Editorial
A challenge before RMG export
Improved negotiating capacity called for
EVEN though the volume of our readymade garments export is on the rise, with any possible knock-on effect of the global economic downturn on the demand side yet to be visible, the international garment buyers appear to be pressing newer levers on the bargaining counter. For instance, they are asking for rebates and discounts on shipped products, more intensely than before, following the onset of the financial meltdown. As it is, fierce competition in the global apparel market has already had the selling prices plummet, and now comes the scraping for discounts and rebates raising the prospect of denuding profit margins of the manufacturers and exporters.
There is clearly a double standard here, bordering on the unethical; for, when it comes to importing raw materials for garments manufacture, let alone capital machinery, the overseas business houses wouldn't simply allow any price rebate, even though their purchase price had registered a fall like in the case of cotton.
At the same time, the international buyers never cease to emphasise how important the compliance issue is. Of course, we see the merit in demanding compliance with global standards pertaining to remunerative wage, better working conditions and prohibition of child labour. But should we underestimate the cost factor involved in meeting those standards? There is a growing sense that continuing downward pressures on prices being exerted by international buyers are not merely stripping away profitability of the sector but also inhibiting efforts to improve working conditions in the sector.
There is evidently a case for a continuing dialogue with the major international buyers to convince them about the need for a business-friendly ethical approach to the concerns of our garment manufacturers and exporters. At the same time, with limited local value addition to garment manufacturing, erratic supply of gas and power, higher freight charges and the overall cost of business going high, the government has to see what fiscal incentives can be given to buoy up the garments sector, aside from overcoming the problems related to backward linkages and utility services.
Given our competitiveness limitations, we stand in dire need for capacity building in terms of diversifying markets, developing new techniques of negotiation and acquiring skills in product development with new designs and a modern outlook as suggested by a discerning manufacurer. The BGMEA and the government should work in close collaboration to bring all sorts of international and local inputs to bear on such a modernisation process.
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