Global buyers yet to raise rates as promised after RMG wage hike

Some 79.1 percent of the apparel factory owners said international buyers are yet to increase prices of Bangladeshi goods, which they earlier promised to do after the new garment wage comes into effect in December last year, a survey found.

In 2023, the cost in customs and bonds increased 47.85 percent year-on-year because of delays and other procedural issues, according to the survey.

Moreover, around 27.5 percent of the installed production capacity remained unutilised last year due to lower number of work orders following high inflationary pressure on the western consumers, stemming from the fallouts of the Covid-19 pandemic and the Ukraine war, it said.

But the international retailers did not raise the rates after the implementation of the new garment wage with a 56 percent rise, according to the survey.

Forum panel, the opposition group of the last election of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), conducted the survey among 100 garment factory owners on December 21 last year.

Some 66 factory owners took part in the survey out of the 100 interviewed, Faisal Samad, leader of the Forum panel, said while presenting the findings of the survey at a discussion with journalists at the Dhaka Club today.

Samad said last year the factory owners also faced a 3.9 percent year-on-year decline in the freight on board value of the locally-made garment items.

The owners are still suffering from inadequate energy supply although the price of gas was doubled last year, he said.

The worst sufferers of the lower inflow of work orders were the small and medium level factories as they do not have strong financial capability to face the challenges, he said.

The growth of the apparel sector started declining in 2022 because of the global challenges, Samad said.

In the second quarter of 2023, only 9 percent factories had full work orders and 82 percent of them had work orders below their capacity. "6 percent factories had no work orders in 2023."

Some of the factory owners may become victim of forced loan as the buyers who defaulted in their businesses are yet to clear around 6 to 7 percent price of the goods exported, he added.

Samad also promised to ensure improved compliance in business and lobby with the government for reducing source tax if his panel can form the board by winning the next BGMEA election scheduled to be held on March 9 this year.

He sought a very transparent voter list from the election commission for the upcoming BGMEA polls for 2024-26 tenure.