to facilitate policy reforms

2011-2012: President of Dhaka Chamber of Commerce and Industry

2007: Conferred the Commercially Important Person status by the Ministry of Commerce in Bangladesh

1993: Joined Newage Group of Industries

1990s: Graduated from the University of North Texas

Quick takes:

Who do you look up to?

Mahatma Gandhi, Nelson Mandela and Muhammad Yunus.

What is your business motto?

To do business for the improvement of my workers’ quality of life and thereby contribute to the economic development of Bangladesh.

What is the secret to your success?

Straightforwardness, doing a lot of research and taking an interest in the global economy.

Date of birth: 23 July, 1965


 

 

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