DHAKA, Bangladesh -- Mostafa Quddus employs 9,000 people making garments. He fears that before long he will have to fire six of every 10 of them.
"Their fate is hanging in the balance," Quddus says as he shows a visitor around his main factory in the Bangladeshi capital. "If I can survive, it will be a miracle."
The harbinger of doom is the expiration at the end of this year of the 30-year-old Multi-Fiber Arrangement that uses a system of national quotas to guarantee Bangladesh and other poor countries access to the textile and clothing markets of Europe and America.
Bangladesh has made good use of the MFA to build a thriving ready-made garment industry that accounts for half of all manufacturing, employing 1.8 million people directly and at least five times more than that in ancillary jobs.
Annual exports of $5 billion earn 76 percent of the foreign exchange income of the South Asian nation and have fueled decent economic growth of around 5 percent a year.
The fear gripping Bangladesh -- and Sri Lanka, Mauritius and Cambodia to name just a few -- is that everything it has built up in the past 20 years will come crashing down when the expiration of the MFA exposes it to the full blast of competition from China.
"If you cannot stop China they will grab the whole market," says Quazi Moniruzzaman, president of the Bangladesh Garment Manufacturers and Exporters Association. "The whole economy will be disrupted; society will be disrupted; industries will collapse."
The World Bank reckons China, with unrivaled economies of scale, will have cornered half of world clothing exports by 2010, up from 20 percent now. India and Pakistan are also tipped to gain market share in a quota-free world.
Quddus says overseas buyers are already turning up the heat on his firm, Dragon Sweater Bangladesh Ltd. He brandishes an email from a British firm demanding a further 12.5 percent cut just five days after asking Dragon to lower its offered price by 6 percent. Quddus says he turned down the business.
The factory, spread out over a dozen floors, is bright and tidy. Foreign buyers pay attention to working conditions, says Quddus, pointing out a daycare center and an infirmary.
While men tend banks of knitting machines, women sit at long workbenches finishing the garments. Quddus stops to inspect a children's sweater labeled for Spanish chain Zara, which will buy it for about five euros and then sell for 15.90 euros.
Quddus knows he must invest to stay in business but is put off by high borrowing costs and the threat of politically motivated strikes. "This kind of unrest will lead us to the graveyard," he grumbles.
Deepening Bangladesh's plight is its inability to take advantage of the European Union's "Everything But Arms" initiative extending duty-free access to most goods from the world's least developed countries.
Because Bangladesh imports 80 percent of its raw materials for woven apparel and 30 percent for knit apparel, only a tiny part of its output meets the EU scheme's rules of origin.
The government is lobbying hard for an easing of the rules.
"The end of MFA will be a disaster unless there is an improvement in the rules of origin or if the improved market access that we are seeking into the U.S.A. does not come through," Commerce Minister Amir Khasru Mahmud Chowdhury said.
By some estimates, as many as 1 million garment jobs are at risk. Because women make up 85 percent of the garment industry's workforce, layoffs would not only cause serious economic damage but would also be a setback for the empowerment of women in what remains a conservative, mostly Muslim society.
Not everyone takes such a gloomy view. Dhaka University professor Wahiduddin Mahmud said it was scare-mongering to forecast an employment slump: many smaller firms would go to the wall, but bigger companies with direct links to Western buyers had the fatter margins needed to survive.
Indeed, he expects export earnings to keep expanding, though not at the heady 15 percent annual growth rates of the 1990s. After all, exporters had continued to boost volumes in the past two or three years despite a 25 percent drop in prices.
"It is a bad thing for the terms of trade but it shows the resilience of the sector in terms of its power of competitiveness," Mahmud said.
Like other economists, he ruled out Bangladesh's chances of emulating India's success in luring western back-office jobs to make up for an end to the boom in garments.
"Bangladesh's manpower quality is nowhere near India's at this moment," Mahmud said.
Fishing and farming, which are already doing well, offered more realistic growth alternatives, but in all probability Bangladesh would just have to accept lower growth, he added.
"Their fate is hanging in the balance," Quddus says as he shows a visitor around his main factory in the Bangladeshi capital. "If I can survive, it will be a miracle."
The harbinger of doom is the expiration at the end of this year of the 30-year-old Multi-Fiber Arrangement that uses a system of national quotas to guarantee Bangladesh and other poor countries access to the textile and clothing markets of Europe and America.
Bangladesh has made good use of the MFA to build a thriving ready-made garment industry that accounts for half of all manufacturing, employing 1.8 million people directly and at least five times more than that in ancillary jobs.
Annual exports of $5 billion earn 76 percent of the foreign exchange income of the South Asian nation and have fueled decent economic growth of around 5 percent a year.
The fear gripping Bangladesh -- and Sri Lanka, Mauritius and Cambodia to name just a few -- is that everything it has built up in the past 20 years will come crashing down when the expiration of the MFA exposes it to the full blast of competition from China.
"If you cannot stop China they will grab the whole market," says Quazi Moniruzzaman, president of the Bangladesh Garment Manufacturers and Exporters Association. "The whole economy will be disrupted; society will be disrupted; industries will collapse."
The World Bank reckons China, with unrivaled economies of scale, will have cornered half of world clothing exports by 2010, up from 20 percent now. India and Pakistan are also tipped to gain market share in a quota-free world.
Quddus says overseas buyers are already turning up the heat on his firm, Dragon Sweater Bangladesh Ltd. He brandishes an email from a British firm demanding a further 12.5 percent cut just five days after asking Dragon to lower its offered price by 6 percent. Quddus says he turned down the business.
The factory, spread out over a dozen floors, is bright and tidy. Foreign buyers pay attention to working conditions, says Quddus, pointing out a daycare center and an infirmary.
While men tend banks of knitting machines, women sit at long workbenches finishing the garments. Quddus stops to inspect a children's sweater labeled for Spanish chain Zara, which will buy it for about five euros and then sell for 15.90 euros.
Quddus knows he must invest to stay in business but is put off by high borrowing costs and the threat of politically motivated strikes. "This kind of unrest will lead us to the graveyard," he grumbles.
Deepening Bangladesh's plight is its inability to take advantage of the European Union's "Everything But Arms" initiative extending duty-free access to most goods from the world's least developed countries.
Because Bangladesh imports 80 percent of its raw materials for woven apparel and 30 percent for knit apparel, only a tiny part of its output meets the EU scheme's rules of origin.
The government is lobbying hard for an easing of the rules.
"The end of MFA will be a disaster unless there is an improvement in the rules of origin or if the improved market access that we are seeking into the U.S.A. does not come through," Commerce Minister Amir Khasru Mahmud Chowdhury said.
By some estimates, as many as 1 million garment jobs are at risk. Because women make up 85 percent of the garment industry's workforce, layoffs would not only cause serious economic damage but would also be a setback for the empowerment of women in what remains a conservative, mostly Muslim society.
Not everyone takes such a gloomy view. Dhaka University professor Wahiduddin Mahmud said it was scare-mongering to forecast an employment slump: many smaller firms would go to the wall, but bigger companies with direct links to Western buyers had the fatter margins needed to survive.
Indeed, he expects export earnings to keep expanding, though not at the heady 15 percent annual growth rates of the 1990s. After all, exporters had continued to boost volumes in the past two or three years despite a 25 percent drop in prices.
"It is a bad thing for the terms of trade but it shows the resilience of the sector in terms of its power of competitiveness," Mahmud said.
Like other economists, he ruled out Bangladesh's chances of emulating India's success in luring western back-office jobs to make up for an end to the boom in garments.
"Bangladesh's manpower quality is nowhere near India's at this moment," Mahmud said.
Fishing and farming, which are already doing well, offered more realistic growth alternatives, but in all probability Bangladesh would just have to accept lower growth, he added.
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