The prices of Bangladesh-produced cotton trousers have declined by over 40 per cent in the US market since 2000, according to an American researcher.
Dr Mark Anner, an associate professor at Penn State University, came across this as part of his research titled ‘Prices and Development in the Global Apparel Industry: Bangladesh in Comparative Perspective’.
Revealing the findings of his research Thursday at the BGMEA conference room, Dr Anner said if constantly improved efficiency on the part of the supplier results in constantly reduced prices, then the gains in efficiency will be captured at the top of the supply chain.
Bangladesh is one of the top cotton trouser-exporting countries to the USA along with China, Mexico, Vietnam, Pakistan and Indonesia.
Dr Anner stressed the need for conducting further research on cost breakdown of buyers to assess the US market.
Associate Professor of University of Colorado Jennifer Bair, and fellow of Penn State University Jeremy Blasi also contributed to the research Dr Anner presented at the discussion yesterday.
Speaking on the occasion, BGMEA president M Atiqul Islam said the government has proposed source tax on RMG sector in its upcoming budget of fiscal 2015-16, which will force the industry into trouble.
He said if source tax is imposed amid the price decline of RMG products in US market, it will be suicidal for the RMG industry, in which at least 4 million workers, mostly women, are currently working.
The BGMEA president also said the growth rate of RMG export is less than 3 per cent in Bangladesh while the rate has reached to double digit in the competitor countries like in Vietnam, India or even Pakistan.
Shafiul Islam Mohiuddin, senior first vice president of FBCCI, urged the government to reconsider the decision of imposing source tax for the long term benefit of the RMG sector.
Kandakar Golam Moazzem, additional research director of Centre for Policy Dialogue, said the governments of both buyer and seller countries should monitor the businessmen whether they are doing business in a right way or not.
Ahsan H Mansur, executive director of the Policy Research Institute of Bangladesh, said the RMG producing countries can make a coalition to stop the price discrimination.

Monopsony power has apparently emerged as a major setback for the apparel makers of the country in getting hiked price of garment items against the increased cost of production.
It was referred at a study dubbed ‘Prices and Development in the Global Apparel Industry: Bangladesh in Comparative Perspective’ revealed formally at the conference room of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) building in the capital on Thursday.
A team of expert, led by Mark Anner, Associate Professor of Penn State University, USA, has conducted the study. Monopsony is a market where one buyer faces many sellers.
Analysts, however, called upon the government of retailers’ countries and apparel consumers to take steps to break such Monopsony power to help the garment makers to cope with the market competitiveness. The study mentioned that though the cost of production has increased, prices of apparel items have gone down steeply in the US market. Prices of cotton trousers, for instance, went down by 40.89 percent in US market during the timeline of 2000 to 2014, the study said.
Amount of revenue needed to pay the US government increased sharply during the period of January 2006 to January 2015, while the profit of retailers did not see such surge, it said.
Chaired by Atiqul Islam, President of BGMEA, the event was addressed, among others, by Md Shafiul Islam, First Vice-President of the Federation of Bangladesh Chambers of Commerce and Industry and former President of BGMEA, Dr Ahsan H Mansur, Executive Director of Policy Research Institute of Bangladesh, Dr Khandakar Golam Moazzem, Additional Research Director of Centre for Policy Dialogue, Dr Nazneen Ahmed, Senior Research Fellow of Bangladesh Institute of Development Studies, and BGMEA office bearers.
The US government can play a significant role in breaking the Monopsony power resulting in helping the apparel makers of Bangladesh to cope with the international market, said Dr Nazneen Ahmed. Calling upon the government to reduce source tax in the next budget, BGMEA President Atiqul Islam said the garment industry is under many threats, including hike of cost of production, factory remediation and currency devaluation.

Experts on Thursday observed that the prices of apparel products decreased significantly on the international market in last couple of years as the global buyers controlled the market and mounted pressure on suppliers to lower the prices.
They suggested that the governments of the supplier countries should break the monopsony power of the global buyers as the power instigated unfair competition among the suppliers.
They also urged the US government to play a role in raising the prices of the Bangladeshi apparel products in its market.
Their observation and suggestion came at the launch of a study ‘prices and development in the global apparel industry: Bangladesh in comparative perspective’ conducted by Mark Anner, an associate professor at Pennsylvania State University.
The Bangladesh Garment Manufacturers and Exporters Association launched the study report at its office in the city.
In the research paper, Mark said the prices of apparel declined on the global market due to monopsony power of the global buyers.
He said that the prices of RMG decreased by more than seven per cent in the world market in last couple of years.
Mark said, ‘Monopsony helps big buyers to put pressure to reduce the prices of products.’
In the research he showed that the prices of Bangladeshi cotton trouser in the US market decreased by 40.89 per cent in last 14 years.
Bangladesh is the number one exporter of the cotton trouser to the US market. China is the second largest exporter of the item while Mexico is the third.
According to the research by Mark, the prices of apparels also declined below the level required to ensure worker rights.
He said the buyers were getting benefits of the decreased prices of apparel products not the consumers.
Saying that continuous fall in the prices of products has put pressure on the suppliers and exporting countries, Mark suggested that suppliers should reach a consensus on price per unit.
Bangladesh Institute of Development Studies senior research fellow Nazneen Ahmed said that it would not possible to reach a consensus among the suppliers as competing countries would try to garb more market share.
Bangladesh government has nothing to do in this case but the US government has some role to pay in lifting the prices of apparel products, she said.
Nazneen said that the bargain power of exporting countries was very low as the number of suppliers was much higher than that of buyers.
‘The US government has a role to play in raising prices of the Bangladeshi RMG products as the buyers are offering lower prices to the manufacturers and selling the products at higher prices to the consumers,’ she said.
Khondaker Golam Moazzem, additional research director of the Centre for Policy Dialogue, said once the Trans-Pacific Partnership Agreement between US and Vietnam is signed, Bangladesh would have to face tough competition as 10 products of Bangladesh matched with that of Vietnam.
He urged the US not to change the rules of origin saying that if the US changes its rules of origins following the TPPA, Bangladesh would be affected.
Policy Research Institute executive director Ahsan H Mansur, BGMEA president Md Atiqul Islam, former BGMEA president Shafiul Islam and vice-presidents Shahidullah Azim and Reaz-Bin-Mahmood were present, among others, in the programme.

The government has completed its part of inspecting 1000 ready-made garment (RMG) factories to oversee structural, fire and electrical safety initiatives taken by owners and its progresses, the International Labour Organisation (ILO) said on Wednesday. The ILO is monitoring implementation of post-Rana Plaza collapse restructuring of the RMG industry, aiming to improve compliance status of international standard.   Following the Rana Plaza collapse, the ILO says, the immediate priority was to carry out safety inspections of all 3,508 export-oriented RMG factories in Bangladesh. To date, some 2,904 RMG factories have been inspected of which 1,000 fall under the government’s National Initiative under the Tripartite Plan of Action, supported by the ILO with backing from Canada, the Netherlands and the United Kingdom. A further 1,904 factories have been inspected by the Bangladesh Accord on Fire and Building Safety and the Alliance for Bangladesh Worker Safety. “This is a significant milestone as we seek to create a safer RMG sector for Bangladesh. We are now making concerted efforts to complete as many inspections as possible by the 31 July deadline. We will not compromise on the safety of workers. After this date, factories will no longer receive inspections for free and will need to meet the costs themselves if they wish to continue exporting,” said Syed Ahmed, Inspector General of the Department of Inspection of Factories and Establishments. Srinivas Reddy, ILO Country Director for Bangladesh, said that the scope of the government goes far beyond carrying out factory inspections. “The national initiative has seen an intensive process of cooperation and collaboration on areas such as the harmonization of inspection standards and reporting. Considerable efforts have also been made to establish management processes within regulators to effectively follow up on inspection reports in a systematic and transparent manner,” he said. As of now, only 604 factories from the original list remain to be inspected, an ILO statement said. Inspection of factories under the national initiative has been hampered due to the number of factories having closed, moved or changed contact details. Significant efforts involving Department of Inspection for Factories and Establishments (DIFE), the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) and ILO are underway to create a comprehensive and accurate list of actively exporting RMG factories. This will be a valuable tool and will form the basis for follow-up activities and knowledge management systems, the ILO said.

Seeking support from the government and the people of the country as well, Kihak Sung, chairman of Youngone Corporation of Korea, said the Korean EPZ (KEPZ) will attract foreign investment of $1.2 billion and create jobs for 3,03,000 locals by the year 2020. But any move by the government to take back 2,000 acres of land acquired by the KEPZ will send negative message to foreign investors and discourage foreign investment largely, he added. “Lots of development at KEPZ has been made so far and 67 percent of land earmarked for industries has already been prepared for setting up factories. We have invested $250 million there. So the allegations that the authority has failed to develop the zone is baseless,” said Kihak Sung, chairman of the Korea-based multinational company that owns the KEPZ. “We are not sitting idle. Lots of development has been made so far. We did not violate the rules, nor any terms and condition,” said the Korean entrepreneur who has made his presence in Bangladesh for over 35 years. There is no scope for misunderstanding that the KEPZ lands have been lying unused, he said while his attention was drawn to a media report that the government has decided to take back 2,000 acres of land for not being able to draw FDI. “KEPZ is protected by law. We developed the entire land complying with the law of the land. Legally, the KEPZ land cannot be taken back. Any such move, if taken, will certainly affect the country. It will be self-damaging,” Kihak Sung told daily sun in an interview at Youngone’s Dhaka office on Tuesday. Youngone is a global listed company and 30 percent of its investment is from the US and European countries, he said, adding that the market capital of the company is $3 billion. If Youngone’s investment faces setback here, then definitely it will bear a worrisome message to foreign investors, he added. “The largest investment I have made in Bangladesh and I want to see more and more FDI comes here because I like this country and its people,” Kihak Sung said, adding, “I make profit to reinvest here, which is gradually increasing employment scope.” “Around US$ 250 million has already been invested at the KEPZ in Chittagong. Youngone has set up industries in Vietnam investing $150 million. This fund could be invested in Bangladesh, but it was not possible for various bureaucratic obstacles,” he said. Asked about the FDI prospect and problems in Bangladesh, Kihak Sung said, “If Bangladesh truly wants FDI, it can explore it as the country has huge prospects. The overall environment should be made industry-friendly and everyone should realise that more foreign investment is essential for the country to employ more people.” Elaborating overall development of the zone, he said, the KEPZ will have a total 1 crore square feet (sft) of floor area for setting up factories under a modern and well-equipped greenery environment being developed as a comprehensive industrial site. Over 67 percent of the land earmarked for industries has already been developed and a total of 30 lakh sft of floor area has been completed so far, while 30 lakh sft of floor area and related infrastructure will be completed by the 2016-17 and another 40 lakh floor area by 2018-19. The development of the site, over 2,492 acres of land was made as per the terms and conditions of the Environment Clearance Certificate issued by the Ministry of environment, he mentioned. As per the certificate, 33 percent (822 acres) land should be kept green with plantation, while 19 percent (470 acres) as open area and water bodies. Forty-eight percent (1200 acres) of land should be used for factories, utilities, roads, accommodations, hospitals, schools and other supporting facilities, Kihak mentioned. After keeping aside the area to be used for roads, utilities and supporting facilities, which is 30 percent of usable land, only 840 acres of land remain for industrial use, Kihak Sung said, adding, “We will need two dry seasons to complete development of the remaining area of 400 acres.” “We did not violate the terms and condition. About 26 kilometres roads have been constructed and installation of 16km 33KV and 11KV electric line has been completed. Two units of workers’ welfare centre are near completion and another two units are under plan,” said the Korean entrepreneur. “Thirty global giant investors sat with us. They wanted to invest here and sought land, but it was not possible as the district administration is yet to give ownership of the land through completing mutation process,” he said. The KEPZ authority acquired land, a barren land, from the government in 1999 by paying Tk 68 crore and its possession was handed over by the deputy commissioner of Chittagong on August 3, 1999, but it took ten years to get environment clearance in 2009. Karnaphuli Shoes Industries Limited is the first company that set up factory in KEPZ on October 2, 2011, said Kihak Sung, who is also Chairman of the Korea Federation of textile Industries (KOFOTI). A number of industries are now in operation there. Comparing the investment environment of Bangladesh to Vietnam, he said, “Doing business in Vietnam is quite easier. In Hanoi, we can make 90 percent concentration on business while in Dhaka it is 20 percent as most of the time we need to use for government procedures.” “We got land free of cost in Vietnam and needed no money to construct roads and other utility facilities as everything was arranged by the authority. We invested $150 million to set up three industries there,” Kihak Sung mentioned. He also said, “Bangladesh has a very dedicated workforce, more communicative, especially in terms of efficiency in English. People are hard working and very suitable for mid-level management. Considering all these, I can say Bangladesh has good future if foreign investors are treated appropriately.” “But still there are some challenges. Connectivity is a major challenge for which workers face problems in reaching workplaces in time. Some other factors, I should say local factors are there which also decrease productivity. The government should take initiative in improving connectivity.” “South Korean company Samgsung came at KEPZ in 2011 to invest here. LG was also interested. Thirty major Korean companies also wanted to invest here. Samsung has now moved away to Vietnam,” he added. At present, Youngone is employs over 70,000 workforces at CEPZ, DEPZ and KEPZ in Bangladesh. About his business career, he recalled that after completing his studies in 1970, he started the company in 1974. “I borrowed $700 from my aunt to start the company. Now Youngone has industries in five countries in the world – Korea, Bangladesh, China, Vietnam and El Salvador. But the biggest investment is made in Bangladesh.” The company exports goods worth $2 billion annually and its major markets are USA, Europe and Asia, Kihak Sung said, adding: “Korea is a prospective market for Bangladesh. I persuade the Korean government to allow Bangladesh duty-free access of Bangladeshi products to that country and Bangladesh now enjoys the facility,” said the Korean entrepreneur. While his attention was drawn about the government’s initiative to allow a number of economic zones, he said, whether it is EZ or EPZ, what is needed to attract FDI is proper support from the government. “We are the first investor in readymade garment sector in Bangladesh. We started here in 1980 and Youngone is the first company that employed female workers. The first industry at the Dhaka EPZ is ours. We purchased many of failed factories and upgraded them to modern units.” “The land at KEPZ has been developed in a greenery manner. The entire area was a barren land and we planted 20 lakh trees, developed lakes and other supporting facilities for making the zone comfortable for foreign investors,” Kihak Sung said.

Youngone Corporation of Korea, the largest foreign investor in Bangladesh, has been facing hurdles at every step for the last 16 years while the country is desperately seeking foreign direct investment (FDI). According to sources, a crisis has developed in the Korean EPZ (KPEZ) as the government has reportedly decided to take back a large chunk of the land allotted to the company for their functioning here. The Awami League government in 1999 allotted 2492.35 acres of land on the bank of Karnaphuli river in Chittagong  to the South Korean government-nominated enterprise Youngone Corporation for setting up the KEPZ. A gazette notification in this regard was published on October 7 of the same year. Reports have appeared in the media recently that the government would take back 500 acres of land from the company. The possession of the land was handed over in 1999, but the mutation has not been completed yet. The environment clearance for infrastructure was issued 10 years later. Gas and power connections were snapped on more than one occasions. Chairman of Youngone Corporation Kihak Sung has sought cooperation of the government as regards the KPEZ. He said the government cannot take back the land as the company is protected by the law and the agreement.  But any move to take back a large portion of the land of the KEPZ by the government will affect the country as this will send a negative message to foreign investors and discourage them seriously, he added. On this issue, Deputy Commissioner of Chittagong Mezbah Uddin said, “The question of taking back the land does not arise, as the KEPZ authorities are not the owner of the land at all.” It was seen during an on-the-spot survey that the construction work of four factories of the Youngone Corporation in that EPZ is progressing fast. Preparations are going on for the construction of 10 more factories. The construction of internal road is also almost complete and residential houses have been constructed for the foreign buyers. Kihak Sung said, “A lot of development at KEPZ has been made so far and 67 percent of land area earmarked for industries has already been developed for setting up the factories. We have invested $250 million there. So the allegation that the authorities have failed to develop the zone is baseless.” “We are not sitting idle. A lot of development has been made so far. We did not violate the rules, any terms and condition,” said the Korean entrepreneur who has made his presence in Bangladesh for over 35 years. Youngone is a global listed company and 30 percent of its investment is from US and European countries, he said adding that the market capital of the company is $3 billion. If Youngone’s investment faces setback here, then definitely it will bear an alarming message to foreign investors, he added. “The largest investment I have made in Bangladesh and I want to see more and more FDI comes here because I like this country and its people,” Kihak Sung said, adding, “I make profit to reinvest here, which is gradually increasing employment scope.”

The government’s efforts to inspect readymade garment (RMG) factories for structural, fire and electrical safety have reached a 1,000-factory mark, reports UNB. Following the Rana Plaza collapse, the immediate priority was to carry out safety inspections of all the 3,508 export-oriented RMG factories throughout Bangladesh. Till date, some 2,904 RMG factories have been inspected of which 1,000 fall under the government’s National Initiative under the Tripartite Plan of Action, supported by the International Labour Organisation (ILO) with backing from Canada, the Netherlands and the United Kingdom, according to ILO. A further 1,904 factories have been inspected by the Bangladesh Accord on Fire and Building Safety and the Alliance for Bangladesh Worker Safety. In all, 604 factories from the original list remain to be inspected. Syed Ahmed, Inspector General of the Department of Inspection of Factories and Establishments said, “This is a significant milestone as we seek to create a safer RMG sector for Bangladesh. We’re now making concerted efforts to complete as many inspections as possible by the July-31 deadline. We shall not compromise on the safety of workers. After this date, factories will no longer receive inspections for free and will need to meet the costs themselves if they wish to continue exporting.” He said the National Initiative is now moving into the factory remediation phase with a pilot programme which sees DIFE inspectors explaining the process of developing Corrective Action Plans to a select number of factories. “This will provide useful experience and lessons on the time, skills and resources needed to manage this process before it is fully rolled out to all factories under the National Initiative,” he added. Inspection of all 1,827 factories under the national initiative has been hampered due to the number of factories having closed, moved or changed contact details. Significant efforts involving Department of Inspection for Factories and Establishments (DIFE), the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) and ILO are underway to create a comprehensive and accurate list of actively exporting RMG factories. This will be a valuable tool and form the basis for future follow-up activities and knowledge management systems. Srinivas Reddy, ILO Country Director for Bangladesh highlighted that the scope of the National Initiative goes far beyond carrying out factory inspections. “The national initiative has seen an intensive process of cooperation and collaboration on areas such as the harmonization of inspection standards and reporting. Considerable efforts have also been made to establish management processes within regulators to effectively follow up on inspection reports in a systematic and transparent manner,” he said.

The government is likely to reduce tax at source on export of all products by 0.20 percentage points to 0.80 per cent in the budget for the next fiscal year from the proposed 1 per cent, officials of the finance ministry said. Bowing down to pressure from the exporters, particularly from the readymade garment sector, the government has decided to reduce the export tax, they said. In the budget proposal before the parliament on June 4, finance minister AMA Muhith proposed an increase of export tax to 1 per cent for apparel and other products from the current 0.30 per cent and 0.60 per cent on export proceeds respectively. According to the proposal, the tax will be considered as final settlement for all export sectors and the exporters will not need to pay any other tax on their export earnings. Currently, export tax on some items including knitwear, woven garments, terry towel, carton and accessories of garment industry, jute goods, frozen food, vegetables, leather goods and packed foods are considered as final settlement. And the tax at source on export of other products is considered as advance tax which can be adjusted with the income tax returns. The National Board of Revenue estimated that additional Tk 2,000 crore would come in the next year from the sector if the export tax was raised to 1 per cent. The revenue board may get around Tk 600 crore less from the sector if the tax is reduced at 0.80 per cent, officials said. Exporters, however, have been demanding for not increasing the tax and keep the current rate unchanged. RMG products exporters demanded that any increase in the tax would severely hamper the growth of the sector as they managed to make profit only of 2 per cent to 3 per cent on their total export proceeds while the cost of doing business has increased significantly over the last few years because of compliance cost, implementation of new wages and devaluation of the Euro in Eurozone. The revenue board on Tuesday sent a summery proposing reduction of tax at source on export to the finance minister for his approval, officials said. Muhith has already approved the proposal which will be placed before the parliament for its approval. The budget for the next fiscal year will be passed in parliament by the end of this month.

Bangladesh in the recent past earned the highest US dollar 30,186.62 million, a record-breaking income from exports, during the 2013-14 fiscal year, reports BSS. The annual export income was US dollar 16,204.65 million in 2009-2010 fiscal year, which increased to US dollar 22,928.22 million in 2010-2011, US dollar 24,301.90 million in 2011-12 and US dollar 27,027.36 million in 2012-13. Commerce Minister Tofail Ahmed made the disclosure in parliament Wednesday while replying to a question from treasury bench member Habibur Rahman Mollah. “The country usually exports 729 items form various sectors,” he said.During the current fiscal year till May 2015, he said the country earned US dollar 28,144.38 million by exporting various items side by side with diversifying the export market in the greater interest of the economy, he said on another query from Jatiya Party bench member Mohammad Ilyas of Cox’s Bazar. “The Ministry of Commerce has already undertaken many steps for increasing the exports of non-traditional items to further raise the annual export income,” Mr Ahmed said.

Exportable products are no longer required international certification as the local accreditation is recognised globally, a minister said. “Local businesses now can take globally-accepted standardised calibration certificates for their products from the local accreditation authority. They don’t need to seek international certification,” Industries Minister Amir Hossain Amu said. In the past, local exporters used to rely on foreign countries for such costly certification to export their products as the local calibration certificates weren’t recognised internationally. The minister said Bangladesh Accreditation Board (BAB) will now issue the calibration certificate after securing accreditation recently from the Asia Pacific Laboratory Accreditation Co-operation (APLAC) to do so. The minister was speaking at a function organised to celebrate the global recognition of the BAB at the ministry on Wednesday. APLAC is a cooperation of accreditation bodies in the Asia Pacific region that accredits laboratories, inspection bodies and reference material producers.  It is recognised by the Asia Pacific Economic Cooperation (APEC) as one of five Specialist Regional Bodies (SRBs). Mr Amu termed the APLAC’s recognition a ‘big’ achievement of the incumbent government. He said it will help strengthen Bangladesh’s position further in global trade. “… hence, Bangladesh’s position in the international business has become stronger. It will also help our local entrepreneurs save money and valuable time, as they won’t need such certification from abroad,” the minister said. Industries secretary Md. Mosharraf Hossain Bhuiyan, BAB’s director general Md. Abu Abdullah, among others, spoke at the function.  The minister said such global recognition will not only eliminate the existing technical barriers to trade (TBT) for Bangladeshi products, but also help local consumers get products with accurate weight. “Now, existing unequal and asymmetrical measurement of products will be no longer in the market, from the industry to the consumer level, as the BAB’s calibration laboratory has got the authority,” Mr Amu said. He called upon the BAB officials to work hard for keeping up its reputation globally so that international traders will come to Bangladesh to get certification of their products. “If you can maintain a globally-recognised standard certification, then foreign traders will come to the country to get approval for their exportable goods,” he said. He urged the BAB authorities to issue such certificate carefully, so that the country’s image is not damaged in the international arena. “Bangladesh has many competitors in international trade. These competing countries are not sitting idle. They’re trying to establish their own national standards infrastructure alongside improving quality of their own products,” he said. Citing the example of ready-made garment, Mr Amu said the competing countries continue to hatch conspiracy against Bangladesh’s apparel products.