In December 2005, The Asia Foundation, with funding from USAID, launched an eight-month regional project on Building Competitiveness through Economic Reforms in the Garment-Exporting Countries in Bangladesh, Cambodia and Sri Lanka during the post-MFA era. The aim of this project is to foster a conducive, competitive domestic economic environment to encourage investment and preserve employment by bringing the key actors of the apparel sector to engage into a constructive dialogue on the main constraints facing the industry.

In each of the countries, through a series of tripartite working meetings among employers, labour unions and the government, the three parties have come together to discuss areas of collaboration for improving the competitiveness of the ready-made garment (RMG) industry. The cross-country program has also been an ideal arrangement for exchanging ideas and lessons among the three countries. While the context in each of the countries is unique, it is useful for participants to know about the problems facing the other countries and how these problems are resolved.

The participants in Bangladesh expressed that the main factors adversely affecting the industry are inadequate infrastructure (e.g. poor quality of roads, railways and ports, and erratic supply of electricity and gas), inefficient and corrupt facilities (e.g. port and customs procedures), insufficient business support (e.g. high bank interest and charges), low level of labour standards and compliance (e.g. low wages and inadequate compensation, unsafe working hours, low level of productivity and skills, non-implementation of labour laws), and ineffective policy support. The participants strongly expressed that these issues need to be addressed by relevant entities in order to improve the industry's competitiveness.

In Cambodia, the industry's key actors expressed concern about issues including the deterioration of labour relations, ambiguity in the Labour Law, the lack of coordination and growing competition amongst unions, illegal strikes, low productivity of workers or high costs (specifically transportation and electricity). Participants also expressed that workers are not always fully informed about their rights and responsibilities and need more information on the changing economic environment in the post-MFA context.

In Sri Lanka, participants raised their worries on labour-management relations, difficulties with recruiting/retaining workers, inflexible working hours (making it difficult for continuous production), long lead times (need for quicker procurement of fabrics), low productivity and poor country infrastructure. Another interest of participants is to study whether "labour compliance" could be a source of competitive advantage for the industry, a consideration partly based on observations on Cambodia and the success of the ILO's Better Factories Cambodia program.

In both Bangladesh and Cambodia, participants have decided to continue the tripartite meetings after the end of the USAID-sponsored program and to maintain it as a platform for regular, open dialogue among the three parties. Both countries also agreed to publish a series of articles to promote understanding on the tripartite working meetings and the forging of partnership among labour unions, garment factories and the public sector. In Sri Lanka, participants selected three activities to be implemented by The Asia Foundation: the improvement of the capacity of small and medium factories to produce accurate quotes and samples for overseas buyers, a worker/employer survey on changing from a five-and-a-halfday to a five-day work week, and a research study on health and safety for women in boarding houses.

For the last phase of this eight-month program, the representatives from the workers, the garment factories and the government that participated in the tripartite meetings, met for a two-day conference on the 24th-25th of July 2006 in Bangkok. This closed-door workshop, entitled "The End of the MFA in Asia: Eighteen Months Later," provided an opportunity for the tripartite participants from the three countries to exchange experiences and best practices. It also offered them an opportunity to exchange views, across countries and with international experts, on the state of the garment industry since the Multi-Fiber Arrangement (MFA), the quota regime governing the apparel industry, ended on January 1, 2005. The meeting focused on the experiences and opportunities for reform in the smaller garment-exporting countries of Bangladesh, Cambodia and Sri Lanka. The goal of this cross-country workshop is to foster a productive and open dialogue between the groups that need to work together to forge a coherent domestic response to the evolving global environment.

The contents are the responsibility of the tripartite meetings and do not necessarily reflect the views of USAID or the United States Government.