Bangladeshi Government Dissolves BGMEA Board. Now What?
Bangladesh’s Ministry of Commerce has ordered the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) to dissolve its board of directors, citing the “flawed” reconstitution of the trade group’s leadership following the resignation of its previous president and its “failure” to effectively address the sector’s ongoing operational turmoil and worker unrest.
The decision, which was announced Sunday, is unprecedented, said Mohiuddin Rubel, an additional managing director at Denim Expert who was, until recently, one of the BGMEA’s directors. Because of this, there is no clear roadmap beyond what the agency’s circular defined: That Md. Anwar Hossain, vice chairman of the Export Promotion Bureau will be taking over as administrator and that he will be initiating a “free and fair” election within 120 days to complete the transfer of power.
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But a few additional details coalesced on Monday. Hossain is expected to form an interim committee—perhaps as soon as tomorrow—comprising members from the BGMEA’s main rival factions: Sammilito Parishad, which clinched all directorship positions, including that of the president, in March, and Forum, whose members have accused the latter group of vote rigging through the use of fake members.
“The administrator needs a team with the experience to handle such a large organization,” Rubel said. “He cannot run it by himself only.”
The move, though surprising, wasn’t wholly unexpected. Faisal Samad, a Savartex Group managing director who ran for president under the Forum banner, as well as a former BGMEA vice president, has been at the forefront of calls for the board’s disassembly, not only because of what he described as unscrupulous ballot stuffing but also due to then-president SM Mannan Kochi’s extended absence from Bangladesh following the overthrow of the ruling Awami League. As uncertainty reigned and production delays stretched on, the BGMEA brass provided no meaningful direction that would assuage international buyers’ concerns, he said. Worker protests over August and September alone have cost the sector $400 million due to interrupted operations, according to the BGMEA’s estimate.
By the time Kumkum Sultana, the Export Promotion Bureau’s director of textiles, called a hearing last month, circumstances were far from in the board’s favor. Not only was Khandokar Rafiqul Islam’s appointment as Mannan’s successor in August considered irregular, Samad said, but the government had also lost confidence in the board’s ability to navigate the organization through the tempest of multiple and consecutive crises. Bangladesh, as a whole, is also trying to find homeostasis in the wake of former prime minister Sheikh Hasina’s sudden resignation and departure nearly three months ago. With Nobel Peace Prize laureate Muhammad Yunus now helming a caretaker government, every industry has been clamoring for reform that would throw off the final shackles of an authoritarian regime that helped install loyalists in private-sector positions of influence.
“All these years, it’s been politics mixed up with business,” he said. “Businesspeople should lead business and politicians should do political work.”
Asked if he would run again, Samad said it would be a party decision. He said that any changes in the BGMEA’s governance are only just beginning and what’s important is that things are conducted in a “proper, compliant manner.”
Even so, Nazma Akter, who leads the worker rights groups the Awaj Foundation and the Sommilito Garments Sramik Federation, said she worried that the timing of the announcement would upset the delicate truce between manufacturers and workers. Of the more than 2,000 factories that had been beset by calls for higher pay and better working conditions in the industrial hubs of Ashulia, Gazipur and Savar, resulting in closures from the eruption of vandalism and violence that at times ensued, all but two are open and running. She fears that the vacuum of power, which could delay satisfying worker demands such as a new minimum wage review and the resolution of criminal charges from last year’s pay protests, could rile up further demonstrations, especially if conditions further deteriorate.
“At the end of the day, workers are suffering,” she said. “The business community are the people who are creating this problem.”
Another industry insider, who asked for anonymity to be able to speak freely, said that it could take more than 120 days—more like 120 to 210—to make the necessary changes before elections can happen. But this person also said that no one wants to see any panic from suppliers, buyers or workers over this. Rather, it’s an “opportunity to remake the BGMEA to reflect what the industry really needs” without political interference.
“As far as Bangladesh is concerned, we’ve been panicking people for the last three months, [but] without that reform, we are never going to get very far,” the insider said. One of the issues the BGMEA has been avoiding is defining who gets to vote. “You don’t necessarily have to be either a manufacturer or an exporter to be a voter,” the person added. “This is the fundamental problem in our association, and it’s the first task of this administrator to resolve that.”
Also looming over the future of Bangladesh are the U.S. presidential elections. Whether Donald Trump or Kamala Harris comes out on top could determine how things further shake out.
“If the Democrats come in, we will be completely moving in a different direction, say, where human rights will have to be not just something we pander to the Europeans, but that we will actually have to do,” the person said. “There are also certain trade issues and tariffs that are on the discretion of the president.”
A new board will have its work cut out for it, Rubel said. Its first test would be to normalize relations with customers who have been spooked by the country’s turbulence. But a consistent power supply also remains an omnipresent problem in Bangladesh, as does a volatile financial sector and rising manufacturing costs that have hampered its competitiveness in comparison to Cambodia or Vietnam. But perhaps the BGMEA’s biggest challenge is getting the “right” price from buyers, who have increasingly squeezed margins over the years, making it near-untenable for suppliers to survive.
“The government and the board and the industry has to negotiate with the buyers and to give us the right price,” Rubel said. “Giving us a lot of orders without our costs will not make us sustainable in the long run. If you want Bangladesh to be the safest destination with compliant factories and for Bangladesh workers to get wages as per the living standard, then you must comply with the best price according to what you are taking. If you’re not giving the justified price to suppliers, how will they fulfill those demands?”
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