RMG exporters to go all out for fair prices

In a desperate move for better prices, Bangladeshi garment exporters are planning to hold rallies and human chains in major European cities to create awareness among the end consumers.

The activist move comes after brands opposed the idea of fixing a base price for garment items.

At present, as many as 39 percent of the garment manufacturers are selling garment items to buyers at prices lower than the production costs, according to a survey of the Fair Wear Foundation, an Amsterdam-based organisation that works to improve labour conditions in garment factories.

The reason garment makers resort to the desperate move is that insolvency safeguard mechanism is absent, said Rubana Huq, president of the Bangladesh Garment Manufacturers and Exporters Association, the sector’s apex trade body.

“The data mentioned in the report not only reflects the desperate move by the factories to retain their customers, but also their struggle to avoid any situation leading to insolvency since there is no legal route to safely exit from their investments.”

The cost of production of apparel items increased 30 percent between 2014 and 2018, she said.

Furthermore, the minimum wage of the garment workers has increased 51 percent since December last year.

Between fiscal years 2015-16 and 2018-19, the industry’s value addition has gone down 1.61 percent though apparel exports have increased from $28.10 billion to $34.13 billion during the period.

“This means that the growth is happening in physical terms only. But the value addition per piece of garment has rather declined over years.”

She also blamed the unplanned expansion in the industry for accepting low prices from retailers.

“While we are trying to find our way out from the price-trap situation, we need to look at ourselves and stop unplanned expansion and overcapacity. Overcapacity is perhaps the weakest point behind our poor bargaining ability.”  The current BGMEA board has taken a number of steps to bring discipline in the sector such as putting in a request with the commerce ministry to initiate a national database project named ‘National Base Capacity’ to monitor product-wise capacity in the industry and regulate future investments. The over concentration on few products and markets is another problem for the sector, she said.

Almost 85 percent of the garment products from Bangladesh are headed to the EU and North America.

“Product diversification is also not happening at the desired pace,” she added.

Ahsan H Mansur, executive director of the Policy Research Institute, also supported the initiative of holding awareness programmes on the proposal to fix a base price.

“In many cases the suppliers might lose the profit, but in the long run they may make profit.”

The awareness programmes among the end consumers are needed because they should know that the low prices make poverty permanent in many countries.

The suppliers should also form an association for launching such campaigns, he added. Syed M Tanvir, a director of Pacific Jeans, a leading denim jeans exporter, also welcomed the awareness programmes.

Mohammed Hatem, first vice-president of the BGMEA, said: “Sometimes, we are bound to sell our products below our production costs.”