Though this is a much-needed reformative move considering that it has been five years since the last wage hike , the industry – already reeling under falling margins and increased competition – at its wits ’ end , is struggling hard to figure a way out of this precarious situation .

“ In this Fiscal till June , I think the business should be good and there would be good growth as order volumes are on the rise … However , from July onwards , we might face some problems due to the planned increase in workers ’ wage ,” maintains Md . Aminul Islam , CEO of City Apparel Tex and Secretary General of the Bangladesh Garment Buying House Association ( BGBA ).

A Dhaka-based buying house , City Tex predominantly sources knitwear , outerwear , sleepwear and a small amount of home textiles for Europe , North and South America while the company ’ s other arm- Hua Shen International , run by Islam in association with a Chinese partner , supplies fabrics and yarns to a host of RMG factories and textile mills in Bangladesh .

Considering the buyers ’ uncompromising stance on prices offered , Islam is very apprehensive about the overall business and its adverse effects on the industry . “… A

minimum wage of even Taka 7,000- 8,000 would be very difficult to handle . If the helper starts getting this salary , the operators ’ salary will be almost double of that ,” explains Islam , underlining that increasing overheads and scarce availability of raw materials are going to complicate things further .

“ If the CM is not increased , carrying out the existing orders will also become difficult … We also have to think about the raw materials , prices of which are going up day by day . Besides , since most raw materials are sourced from overseas , prices are dependent on the global market and are very volatile ,” Islam points out .

Working with a host of factories in different product categories , Islam considers himself lucky to have established dependable sourcing channels , thanks to China-based Hua Shen International , which boasts of around 10 textile mills of its own . “ Despite the advantage , things would also be difficult for us … As we have very good sourcing channel for raw materials , we can successfully cater to smaller volume orders , but for that prices need to be decent ,” explains Islam ,

“... till June , I think the business should be good and there would be good growth as order volumes are on the rise … However , from July onwards , we might face some problems due to the planned increase in workers ’ wage ...

- Md . Aminul Islam

who feels that the Government ’ s recent move to fix guidelines for the buying houses is a saving grace for businessmen like him . According to him , this would not only effectively abolish the malpractices employed by some buying entities but would also bring in certain amount of discipline and transparency , and will create a level playing field for all .

“ Honestly speaking , a lot now depends on the Government . Since 2013 , there has not been any binding law for the buying houses ( domestic and multinational ) taking advantage of which not only a host of buying houses have cropped up but some have even started indulging in unethical practices …,” Islam explains .

As per the new policy ( drafted by the Ministry of Commerce ), all buying houses need to register with the Export Promotion Bureau ( EPB ), without which no one will be able to handover Letter of Credit ( LC ) from buyers to the manufacturers .

There are over 1,000 apparel buying houses in Bangladesh , about 400 of which are under BGBA . These houses obtain orders from

buyers abroad , source from local manufacturers and then deliver to apparel buyers abroad . Till now , buying houses in Bangladesh have been operating without a legal framework and oversight – which came to light rather badly when the industry suffered a US $ 72,000 setback , the largest in history , last year owing to fake orders from a non-existent overseas entity .

Apart from the Government ’ s move , which is aimed at reigning in the erring buying entities , Islam sees a silverlining for the industry in the emerging markets of South America , China and even Africa , which as per him hold promise in abundance . He maintains ,“ I am very upbeat about the Chinese domestic market , which would be round US $ 150 billion in size . Besides China also offers some duty benefits which makes it even more interesting . If we can capture China , our dependence on other markets could be balanced out accordingly .” The Government ’ s planned move to establish a trade centre in South America could further open up new growth opportunities for the industry , underlines the General Secretary of BGBA , who points out his association ’ s desire to help the industry make inroads in Africa as well .

“ Africa is also a very good market but people are not keen to venture there due to lack of information and alleged corruption in some of the African countries . But BGBA is now planning to get a warehouse facility somewhere in Africa , which would be a big plus for the buying houses that want to cater to the African market ,” adds Islam on a parting note .