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Bangladesh threatens to blacklist British brands for outstanding dues

  • Published at 11:14 am May 23rd, 2020
Photo: Mehedi Hasan/Dhaka Tribune

A letter from BGMEA President Rubana Huq, asks EWM owner Philip Day to settle dues by May 29

Bangladeshi apparel maker trade bodies threatened to place an embargo on business and to potentially blacklist Peacocks, Jaeger, Bonmarché, and other brands owned by British businessman Philip Day, unless they pay their outstanding dues to their suppliers in Bangladesh.

On May 21, in a letter to Philip Day, Bangladesh Garment Manufacturers and Exporters Association (BGMEA), and Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), made the harsh move following several complaints from suppliers about unreasonable discounts and non-payment of dues for the brands of Edinburgh Woollen Mill Limited (EWM).

Edinburgh Woolen Mill Limited is the parent company of Peacocks, Jaeger, Austin Reed, Jacques Vert, Country Casuals, Windsmoor, Baumler of Germany, Bonmarché, and Ponden Home.

The letter from BGMEA President Rubana Huq, asked EWM owner Philip Day to settle dues by May 29, or otherwise face an embargo on doing business in Bangladesh.

The associations have taken a strong stance on the matter in the interest and survival of its members, stakeholders, the international image of the industry, and more importantly, compliance with local laws and foreign exchange restrictions.

"The advent of Covid-19 has caused economies around the globe to plunge into recession and as a result, disrupting and affecting all forms of supply chain and distribution," said the letter. 

"We realize and acknowledge that everyone is affected by Covid-19 and therefore believe this is a time for all of us to unite and support each of our interests. 

"It has unfortunately come to our attention that certain buyers are taking undue advantage of the Covid-19 situation and demanding unreasonable discounts, despite pre-Covid-19 contracts and continued business activity, which are not only impossible to grant by our members, but also in violation of local laws and international acceptable standards," the associations said. 

"Moreover, it defies all the principles of ethical sourcing and governance that international brands and organizations expect from the industry and all its stakeholders.  

"It should be noted that the demand for the discounts will not only be financially catastrophic but will also expose our members to various claims and liability from regulations, banks and other third parties, who will eventually legally implicate the buyers themselves," said the letter.

Decisions of BGMEA, BKMEA

In light of the given circumstances, the BGMEA and BKMEA, upon fully taking into consideration the predicament of both the exporters and the buyers, and the local laws and regulations of Bangladesh, have taken certain decisions regarding the alleged claims for discounts, the letter said. 

1. The associations said: "For goods already shipped and handed over to your nominated freight forwarder prior to March 25, EWM, which includes all its affiliates and associates, shall make the payment as per the original agreed terms of payment, i.e. concluded agreement. This payment has to be settled no later than May 29."

For orders already placed, negotiations between the exporters and the buyers should be concluded within June 5 and all negotiations must be mutual and not unilateral by the buyers.

2. Deferred shipment, deferred payment and permitted discounts may be allowed, provided that the exporters and the buyers have come to an agreement in this regard and such agreement is in compliance with local laws and regulations.

Any discounts beyond permissible limits may lead to adverse and legal consequences for EWM, including all its affiliates and associates.

3. Until the above issues are settled and agreed, the associations will not issue any new Utilization Declaration (UD) to its members for any orders of EWM, which includes all its affiliates and associates. Similarly, BEPZA (Bangladesh Export Processing Zones Authority) may also withhold issuance of Export Permission (EP).

"We request that you comply with the aforementioned requirement and settle all outstanding dues as prescribed above. In the event that instruction provided herein above are not followed, we will have no option but to take the decision to place an embargo and blacklist the buyers and their agents who do not comply with our instructions, which will prevent them from conducting business with our members in future, directly or indirectly," the associations threatened.

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