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Retailers cancelling RMG orders, seeking discounts

BTJ Desk Report
Retailers cancelling RMG orders, seeking discounts

Global apparel retailers and brands are either cancelling their orders to garment factories in Bangladesh or putting them on hold because of the persisting volatility in the global economy, higher inflation, and stockpiling of unsold goods.

Inflation in Europe and the US, the two largest markets for garment items made in Bangladesh, as well as many other export destinations has remained at an elevated level despite falling in recent months, meaning a continued struggle for consumers.

Faruque Hassan, president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), revealed it to the journalists in a press conference on Tuesday.

He also said that this has forced international retailers and brands to cancel orders even for the goods that are ready to be shipped from factories.

Without giving any specific number, Hassan said orders have declined to such a level that some suppliers are running their factories four to five days a week in order to retain buyers while keeping the production cost lower.

“Buyers are even asking many local suppliers to share the losses they are incurring owing to the fall in sales caused by a lower demand.”

The BGMEA chief asked the government to reconsider the implementation of the latest hike in gas and power tariffs since the spike in energy costs would create an extra burden on the manufacturers and affect their competitiveness in the global markets.

Despite the economic volatility at home and abroad stemming from the dragging Russia-Ukraine war and the global energy crisis, the shipment of garment items from Bangladesh is increasing.

Hassan credited the depreciation of the local currency against the US dollar and the export of high-value-added items for the increased earnings.

The taka has lost its value by about 25% cent against the American greenback since the war erupted, making the goods manufactured in Bangladesh cheaper in the export markets.

Thus, garment shipment, which accounted for about 85% of national exports, rose 14.31% year-on-year to $27.41 billion in the July-January period of the current financial year.

In Bangladesh, many local garment factories are capable of producing jackets worth $30 to $35 per piece, which indicates that the country is shifting to the production of value-added apparel items from basic ones.

Moreover, a lot of orders are moving away from countries such as China, India, Pakistan, Vietnam, and Myanmar to Bangladesh, helping the readymade garment sector to keep growing even during turbulent times.

In another encouraging development, freight costs have declined and returned to the pre-pandemic level, said a number of suppliers.


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