Garment manufacturers could not avail themselves of the $100 million remediation fund of the Alliance signatory companies due to complicated terms and conditions, making the 28 North American retailers' pledge an empty promise.
“The terms and conditions are very hard for us and also time-consuming,” said Mahmud Hasan Khan Babu, vice-president of the Bangladesh Garment Manufacturers and Exporters Association.
Some 2-3 firms had applied for the fund but they did not get the money, according to Babu.
The factory owners instead are completing the remediation works with their own money. Factory owners have spent Tk 5 crore on average for strengthening the workplace safety, according to industry insiders.
To avail the fund, factory owners have to apply to the Alliance signatory brands first. The brands would then weigh up whether the factory needs money or not, which is a drawn-out process.
If any brand releases a certain amount of money it will have to be done through the Bangladesh Bank, which, in turn, will disburse it through banks.
Both the central bank and the banks will charge a certain amount, so the average rate of interest goes past the 10 percent mark.
Factory owners can get loans from banks at much lower rates and with lesser strings attached.
“So the owners even did not try to utilise the fund, although the Alliance had committed it to facilitate factory remediation,” he added.
Formed in May 2013, the Alliance for Bangladesh Worker Safety is a five-year-long binding agreement of 28 North American clothing brands, including the US retail giant Wal-Mart.
Jim Moriarty, executive director of Alliance, also acknowledged that the factory owners did not show any interest in taking the $100 million fund.
“The factory owners have already spent a lot of money for upgrading safety in production units,” he said at a press briefing yesterday at the capital's Westin hotel.
Moriarty, a former US ambassador to Bangladesh, went on to laud the progress in factory safety over the last five years.
As per the conditions, the tenure of the Alliance is supposed to expire in May. But, it might be extended by six months for a smooth transition. “Our factory remediation work is progressing at a rapid pace, and we remain on track to meet our stated commitments by the end of the year.”
As of yesterday, 322 Alliance-affiliated factories have completed all material components in their corrective action plans and are considered substantially remediated.
As many as 88 percent of factory remediation is complete across all active factories, including 84 percent of items most critical to life safety, he said. All told, 290 Alliance factories have required structural retrofitting.
Of those, 264 factories, or 91 percent, have fully completed retrofitting, meaning that their foundations, columns and beams are now able to meet the imposed load demands required for an industrial building, he said.
Similarly, 141 factories needed to install sprinkler systems. Of these, 118 factories, or 84 percent, have completed installation.
“These systems extend the time available for people to escape from fires, and they can also extinguish fires in the very early stages of combustion, reducing risk for workers and fire-fighters alike.”
He went on to express hope that the government, the International Labour Organisation, the Department of Inspection for Factories and Establishments, the BGMEA and the Bangladesh Knitwear Manufacturers and Exporters Association will establish an independent, credible and trustworthy organisation like Remediation Coordination Cell for monitoring the progress of safety in factories.
In May 2013, Alliance started preliminary inspection of more than 700 member factories.