Order cancellation and demanding discount by the global apparel buyers during COVID pandemic has strengthened the demand of ethical sourcing. While Bangladesh is taking many steps and investing to make the industry and the supply chain sustainable, US buyers are offering underrated prices, which is not showing an example of a responsible business partner. Long-term cooperation between brands and suppliers can create a future growth strategy for the apparel industry.
The Bangladesh Garment Manufacturers and Exporters Association (BGMEA) President Faruque Hassan made the remarks at a press conference while expressing his post-US visit experience with journalists on 2 October in the capital.
BGMEA leaders paid a month-long visit to the United States and Canada for branding the country’s ready-made garment sector as a part of ‘Apparel Diplomacy’.
During the visit, they joined in various meetings with various government and non-government organizations, stakeholders and buyers where they discussed on various issues related to the interests of the country’s apparel industry.
They conducted almost 30 meetings with various stakeholders including the US-Bangladesh Business Council of US Chamber of Commerce, American Apparel and Footwear Association (AAFA), International Cotton Advisory Committee, IFC, Worldwide Responsible Accredited Production (WRAP), and with brands like VF Corporation, Ralph-Lauren, Amerex Group, Dreamwave, and Canadian Tire Corporation.
The decline in price has already been a trend in the global apparel market. While the apparel industry of Bangladesh is struggling to come out from the COVID led disruption, the items have witnessed a sharper fall in prices to the US markets. According to the BGMEA, in the US market, the price of ‘made in Bangladesh’ apparel items declined by 8.04 percent between August last year and July this year.
Bangladesh has the highest number of Leadership in Energy and Environmental Design (LEED) green factory buildings certified by the United States Green Building Council (USGBC).
Moreover, of the 10 LEED-certified garment buildings of the world, nine are in Bangladesh, and of the top 100 such structures, 40 are in the country. Another 500 garment factories are waiting to achieve LEED certificate by the USGBC.
Considering such investment, global buyers–including US buyers—should offer a good price for their importing items.
Bangladesh was receiving an increased volume of work orders from international retailers and brands as demand rose thanks to the reopening of the global retail stores.
Faruque Hassan said, “The entrepreneurs in the apparel sector of the country need to be more focused on price calculation and be more cautious in price negotiations with foreign buyers.”
Highlighting the bad impact of accepting any order at a lower rate he said, “Selling products at a price lower than the cost of production will not benefit any of them in the long run rather it will only make the situation more difficult.”
He requested the manufacturers to diversify their capacity. “We shouldn’t be limited to a few products because the over-capacity is one of the biggest weaknesses,” he added.
BGMEA President announced a good news regarding the Generalized Scheme of Preferences (GSP) in the EU countries.
“Obtaining GSP Plus status in the EU market will not be difficult if the EU finally adopts the proposed rules without the threshold criteria,” he said.
Already the bloc has proposed to update rules to allow a growing number of graduating LDCs to qualify for the preferential trade benefit.
A least-developed country’s share in the EU’s total import can’t be more than 7.4 percent to be suitable for the duty-free export facility under the GSP. Fortunately, considering the BGMEA’s relentless request on September 22, the European Commission, the executive branch of the EU, dropped the threshold in the proposed new GSP scheme.
“We arranged several meetings in Brussels with the Bangladesh representatives of the European Union (EU) on the post-EBA tariff facility –GSP Plus. I requested them to exempt Bangladesh from the import threshold of 7.4% or an alternative formula be introduced,” he said.
Europe is the main destination for Bangladesh where 60% of products are being exported.
“Our duty-free access to this market will change with the graduation from the least developed countries. However, the current facility will remain in force till 2029,” he added.
The government and the BGMEA are working together to ensure that the facility (EBA) remains in force for at least 12 years.
Emphasizing on current challenges the industry facing BGMEA President said, “Our garment exports are gradually turning around as the global pandemic situation continues to be normal. However, some new challenges are also being created in the industry like, container fares have increased 200%-300% due to the collapse of global freight management.”
Moreover, there is a tendency of “Nearshoring” among the buyers to reduce the cost of this freight. Buyers are now buying clothes from nearby countries at a slightly higher price to reduce lead time and total import cost. This a big concern for Bangladeshi apparel exporters.
Among the local problems, the number of loan repayment instalments required to pay the wages and allowances of the workers needs to be increased from 18 to 36.
The obligation to have a bonded warehouse license for locally procured raw materials, yarn and accessories through local back-to-back debentures also need to be abolished, according to him.
BGMEA also demanded the elimination of the complexity of including HS code and raw material details in bond licenses.
BGMEA President also emphasizing on producing apparel items using man-made fiber, and he urged to invest to produce man-made fiber as there is a brighter future ahead. Almost 75 percent of total consumption of global textiles is non-cotton, where the share of Bangladesh is only 25 percent.
BGMEA’s top office bearers including Syed Nazrul Islam, First Vice President; Md. Shahidullah Azim, Vice President; Khandoker Rafiqul Islam, Vice President (Finance); Miran Ali, Vice President; Rakibul Alam Chowdhury, Vice President; Barrister Shehrin Salam Oishee, Director; Asif Ashraf, Director; Md. Mohiuddin Rubel, Director; Md. Khosru Chowdhury, Director; Faisal Samad, Director; Abdullah Hil Rakib, Director; Rajiv Chowdhury, Director, Barrister Vidiya Amrit Khan, Director and M. Ahsanul Hoq, Director were present in the press conference.