Al Amin :
Unhealthy competition among the country’s readymade garment exporters in pricing to grab orders is quelling down the prices of the country’s finished apparel goods.
Stopping the destructive competition, the apparel exporters have decided to use institutional method to determine the prices of the finished apparel goods to get fair prices.
Following this, the two major apparel trade bodies- Bangladesh Garment Manufacturers and Exporters Association (BGMEA) and Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) — have jointly formed an 11-member committee recently that would determine the minimum cutting and making charges for any dresses.
“Instead of old method of pricing, we will unveil a new method that will be minute-value-based and it will help the RMG exporters to negotiate with the apparel buyers,” Miran Ali, Vice-President of the BGMEA told The New Nation on Monday.
“BGMEA is also working for developing price bargaining capacity to get fair prices,” he said.
As orders began to pour in since August last year, an ill competition ensued between the apparel manufacturers to grab the orders with minimum possible profit margins.
Exporters said this was distorting the business in general and hurting fair competition, in specific.
The buyers, however, have had tight negotiation when the exporters received the orders at a “so called” rate during the Covid-19 pandemic. Sometimes many had incurred losses to sustain in the apparel trades. Under this circumstance, the leaders of the two apex bodies of the apparel sector decided that there should be a norm over claiming minimum price, said Fazle Shamim Ehsan, the Chairman of the 11-member Committee.
“The exporters have created an uneven, unfair and unethical market regarding the price of apparels. So, to make a level field for all the exporters the committee will set a minimum price,” Ehsan, also Vice-President of the BKMEA, said.
Offering nearly a break-even price was a common practice of the smaller exporters’ decades ago. This practice — an uneven negotiation, to be precise — has been going on unabated.
But, as the raw material prices have been hiked by 60 per cent, freight charges more than 400 per cent, yarn price 65 per cent, workers’ wages more than 25 per cent and port cost 23 per cent, dye-chemical cost 40 per cent, doing business get difficult.
But the exporters are able to negotiate only 10 to 20 per cent higher rates.
The exporters were able to bag a little extra price for several segments of the production process, which did raise the production costs too.
And then, the exporters are asking for higher rates from the buyers but the buyers are very reluctant to increase the unit price to a comfortable level for the manufacturers, said industry insiders.
The Fair Wear Foundation, Amsterdam-based institution in Bangladesh, is providing training on ‘Labour Minute Costing’ for the officials, who will be engaged in bargaining with the apparel buyers.
