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.