The government is set to frame a policy to bring in discipline and ensure accountability among the buying houses in the export-oriented apparel industry.
The commerce ministry has already prepared a draft that seeks to get buying houses registered with the Export Promotion Bureau.
Without registration with the EPB, no buying house will be able to hand over letters of credit on behalf of buyers to manufacturers, according to the draft, which was sent to stakeholders for vetting last month.
“This is an initial draft. Our spirit is to expand our export market by creating a good reputation of our sector,” said Md Abdur Rahim Khan, deputy chief at the commerce ministry's textile cell. The move comes after some incidents of fraudulence by some buying houses. Last year, 26 Bangladeshi garment exporters became victims after two local garment buying houses, Vanguard and ASM Apparels, placed work orders on behalf of the “importer” Y&X, saying that the latter is owned by a Bangladeshi-born British citizen named Manjur Billah.
The duo offered higher prices on the condition that the raw materials have to be bought from select textile factories in China.
The deception came to light after the first batch of consignments was left unclaimed for over one month at a UK port.
Until now, there has been no policy on buying houses and there is no controlling authority for them, Khan said.
“We have been demanding a policy for the last 10 years to bring in discipline in the sector,” said Kazi Iftaquer Hossain, president of the Bangladesh Garment Buying House Association, which represents 400 buying houses.
Apart from BGBA members, there are many buying houses operating in the country, the total of which would come to 1,500, he said.
A policy would be instrumental in resolving problems or disputes that occur among buyers, buying houses and exporters.
As per the draft policy, buying houses and apparel manufacturers will have to carry out business based on contracts and send the copies of contracts to their respective organisations.
Buying houses will have to maintain transparency in determining prices between buyers and exporters, according to the draft.
After handing over the letters of credits to exporters on behalf of buyers, buying houses will have to continue to carry out responsibilities until exporters get payment, it said.
The draft policy said buying houses or buying agents will have to send statements of order placement to the BGBA every three months. And the BGBA will send the attested copies of statements to the EPB and the Bangladesh Bank.
If any dispute arises between the export-oriented firm and the buying house, they can apply to the arbitration committee of representative organisations, who would then settle the matter within four weeks, said the draft policy.
The draft policy seeks to form a panel to monitor the activities of buying houses. The panel will inform the commerce ministry and recommend actions if it finds involvement of any buying house in export by violating rules.
Khan said the draft policy will get a shape in one or two months.