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Bangladesh struggles with low price offers

Bangladesh’s garment manufacturers are urging buyers to pay more. These manufacturers often have to sell garments at prices lower than the production cost. The cost of production apparel production has increased 30 per cent between 2014 and 2018. Meanwhile, the minimum wage of the garment workers in Bangladesh has increased 51 per cent since December last year.

Between 2015-16 and 2018-19, the industry’s value addition has gone down 1.61 per cent though apparel exports have increased. Even though there has been growth in physical terms, the value addition per piece of garment has declined over years. Unplanned expansion is one reason the industry has to accept low prices from retailers. Overcapacity is perhaps the weakest point behind this poor bargaining ability. Over concentration on a few products and markets is another problem for the sector. Almost 85 per cent of garment products from Bangladesh are headed to EU and North America. Product diversification too is not happening at the desired pace.

But brands have opposed the idea of fixing a base price for garments. So Bangladesh is planning to launch awareness programs among end consumers so as to make them realize the low prices make poverty permanent in many countries.