Apparel exporters urge global buyers to share burden of rising production costs

Bangladeshi apparel exporters reiterate their call for global buyers and brands to bear a portion of the rising apparel manufacturing costs associated with the impending wage increase.

Moreover, several buyers have already demonstrated their commitment to supporting the adoption of the new wage structure by agreeing to share the associated manufacturing costs.

Both parties expressed this sentiment during a conversation with The Business Standard at the opening ceremony of the 15th Bangladesh Denim Expo 2023 at the International Convention City Bashundhara in Dhaka on Wednesday.

A total of 80 exhibitors from 12 countries are participating in the expo. About 5,000 visitors from home and abroad have registered to attend the two-day event.

Bangladesh Garment Manufacturers and Exporters Association (BGMEA) President Faruque Hassan said the new minimum wage was announced on Tuesday and it is their priority to implement it.

"I hope the buyers will also support us in this work," he said.

The BGMEA president told TBS that he will be sending letters to all buyers and brands to inform them of the impending increase in the cost of apparel manufacturing due to the wage hike.

He also mentioned that these letters will serve as a follow-up to previous communication sent last month, which notified buyers about Bangladesh's plan to implement a new wage structure, expected to take effect as early as December this year.

"We will talk with buyers' representatives [at Buyers Forum] asking them to share the burden of the additional costs with us," Faruque Hassan added.

Ziaur Rahman, regional head of H&M Group for Bangladesh, Pakistan, and Ethiopia, affirmed the brand's commitment to pay in accordance with the new wage structure.

"We want to state that H&M Group respects the [wage restructuring] process," he said, urging all stakeholders concerned to reach a consensus that allows fixing a new minimum wage.

Vested groups trying to prolong RMG labour unrest

Former BGMEA president Md Siddiqur Rahman has said vested quarters with political involvement attempting to instigate unrest within the ready-made garment (RMG) sector, cautioning that such actions could drive buyers to seek alternative sourcing destinations.

"If they continue this unrest, buyers may move to other sourcing destinations," he warned, underlining the importance of stability and cooperation to maintain the industry's global competitiveness.

Md Siddiqur Rahman was visibly frustrated as he expressed his bewilderment about the ongoing movement despite the recent wage announcement.

He criticised the RMG workers for continuing the movement even after getting a significant 56.25% increase in wages.

Siddiqur Rahman also noted the potential financial strain this wage hike might impose on certain garment factory owners. 

"We understand that this hike may not be affordable to several garment factory owners, but we agreed with this hike only because it was the prime minister's directive," he said.

Regarding the recently declared minimum wages for the RMG workers, Commerce Minister Tipu Munshi said the government has tried to adjust the wages given the current inflation.

Exporters keen to double denim export by 2030

Apparel exporters wish to double their denim export to global destinations to achieve the target of $100 billion in apparel export by 2030.

Commerce Minister Tipu Munshi said Bangladesh is the second largest apparel exporting country in the world, but in denim, Bangladesh is the largest exporter both to the EU and USA.

According to industry data, Bangladesh's denim export to the EU was about $800 million from January to August 2023, while the earnings were $1 billion in the same period of last year. 

On the other hand, denim export to the USA market was $433 million from January to August 2023, while the earnings were $638 million in the same period of last year.

Former BGMEA President Md Siddiqur Rahman said that Denim and denim-related products account for about one-fourth of Bangladesh's total apparel export. So, to fetch the $100 billion apparel export target the country has to double its denim export by 2030.

Mostafiz Uddin, chairman of Bangladesh Apparel Exchange (BAE), said the Bangladesh denim industry has huge potential and his organisation has been working to unlock the untapped potential of the industry.

SM Mannan (Kochi), senior vice president of BGMEA, also spoke at the event moderated by Mohiuddin Rubel, managing director of the BAE and director of the BGMEA.