Multinational cuts and runs in Namibia

Five years after opening its arms to globalisation, Namibia is left nursing a R200-million hangover, polluted groundwater and thousands of angry workers after the showcase Malaysian textile plant Ramatex Berhad suddenly closed last month.

Namibia rolled out the red carpet for Ramatex in 2002, building the company a tailor-made textile plant, granting it tax-exempt status and throwing in subsidised water and electricity to boot. It was an effort to attract foreign investors willing to take advantage of the United States’s African Growth Opportunity Act (AGOA) of 2000, which offers African countries easier access to US markets as well as other benefits.

Ramatex is a multinational that produces apparel for the likes of Nike, Puma, Adidas and other famous brands, and is owned by the Malaysian-Chinese Ma family. In return for Namibia’s incentives the company promised to create 10 000 new jobs and provide a major boost to industrialisation in the country, whose economy is largely dependant on mining, tourism and agriculture.

Pushed by a government eager to please its Malaysian friends, the City of Windhoek borrowed R200million to erect the massive 76 000-square-metre plant, which was rented to Ramatex for a nominal R1 188 a year.

Protests from local workers, environmental NGOs and ratepayers that the massive textile plant was not in Namibia’s interests were studiously ignored by the government. But it lent a sympathetic ear to the Malaysian company’s complaints that Namibian workers were unproductive and allowed thousands of Chinese workers to be imported. Hundreds of Filipinos and Bangladeshis were also brought in.

Complaints that Ramatex was contaminating Windhoek’s scarce groundwater with poorly maintained waste ponds at its dyeing plant were also dismissed, while city officials turned a blind eye to Ramatex erecting hostels for its workers on factory grounds, in violation of municipal regulations.

The first sign of trouble came in 2004, when a strike led the local media to discover hundreds of Bangladeshis crammed into a single suburban house and forced to live in torrid conditions. The 484 Bangladeshis were exploited in a manner that amounted to human trafficking, said Herbert Jauch of Labour Resources and Research Institute (Larri), an adviser to local unions.

It later also emerged that Ramatex had forced all its female Chinese workers to undergo pregnancy tests as a precondition for employment - and also kept their passports “for safe keeping”.

While local workers were affiliated to the Namibia Allied and Food Workers’ Union (Nafau), foreign workers were immediately victimised if they showed any signs of joining the union, Jauch said.

More trouble was on the horizon: the Multi-Fibre Agreement, which allowed developing countries to import textiles into the US duty-free, came to an end in 2004. Ramatex quietly started closing down parts of its Namibian production line and shipping out its equipment to its new factory in Cambodia, while furiously denying that it was doing so.

In early 2005, Ramatex managers and Nafau hosted a joint press conference where assurances were given that no one was about to be laid off. But two weeks later, Ramatex suddenly laid off 1 500 local workers—while continuing to import Chinese workers, who typically earned twice what their Namibian counterparts were paid, Larri’s research showed.

Ramatex meanwhile quietly continued removing its equipment. When questioned by the government about its plans late last year, the company promised that it would give at least 12 months’ notice if it planned to shut down the factory.

But on March 7, Ramatex told its remaining 3 000 workers that a power outage meant there was no work and sent them home. When workers returned the next day, MD Bang Keon Ong told them that the factory had been incurring losses of R500-million and was therefore obliged to shut its doors.

The Agoa website shows that Ramatex’s revenue was $78,8­million in 2004 and $33,8­million in 2006, of which it spent 11% and 16% respectively on wages. Ong denied this, saying labour and imported raw materials cost too much to justify continued production in Namibia.

A furious Namibian government has demanded answers but was forced recently to admit in Parliament that it does not have a binding agreement with the Malaysians.

Commenting on the debacle, Tim Parkhouse of the Namibian Employers’ Federation said: “In the oceans of globalisation, the Namibian government clearly still has to learn to distinguish between the circling dorsal fins of dolphins and sharks.”

Client Media Releases

SA political parties talk foreign policy
Barloworld announces new group structure
Should I stay or should I grow?
Use Microsoft's eDiscovery for non-Office 365 data sources