BGMEA: Focus on price negotiation, calculation

According to Bangladesh Garment Manufacturers and Exporters Association (BGMEA) President Faruque Hassan, the entrepreneurs in the apparel sector of the country need to be more focused on price calculation and be more careful with price negotiations with foreign buyers. 

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.”

While the country is taking many steps and investing to make the industry and the supply chain sustainable, the price of clothes in the United States fell by 8.04% in one year. 

“I would also like to request all of us to try to diversify our capacity. We shouldn’t be limited to a few products because the over-capacity is one of the biggest weaknesses,” he added. 

Faruque Hassan made the remarks at a press conference at the Westin Hotel in the capital while expressing his post-US visit experience with journalists on Saturday.

Regarding the GSP, he said: "Getting GSP benefits is not an easy task as it involves political issues.”

“However, we have met the conditions to get GSP benefits in the US market, hopefully, we will get them.” 

Though Bangladesh has lost the EBA (Everything but Arms) facility in the European market, there are no major obstacles to get GSP Plus facility. 

BGMEA leaders paid a month-long visit to the United States and Canada to enhance the image and brand of the country's ready-made garment sector as a part of “Apparel Diplomacy”. 

During the visit, they participated in various events including meetings with various government and non-government quarters, stakeholders and buyers on various issues related to the interests of the industry. 

They conducted at least 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. 

According to the BGMEA president, the last two years had been a shaky period for the apparel sector due to the pandemic. 

“Now we are starting to turn around,” he said.

Europe is the main destination for Bangladesh where 60% of products are being exported,” said the BGMEA president.

“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.

“We have also held several meetings in Brussels with the Bangladesh representatives of the European Union (EU) on the post-EBA tariff facility –“GSP Plus”. In particular, I requested that one of the conditions of GSP Plus be exempted from the import threshold of 7.4% or an alternative formula be introduced,” he said.

Upon request, the EU removed this import threshold condition in their proposed 2024-2034 GSP regulation. 

He said, as a result whenever Bangladesh lose EBA benefits, there are no major barriers to getting GSP Plus benefits.

“Our garment exports are slowly turning around as the global pandemic situation continues to be normal. However, some new challenges are also being created in the industry,” said the BGMEA President.

For example, 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. 

In other words, buyers are now buying clothes from nearby countries at a slightly higher price as it costs less both in freight and lead time which is a cause of concern for Bangladesh.

“The big challenge in front of us is falling prices and having some problems at the local level,” he said.

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.

“The bank should not close the banking activities of other associate companies in case of default of a group of companies,” he added.

They also demanded the elimination of the complexity of including HS code and raw material details in bond licenses. 

“We want the proper maintain of the EDS machines installed at the airport for rapid scanning of exports and bring the goods inside the canopy as soon as possible after unloading so that the goods do not get wet in the rain,” he added.

They also demanded the approval for import and partial shipment of cotton, yarn, cloth and other raw materials in the textile and garment sector under bond facilities through other land ports including Benapole, Bhomra and Sona Masjid.