Around 75 small and medium-sized garment factories in Bangladesh have ceased production or closed down completely after losing out on orders as they could not fulfill the compliance requirements.
Industry stakeholders, most of the small- and medium-sized garment factories depend on sub-contracts as they do not get direct orders from buyers. In recent years, however, the flow of sub-contracts has dried up as the units are unable to meet the strict compliance requirements set by Accord and Alliance after the Rana Plaza collapse in 2013.
A small industrialist starts his/her business with a maximum capital of Tk. 15–20 million. But the factory needs a huge amount to meet the compliance measures. The remediation cost for a factory is estimated at Tk. 30–40 million. Bigger businesses can remediate their factories as they have the capacity, but smaller ones cannot do this. The ever-dipping profits and work orders will make the situation worse in the near future.