A fair price for garment items is still a far cry for Bangladeshi manufacturers though they are in tremendous pressure from global buyers to improve conditions at workplace, notably after the Rana Plaza building collapse in 2013. According to local apparel makers, over $1 billion has been invested so far to renovate and retrofit their factories as per the demand of buyers, retailers and brands. Yet, the retailers and brands have shown no interest in offering a reasonable price of the products they source from Bangladesh. And a low profit margin is tying producers’ hands from investing more in improving workplace conditions to avert disaster like Tazreen Fashion fire or Rana Plaza tragedy. Buyers are still paying the traditional low prices for the products and making super profit. A shirt costing between $3 and $5 is selling between $25 and $30. The same is true in the case of high-end value added products, which is 30 percent of the total volume of garment items exported in a year from Bangladesh. The global posh brands pay between $8 and $12 to the local manufacturers for purchasing a piece of value added high-end shirt and the retailers sell the same shirts at $100 and sometimes even at $150, garment makers said.For such a huge gap, the manufacturers and economists blame the faulty global supply chain, which needs a review. The sector operates in a highly unjust global value chain where a $5 shirt made in Bangladesh is sold at $25 at Wal-Mart stores or at much higher prices in countries such as Sweden, said noted economist Rehman Sobhan. “Where exactly does the $20 go? Is this a natural working of the market mechanism or a manifestation of an unjust global order?” He said the current business model forces suppliers to squeeze their workers as much as they can because they have to produce the shirt at $5. Unless there is a major investigation of a professional nature, a political nature and an international nature to rebuild the value chain and see how it can be made to work, “I personally don’t believe discussions will yield any result,” he added. A senior official of European brand, who works in Dhaka, said the brands and store owners also do not always make profit as they can sell the highest 60 percent of the items at tagged prices. Of the remaining 40 percent, 20 percent are sold at discount prices and the rest 20 percent are sold at clearance outlets or donated, he said. “The retailers also make profit and have the operational costs,” the merchandiser added, asking not to be named. Mahmud Hasan Khan Babu, vice-president of Bangladesh Garment Manufacturers and Exporters Association, echoed the view of the merchandiser. The retailers have the target to sell 75 percent of the RMG items at tagged prices and the rest are sold at discount prices. Moreover, the companies annually pay millions of dollars to the high-ups, he said. After those expenses, the companies make a substantial amount of profit, he said. “Our internal unhealthy competition among the manufacturers is also responsible for low prices of garment items.” However, owners of some global brands and retailers, who sell basic garment items made in Bangladesh, have been named richest persons in the world. For example, Spanish business tycoon Amancio Ortega is the richest man in Europe and the wealthiest retailer in the world having $79.5 billion, according to this year’s Forbes list. A pioneer in fast fashion, Ortega cofounded Zara parent Inditex, which purchases nearly $2billion garment items from Bangladesh every year. “The low price of garment items will continue until we say no to it. The retailers are getting the products at lower prices because we supply those,” said Kutubuddin Ahmed, chairman of Envoy Group, which exports garment items worth a few hundred million dollars a year. The international unhealthy competition among the manufacturers is also responsible for the lower prices of garment items over the years, he said. Bangladesh should manufacture high-end items apart from basic items for receiving higher prices, he added. The demand for clothing items decreased worldwide over the last few years due to higher consumption of electronic gadgets like mobile phones. The low demand also affected the Bangladeshi garment prices further, he said. Mustafizur Rahman, distinguished fellow of Centre for Policy Dialogue and a noted trade analyst, said apparel export market is buyer-driven and global brands dictate the market. “If producers can come to an understanding that they will sell a certain product at certain price, they can get a fair price,” he said. “But that doesn’t happen due to an intense competition.” He said there are efforts at the international level to bring the global brands under the fair trade system, but it is not working well. Also, some trade unions and NGOs are trying to set a standard on Asian wage level for apparel workers and if it can be set, producers will get higher prices, he said.country have been “quite good” in the last eight years.The IFC creates a link between a foreign investor and parties in Bangladesh and brings foreign investors to the country.In Bangladesh, the IFC mainly works in power and to some extent in the transport sector. It is keen on expanding to logistics, financial services and agriculture.“The IFC also thinks that it should get into transport in a big way,” Muhith said, while advising the WB arm to target at least $1 billion worth of investment for the sector.“Mr Philippe has accepted it, saying maybe it will not be possible in a single year but the IFC can pick up projects once they roll out to take the investment to $1 billion within one or two years.”
