The resurface of Covid-19 in European countries and the rise in fuel and raw material costs are disrupting the recovery efforts of the RMG sector.
While orders for ready-made garment exports have risen, along with prices, the increasing prices are not yet in line with production costs, the Bangladesh Garments Manufacturers and Exporters Association (BGMEA) said.
Faruque Hassan, president of the organization, said that the recent 23% increase in fuel prices, including the increase in raw material prices, is going to increase the production cost by 4-5%.
On the other hand, coronavirus infections are on the rise in some European countries, disrupting normal life and the efforts to turn around.
At the same time, considering the inflationary pressures of a hike in fuel prices, he urged the government to take the matter into further consideration.
Faruque made the statements at a press conference at a hotel in the capital’s Gulshan on Saturday.
The press conference was organized to highlight the current situation in the garment sector, including various activities of a delegation of the BGMEA’s board of directors, which recently toured Europe, including the United Kingdom.
The BGMEA president said that in the last year, yarn prices have risen by 60%, container fares by 350 to 500%, dye-chemical costs by 40%, wages by 7.5%, electricity by 13%, while the gas price has also gone up.
Now, the BGMEA fears that the hiked prices of fuel will lead to an increase of around 5% in their cost of production.
The BGMEA president stressed that while the cost of production has been rising, this was not reflected in the prices of the goods.
Faruque urged exporters not to negotiate orders below the production cost in any case. At the same time, he urged foreign buyers to be more sensitive about the price of the product, adding that the price should be determined keeping in mind the increase in all kinds of expenses.
Referring to the alarming rise in coronavirus infections in Europe, the BGMEA president said that European countries were already preparing for fresh lockdowns to deal with the fourth wave. A record 52,000 corona patients were diagnosed in Germany in a single day. Infections are on the rise in almost all European countries, including Austria, Belgium, the Netherlands, Sweden, and France, which was a cause for great concern for the sector.
Noting that retail sales were 15% less than usual, he asked exporters to keep in mind the various other issues pointed out.
At the same time, the BGMEA president called for simplification of various processes related to import and export by the National Board of Revenue (NBR), including the customs department at a local level. It will be difficult to take the sector forward if the processes were not made easier, he said.
He called for business facilitation and policy stability to increase investment and employment.
Highlighting the recent visit to Europe, he said that there were meetings with various stakeholders in the garment sector, and discussions were held on ethical prices. “We have requested our buyers to increase the price of garments in line with the rising cost of production,” he said.
The BGMEA president also pointed out that although green factories were built at huge costs, prices for garments produced there had not changed. He, however, added that such factories were set up keeping the future in mind.
Elaborating on the meeting with British brands and retailers, Faruque said that the recent rise in prices of freight and raw materials has put pressure on the apparel industry to maintain a reasonable price for international brands.
“Besides, I have highlighted the potential of Bangladesh for foreign investment in significant sectors, such as manmade fibers, backward linkage, design, and innovation, etc,” he said.
He also urged British brands to strengthen their partnership with their suppliers, saying they would continue to make such calls in the future.
Details of the outcome of the delegations’ talks, however, were not disclosed.
“In addition, during my discussions with UK MPs, I requested Bangladesh be allowed to continue duty-free access after their transition from Least Developed Country, and urged for investment in various potential sectors of Bangladesh, including high value-added products and non-cotton textiles.
The BGMEA president also said that due to the increase in exports, investment in the backward and forward linkage industries, including textiles, has increased and this investment will increase further in the future.
“As a result, cost and quality will be competitive in the future, and we need to take advantage of this opportunity to survive the current crisis.”
SM Mannan Kochi, senior vice president of BGMEA, first vice president Syed Nazrul Islam, vice president Shahidullah Azim, among others, were present at the press briefing.
