The country’s garment accessories sector has been hit hard due to increase of prices of raw materials and buyers’ downward pressure to lower the prices of accessories.
“The two-way pressures – upward pricing of raw materials and downward pressure on product prices – affect the growth of the industry severely,” said Bangladesh Garments Accessories and Packaging Manufacturers and Exporters Association (BGAPMEA) President Md. Abdul Kader Khan while talking to the daily sun.
Entrepreneurs of garment accessories sector, Kader said, are struggling severely to survive as prices of raw materials are increasing consistently while that of finished goods continue to go down.
According to BGAPMEA, prices of raw materials for garment accessories have increased by about 15-20 percent while the prices of finished products have declined by about 10 percent in the recent days.
Buyers of garment accessories, usually the RMG millers, local and international buying houses, are now offering low prices as prices of apparel products have also declined in the global market over the last few years, said BGMEA officials.
As per a rough estimation by the apex body, during the January-July period prices of apparel products have seen on an average 6 percent decline while their production cost increased by 17-18 percent. “When garment makers face price cut from their global buyers, they try to adjust the prices by reducing the cost of production through cost cutting from fabrics, accessories and other heads,” said BGMEA Vice President (finance) Mohammed Nasir.
According to Nasir, prices of garment products have declined by 4.31 percent in the European market and 3.5 percent in USA market over the last six months. The accessories sector, he said, faces challenges like that of the RMG industry.
As an import substitute industry the garment accessories sector, which is fully dependent on imported raw materials, saves huge foreign currency by providing essential accessories to RMG sector, the highest foreign exchange earner. Now the sector at present meets up to 95 per cent of requirement of the country’s RMG sector.
Despite the contribution, the accessories sector failed to add any value addition to the industry last year although it contributed around 30 percent value addition in the products in the previous year. “Once a square-meter paper carton was sold at US$1 which is now being sold at 55 cents,” said BGAPMEA president. “This is the reality of today’s garment accessories sector,” said Kader terming it the outcome of RMG products price cut in the global market.
“We are fervently request the government policy support as well tax benefit to survive in this critical moment” said BGAPMEA president. He demands bank loan facility with single digit interest rate.
BGAPMEA data shows RMG accessories and packaging manufacturers earned $6.12 billion as deemed export in last fiscal year (2016-17). Of the total amount, about 20 percent comes from direct export.