RMG industry faces financial challenges


The ready-made garments (RMG) industry faces huge economic challenges as the international buyers refuse to raise manufacturing cost of the garments.
Although the international brands manufacturing garments and knitting woolen apparels in Bangladesh demand more spending on improving quality of the industrial working environment for international compliance, they overlook the fact that prices of manufacturing is also increasing.

While sharing her views on the crisis, Rubana Huq, President of Bangladesh Garment Manufacturers and Exporters Association (BGMEA) told Bangladesh Post, “Over the past decade or so we have incurred on average about 25 percent loss in manufacturing products. The trend shows prices of cost of manufacturing each categories of the apparel are increasing.”

She said that on one hand the international buyers demand improving quality of working environment which involves huge expenditures; on the other hand, they are reluctant to pay more. This situation is leading to wider gap in manufacturing of finished garments and apparently a financial crisis. She reminded that due to recent implementation of new wage board their production cost has grown substantially.

“Local garments manufacturers are trying to convene the global business partners to increase product price which will be helpful to meet raising business cost,” she added. According to BGMEA and BKMEA in the international market prices of both knit and woven products have dropped more than 25 percent in last ten years.

Sources seeking anonymity said all kind of products including basic T-shirts, trousers, jackets and sweaters price have dropped in the last decade. Exporters said in 2005 cost of manufacturing a basic T-shirt was US$1.50 which is now offered at US$1.15. As a result the price of basic T-shirts decreased by 23 percent in a decade.

They also said in 2005 buyers used to spend US$ 3.50 to weave a Polo T-shirt. Whereas now the same buyers are offering US$ 2.50. As a result, the cost of the Polo T-shirt dropped by almost 29 percent. Woven products manufacturers said that in the year 2018 a cotton jeans pants export price was $8. However in 2005 it could earn $10 dollars from the same product.

 As a matter of fact, the price of cotton jeans pants decreased by almost 26 percent in a decade. Faruque Hassan, Managing Director of Giant Group said the local entrepreneurs are always facing the pressure of price reduction in the international market. He said "We have been facing several adversities in the world market. Still the factory reforms are going on. But the customers are not raising price".