Bangladesh Garment Industry Takes a Stand Against Unfair Discounts
- Details
- Published: Saturday, 06 January 2024 08:15
In response to a growing trend of deceptive bargaining practices by certain global garment buyers, the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) is stepping up its efforts to protect local exporters. Reports indicate an increasing number of incidents where buyers exploit exporters by demanding "illogical" discounts on clothing prices, prompting the BGMEA to consider blacklisting such entities.
The BGMEA issued a circular on December 21, urging its member-factories to compile a list of buyers involved in dubious discount negotiations. This move aligns with the central bank's discount committee decision, which addresses deceptive dealings by these buyers. The circular sheds light on manipulative practices, with certain buyers receiving goods only to declare bankruptcy or request unwarranted discounts based on unfounded pleas.
Faruque Hassan, President of BGMEA, emphasized the vulnerability of exporters in the face of fraudulent buyers, buying houses, and freight forwarders who often trap them into accepting illogical discounts. The circular also underscores the financial repercussions for exporters, highlighting the risk of paying bank interest and loans, potentially leading to factory closures if export proceeds (EXP) become overdue.
Mohammad Hatem, Executive President of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), expressed concern about the rising incidents of unwarranted discounts. Both BGMEA and BKMEA are actively advocating for the blacklisting of buyers seeking illogical discounts and are working to raise awareness among their members.
In addition to addressing discount-related issues, the committee discussed concerns related to Letter of Credit (LC) clauses. The committee urged apparel makers to exercise caution regarding sanctions-related conditions in LCs. A recent LC clause, which absolved the buyer of liability for transactions involving sanctioned parties, raised concerns and confusion among exporters, leading to its subsequent removal. The trade bodies are now advising against accepting LCs with unwanted clauses or conditions.
The BGMEA's proactive stance and collaboration with other industry bodies reflect a collective effort to safeguard the interests of Bangladesh's garment exporters. As the industry navigates challenges related to unfair trading practices, these measures aim to foster transparency, protect the financial well-being of exporters, and uphold the integrity of Bangladesh's apparel sector on the global stage.