UNIDO South Asia - in Action

UNIDO South Asia - in Action United Nations Industrial Development Organization October - December 2008 Vol 2 No 4 Building Trade Capacity UNIDO in Bangladesh: Enhancing Export Competitiveness through Quality Support Programme A shrimp pond National Metrology Institute - Mass Laboratory In this issue: = Bangladesh Quality Support Programme (BQSP) 1-5 = Events: Workshop on CSR/ESR 6 UNIDO-ISF Workshop on Italian footwear manufacturing techniques 7 = Country Programme for Afghanistan on the anvil 7 = Press corner 8 = Forthcoming Events 8 The Bangladesh Quality Support Programme (BQSP) - a project executed by the United Nations Industrial Development Organisation (UNIDO) and financed by the European Union (EU), with the additional support of NORAD - aims to bring quality standards and quality management in Bangladesh upto international standard, and to increase awareness of international quality standards in the business community so as to support the development and diversification of the country's exports. The project duration is from 2006 to 2009. UNIDO SUPPORT FOR THE DEVELOPMENT OF THE NATIONAL QUALITY INFRASTRUCTURE INCLUDES THREE AREAS OF ACTIVITY:! National Quality Management System = Improve awareness and capacity of businesses to meet export quality and packaging standards and to support the development of the export sector. = Improve standards setting, certification, accreditation, and metrology to an internationally accepted standard.! Textiles - to improve international competitiveness strategies for Bangladesh textile and garment exports.! Fisheries - to bring the fish inspection and traceability capability of Department of Fisheries and the private sector up to a level to meet the EU and US standards for the present and the foreseeable future. Conference on the future of BIFT Beneficiaries: The immediate beneficiaries of the programme will be the cooperating organizations in the public and private sectors. Ultimate beneficiaries will be the manufacturers and exporters of Bangladesh; employees; job seekers and trainees in the concerned industries; Bangladesh consumers; and importers as well as consumers in the importing countries. A garment factory Page 01

Key facts: Budget: Total budget for the UNIDO component of BQSP is Euros 10 million, of which the EU contributes Euros 7,756,790; NORAD (through UNIDO) Euros 800,000; and the Government of Bangladesh, Euros 1,443,210 in kind. Duration: Inception phase: January-June 2006 Implementation: 1 July 2006-30 June 2009 Phasing out: 1 July 2009-31 December 2009 The write-up below covers progress of the programme upto November 30, 2008, including overall progress and achievements in respect of each of the three UNIDO sub-components of the Bangladesh Quality Support Programme. BQSP areas of activity 1. NATIONAL QUALITY MANAGEMENT SYSTEM Background There are over 100,000 international standards and over 1,000 new ones introduced every year. It is a major challenge for developing countries to keep up with the ever more rigorous mandatory and market generated product standards. A national metrology laboratory which guarantees that all measurements used by physical, chemical and microbiology testing laboratories are accurate and comply with SI (Systeme International d'unites) standards will provide the basis for a national system of quality testing and assurance. A major constraint to the growth and diversification of Bangladesh exports is the complexity of national and international technical, sanitary and phytosanitary (SPS) conditions which apply to exports to developed markets. To overcome these technical and SPS barriers to trade, Bangladesh needs to respond with internationally accepted standards, testing and certification. At present most testing of Bangladesh export products is done in the importing or a third country, adding to cost and lead times. In addition, Bangladesh manufacturers have to be internationally competitive in terms of price and quality. An autonomous internationally, recognized accreditation authority will make a major contribution to ensuring that tests done in Bangladesh are recognized internationally. Objectives: + To ensure that the System of Quality Management, Standards and Conformity Assessment is brought to an internationally accepted standard; + To support the Government of Bangladesh in the establishment of an effective accreditation authority; + To strengthen Bangladesh Standards and Testing Institution (BSTI) in standards setting and metrology; and + To strengthen the capacity of the Consumers' Association of Bangladesh (CAB) in standards setting and compliance. Results: + Legal framework for standards, metrology, testing and conformity assessment strengthened. Workshop on Standards at Bangladesh Institute of Standards and Testing + An autonomous accreditation authority Bangladesh Accreditation Board (BAB) has been established, with the passing of the Bangladesh Accreditation Board Act in 2006. BAB, with the assistance of UNIDO international and national consultants, has made progress in developing documentation and procedures and in developing international and bilateral links. Three courses two conducted by Norwegian Accreditation and one by Quality Austria have trained potential assessors on the standards for testing laboratories ( ISO 17025). + BSTI metrology capacity, accuracy and traceability improved. + BSTI strengthened to become effective in standard setting and dissemination, including a more effective World Trade Organisation (WTO) enquiry point for TBT (Technical Barriers to Trade); improved library and data dissemination service; and improved performance monitoring mechanisms. To this end, a detailed assessment was made of the organization and functioning of the WTO TBT Enquiry Point and a detailed plan prepared for its upgrading to meet WTO requirements. EU Ambassador launching the Bangladesh Quality Support Programme Page 02

+ Standards developed for 20 key products and harmonized with international standards. Also, 140 plus Codex standards adopted as national standards. + A more effective national product conformity mark scheme designed. + Consumers' Association of Bangladesh (CAB) strengthened to become a significant force in standards setting and market surveillance. + Increased awareness in the private sector of the importance of standards through a series of seminars on topics such as importance of metrology for industry; benefits of and the requirements for achieving laboratory accreditation; consumers' rights legislation; national textile policy and the future of the textile sector; traceability systems; and corporate social responsibility standards. Metrology laboratory 2. IMPROVING THE QUALITY AND PRODUCTIVITY OF THE TEXTILE/READYMADE GARMENT SECTOR Background Problems faced by the Bangladesh textile and readymade garment industry include inadequate backward and forward linkages; low capacity utilization; absence of effective coordination between government agencies and the private sector; inadequate supply of skilled manpower; lack of facilities for training and human resource development; and insufficient facilities for development and dissemination of modern textile design and fashion. There is a shortage of skilled manpower and training due to non-availability of quality trainers in all areas but particularly in quality control and design. Objectives To improve the innovativeness and competitiveness of the textile and garment industry through: + Human resource development : technical and marketing training + Upgradation of industry by promoting forward and backward linkages; modernization and rehabilitation; new product development; and improved industry policies and coordination. + Market access facilitation through technical assistance on information services and quick response garment manufacturing. Results + National Institute of Textile Training, Research and Design (NITTRAD) strengthened. Knitwear finishing Signing an MOU on the transfer of NITTRAD to a public/private board of management Page 03

Students at BGMEA Institute of Fashion and Technology + A consultancy unit established to promote modernization, new product development and forward and backward linkages. + Textile Marketing, Training and Information Services established at the BGMEA Institute of Fashion and Technology (BIFT) which has been established by the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), to respond to the industry's training needs. + Centre for Export and Product Development (CEPD) at BIFT strengthened. + Capacity of concerned ministries and trade associations in analysis and planning enhanced. Textile stakeholders visit Niederrhein University in Germany Bangladesh Textile Industry: A Fact Sheet The Bangladesh textile industry, including the primary textile and garment sector, has shown remarkable growth over the last 20 years, as it has moved progressively from a public sector to a predominantly private sector industry. Readymade Garment (RMG) exports were reported to be USD 643 million in 1990 and about USD 8,000 million in 2006, according to the WTO, i.e. a 1,150% increase. Textile exports (yarns, fabrics, home textiles and other made-up goods) increased from USD 343 million to about USD 700 million over the same period. Garment exports in 1990 consisted of at least 80% imported finished fabrics that were converted into garments by a growing number of small- to mediumsized, privately owned companies. In 2008, backward integration in the industry partly by garment companies themselves but largely by independent primary textile companies has seen garment exports increasingly using locally made fabrics, with imported fabrics presently used for a minor part of garment exports. Foreign direct investment (FDI) has played only a relatively small part in the transformation of the industry over the past 20 years. The primary textile sector served only the domestic market until the 1980s, whilst garment - exporting companies numbered only 9 in 1978. A garment factory in Bangladesh Page 04

3. STRENGTHENING THE FISHERIES SECTOR Harvesting shrimps Background The export sector in Bangladesh faces a number of constraints. Hence, achieving achieving internationally accepted quality standards so as to build the confidence of international buyers in both existing and new markets would benefit the Bangladesh economy. Shrimp industry is the second largest export industry of Bangladesh - exporting over US $ 300 million annually and employing around 600,000 people. But the industry suffered from serious inefficiencies and was exposed to critical social and environmental risks. In fact, the European Community (EC) imposed a ban on import of fisheries products from Bangladesh in 1997, due to inadequate infrastructure, sanitation, inspection and quality control laboratories. Although exports to EU were subsequently resumed as a result of actions taken by Government of Bangladesh, significant problems remained. Objectives To strengthen the Bangladesh Department of Fisheries (DOF)/Fish Inspection and Quality Control (FIQC) in a sustainable manner and to ensure adequate fish inspection capacity in accordance with international food safety standards through the appropriate testing of frozen fish exports (especially shrimps) to the EU, and to improve overall competitiveness of the sector. Results + The capacity of the Department of Fisheries has been strengthened in: -Testing and inspection -Strategy and planning -Public/private cooperation + Three new improved DOF laboratories established. + Private sector laboratory personnel have been trained. + Improved waste treatment, recycling and environmental practices - source of nitrofurans and chloramphenicols traced. Exporting shrimps Vulnerable Target Groups: IMPROVING THE CONDITIONS OF FISHERFOLK Several vulnerable groups were identified - seasonal female operatives in the processing plants; female shrimp farmers and female members of shrimp farming families; and fry collectors who are mainly women and children. A study of problems facing these three groups was completed and a programme of consultation and education began in 2008. UNIDO is working with the Department of Fisheries inspectors, the Bangladesh Frozen Foods Exporters Association (BFFEA), Ministry of Labour's Factory Inspectorate, Ministry of Women's Affairs, and local NGOs to educate and raise awareness among employers, employees and inspectors on social responsibility, and in particular, on labour laws. BFFEA has begun to recognize the importance of these issues to the workers as also the impact that noncompliance has on acceptability and market access. Given the importance of the role of women in shrimp farming in improving quality, hygiene and productivity, and that they would normally not participate in training sessions attended by men, training workshops are being organized for women farmers, wives of farmers and farming couples, besides training of trainers in all cooperating agencies on women's contribution and importance to this industry. Of the three target groups, the most vulnerable are the shrimp fry collectors. They have few, if any, other sources of income; the work is highly seasonal and poorly paid; and furthermore, collecting fry from the wild is now illegal and largely replaced by supply from commercial hatcheries. A pilot programme to improve the status and prospects of one such community has been launched. As families often cannot afford the expenses of sending their children to school, there is emphasis on raising the level of literacy especially of girls through local community teachers. Now in the final year of the four-year programme, BQSP is largely on track. (and) the EU's mid-term evaluation in February 2008 concluded that to a large extent, BQSP would achieve its stated objectives. Page 05

EVENTS WORKSHOP ON FOSTERING CSR / ENTERPRISE SOCIAL RESPONSIBILITY IN MSMEs Mr. Mukesh Gulati, Foundation for MSME Clusters, with a participant. Mr. Philippe Scholtes, Representative & Head, South Asia Office, with Mr. Khalid Nadvi, Professor, ManchesterSchool of Business. Mr. Michele Clara of UNIDO at the Workshop. UNIDO in partnership with the Ministry of Micro, Small and Medium Enterprises (MSMEs), Government of India, and the Swiss Agency for Development and Cooperation (SDC) organized a Workshop on Fostering Responsible Behaviour in MSMEs in New Delhi on 19 November 2008. The objective was to provide a platform for multi-stakeholder dialogue on the significance of mainstreaming enterprise social responsibility (ESR) commonly known as corporate social responsibility (CSR) in MSMEs; to share the learning of the UNIDO-SDC CSR and SME project (2005-2008); and to build on the learnings of the project so far. The principles of CSR/ESR are still not universally established. Yet, these are making inroads into perceptions and assessment of how enterprises operate. However, most of the information and experiences available about responsible behavior across the world is about large enterprises. The MSMEs have either been left out of ESR movements or their role has not been adequately projected. Against this backdrop and building on its role as the specialized agency of the UN within the UN Global Compact with a mandate on small and medium enterprises (SMEs), UNIDO teamed up with SDC on an action research global project (2005-2008). The project, spread over 4 countries - India, Pakistan, Senegal and Ecuador - aimed to identify and disseminate good practices to enhance SME participation in the ESR movement in a sustainable manner. The 5 clusters covered in India were Ludhiana, Jalandhar, Tiruchirapalli, Kalady and Moradabad, while the other 3 clusters studied are in Sialkot (Pakistan), Senegal and Ecuador. Participants in the Workshop included: Mr. Philippe Scholtes, Representative and Head, UNIDO South Asia Office, New Delhi; Mr. Francois Binder, Counsellor and Country Director, SDC India; Dr. Khalid Nadvi, Professor, Manchester School of Business, UK; Dr. Michele Clara of UNIDO/Vienna; Mr. Anil Bhardwaj, Secretary General, Federation of Indian Small and Medium Enterprises (FISME); Mr. H.K.Mittal, Advisor and Head, National Science and Technology Entrepreneurship Development Board, Department of Science and Technology, India; Mr. Subrata Barman, IFC Advisory Services South Asia; Mr. Pinaki Roy of Global Compact Society India; Mr. Satish Wasan, President, Sports Goods Foundation of India, Jalandhar; Mr. Raghunath Singh Rana, Sports Goods Manufacturers and Exporters Association (SGMEA), Jalandhar; Ms. Seemantini Khot, Head CSR, Suzlon Foundation, Pune; Mr. C. Mani of BHEL, Trichy; Mr. K.G.Muralidharan, President, BHELSIA, Trichy; Mr. Hardeep Singh, President, LBIDPS, Orissa; Ms. Neha Kumar of Indo- German CSR Initiative, GTZ; Mr. Karan Butalia of Axis Bank; Mr. M. Shadab of FICCI; and Mr. Mukesh Gulati, Executive Director, Foundation for SME Clusters. Keeping in view the importance of mainstreaming ESR in MSMEs and to build upon the learnings so far, the participants noted the need to: a) further develop the toolkits and methodologies for undertaking sustainable multistakeholder initiatives steered by local industry associations among MSME clusters, b) build capacities of MSME industy associations to undertake socially relevant activities in their respective clusters; c) suitably modify the existing cluster development schemes of th assistance undertaken during the 11 Five Year Plan of India to include socially and environmentally relevant activities, thus fostering inclusive growth; and d) develop a South-based CSR policy agenda suitable for developing countries in their socio-economic context. Page 06

UNIDO, ISF Workshop focusses on experience gained from exposure to Italian Footwear Manufacturing Techniques In an initiative to upgrade the Indian leather footwear industry, UNIDO is cooperating with the leather footwear cluster in Chennai with the Indian Shoe Federation (ISF) as its partner under UNIDO's Consolidated Project for SME Development in India, funded by the Government of Italy. Under the innovative cluster twinning component of the project aimed at creating institutional and long-term relationships between footwear manufacturers of India and Italy, training programmes were conducted by Italian experts in the factories of the cluster members in Chennai in 2008 in best manufacturing practices, productivity and quality. Mr. Giovanni Risso, UNIDO- Italian expert, conducted a technology cum training audit in 10 SMEs, which are members of ISF, in Chennai, Ranipet and Ambur earlier this year which evoked an overwhelming response from the industry, while Mr. Paolucci Franco and Mr. Rimoldi Aldo, senior experts from the leading Italian training institute PISIE conducted a training on best practices and suggested improved strategies to become competitive in terms of both productivity and quality. This training directly benefited 23 MSMEs of Chennai footwear cluster, and 3 local training institutes. Further, in order to provide first hand exposure for learning critical Italian manufacturing techniques in their counterpart factories, 14 representatives from footwear enterprises in Chennai and 4 from training institutions viz., Central Leather Research Institute (CLRI) and Central Footwear Training Institute ( CFTI) participated in a training in Italy ( 28 October to 9 November 2008) where they visited Italy's popular footwear exhibitions - LineaPelle and SIMAC 2008 in Bologna; interacted with technology and machinery suppliers; had tutorials with training institutions like PISIE and had training in the factories of Italian shoe manufacturers. This was geared to bringing about a paradigm shift from sub-contracting to direct manufacturing; improved plant layout and materials movement; modernization; and overall, a change in the mindset. On 5 December 2008, the participants shared their experiences at a Workshop on Best Practices in Footwear Manufacturing - The Italian Experience, jointly organized by UNIDO and ISF in Chennai. Mr. Aqeel Ahmed, President, ISF, addressed the Workshop and Mr. Bruno Valanzuolo, Chief Technical Adviser, UNIDO, in his presentation on the Impact of the Intervention and the Road Ahead said that interaction with the Italian footwear cluster industrial model would foster the expansion of the shoe component and accessory industry which was essential to sustain the growth of Indian footwear exports. Industry and institution representatives who underwent training under the project both in Tamil Nadu and Italy shared their experiences. The Workshop brought out that the initiative both at enterprise and institution levels had achieved its objectives in the following manner: = Giving an opportunity to members of ISF to introspect their own gaps and the need for change as well to understand the way forward to implement their upgradation programmes. = Improved industry-institution linkages. = A vision to foster a paradigm shift from their present practices to more competitive ones so as to meet the global challenges. = An opportunity to network with their Italian counterparts and explore business linkages for twinning of strengths and weaknesses of both the clusters. = Capitalizing on the competitive advantages and jointly exploring third world markets. = Adopting sustainable development activities for the larger benefit of ISF members, bearing in mind the need for a medium to longterm implementation time horizons and the important role that ISF has to play to ensure sustainability and ultimate ownership of the current initiatives. This would translate into 18 months action plan with measurable objectives from ISF to realize the vision of the project on a long-term basis. Mr. Bruno Valanzuolo, Chief Technical Adviser, UNIDO, making a presentation at the Workshop on Best Practices in Footwear Manufacturing: The Italian Experience in Chennai on 5 December 2008. New Initiatives Country Programme for Afghanistan on the anvil Based on a request from the Government of the Islamic Republic of Afghanistan, and the development priorities of Afghanistan, the Country Programme for Afghanistan (2009-213) is currently under finalization which will be in line with Development Assistance Framework (UNDAF) and focus on an overall objective of contributing to poverty reduction and rural development through appropriate industrial initiatives. The earlier three-year Country Service Framework between UNIDO and Afghanistan focused on two areas of cooperation: i) promoting an environment conducive to the development of the industrial sector; and ii) direct interventions for poverty alleviation and employment generation. In view of the shortfall in funds mobilized as against the planned figure, steps have been taken to remedy this weakness: creation of a UNIDO Desk in Kabul in 2005; and the explicit insertion in the new programme of the UN-wide strategy as defined in UNDAF 2010-2013. The Country Programme will broadly consist of three components, namely 1) Support to national institutions; 2) Promotion of private entrepreneurship in off-farm businesses; and 3) Basic services such as clean environment. Page 07

Press Corner UNIDO South Asia activities continued to be in the news in the Indian media during October-December 2008: Forthcoming Events = Media Launch of UNIDO Industrial Development Report 2009 - at UN House, New Delhi, South Asia Regional Office, to coincide with the global launch of the Report by the DG-UNIDO on 23 February 2009. = UNIDO-ICHET to sign MOUs with consortium of Indian partners for Hydrogen-fuelled threewheelers in New Delhi on 12 March 2009 under a project whose acronym is DELHY - 3W. (The International Centre for Hydrogen Energy Technologies (ICHET), based in Istanbul (Turkey) aims to support developing countries to leap-frog to hydrogen, the cleanest energy carrier, by helping the development and demonstration of such technologies). Readers are invited to send their comments and opinions on the contents to the UNIDO Regional Office in New Delhi All material may be freely reproduced with a credit line and clippings sent to the UNIDO Regional Office in New Delhi All correspondence about the publication may please be addressed to the UNIDO Regional Director UNITED NATIONS INDUSTRIAL DEVELOPMENT ORGANIZATION UNIDO Regional Office, 55 Lodi Estate, Post Box No. 3059, New Delhi 110 003, India Tel: 91 11 46532328, Fax 91 11 2462 0913, E-mail: S.Biswas@unido.org, Web: www.unido.org Designed & Printed by: Picture Street