Tuesday, February 20, 2018
Bangla Apparel Desk
January 20, 2018
Mr. Siddiqur Rahman, President-Bangladesh Garment Manufacturers and Exporters Association (BGMEA), said “RMG sector of Bangladesh is in tough time as of now, but the picture is to be changed very soon and situation will improve gradually”. He recently made this remark while discussing the current state of RMG sector of the country.
The readymade garment sector of Bangladesh is fizzling out to get the expected growth in the face of a three-pronged adversity. The devils behind the predicament have been marked out are rising production costs, lower prices from buyers and decreasing global demands.
BGMEA sources said the cost of production has increased nearly 18 percent over the past two years.
During this period, the prices of the two markets in Europe and the United States decreased by almost 7 percent. Last year, clothing prices in the European Union declined by 4.77 percent, and in the US, 3.71 percent.
According to a recent study conducted by the World Trade Organization (WTO), the global apparel consumption has slowed down in the last two years. According to the report, the global market for garment products came down to $444 billion in 2016, from $450 billion in 2015, while consumption in the US decreased 5.23 percent.
Global apparel experts said that the young generation is the biggest consumer of fashion products, including textile products, but they are increasingly attracted to IT products in recent times. Due to this reason the global apparel consumption is witnessing a slow trend.
Although the consumption and prices are on the declining mode in the world market, Bangladesh is witnessing increase in the cost of production, for which the middle range entrepreneurs are barely sustaining, while the small range one are failing to make their businesses exist .
Industry insiders said the cost of electricity increased about 15 percent, and gas price 7.44 percent last year, while the cost of clearing and forwarding (C & F) has risen about 40 percent.
A number of apparel traders have urged the government to enhance the transportation facilities, including improvement of the sea port facilities to reduce production costs.
They claimed that they very often lose export orders from the buyers as they cannot make the supply on time due to transportation difficulties.
The cost of production is rising on the one side, while the cost of garment is falling on the other.
At the same time, the demand for clothing is decreasing in the global market, they said.
According to sources, the BGMEA has canceled the membership of 550 factories due to lack of regular production after 2013, while the BKMEA has canceled the membership of 180 factories for the same.
Besides, some 500 factory owners listed with the BGMEA or BKMEA have shut down their factories for not being able to keep pace with income and expenditure.
The two organizations Accord and Alliance suggest that foreign buyers not buy products of these factories, for which they are not getting any export order.
With the lack in production at large-scale factories, the overall export-oriented pace of the export sector has slowed in recent times.
The country has set the target to earn 50 billion dollars by 2021 from this sector, for which 14 percent annual growth is required.
On the closure of factories Mr. Siddiqur said, “Though we have been affected with this closure, we want those factories which are compliant and can meet the export orders with sincerity on time”.
“The buyers are taking the advantages of competition in global markets, and for this they are paying lower prices when they buy. The income-expenditure scale sees imbalance for the small entrepreneurs when they don’t get proper prices against the rising production costs,” he added.