RMG joint committee is working on establishing a minimum price for the export of garments

The clothing manufacturers’ joint committee endeavors to set the minimum price and manufacturing cost of clothing products.

Committee insiders said they had to work hard to calculate the production cost per minute, but they are confident to give a perfect result.

Earlier, two umbrella organizations of garment manufacturers, the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) and the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), jointly formed a committee to set a price. minimum and manufacturing cost of clothing products on January 1st. of this year.

BGMEA President, Faruque Hassan, chaired the meeting in the presence of high-level leaders from both organisations.

BKMEA Vice President Fazlee Shamim Ehsan led the 15-member committee to conduct in-depth analyzes of manufacturing cost, input cost and export price of finished products.

Speaking to Dhaka Tribune, Fazlee Shamim Ehsan said more than two months have passed since the formation of the joint committee and they are working hard internally to set the minimum price for the clothes.

“We have already held three meetings among ourselves, including one with experts from this sector, and the joint committee will meet on Saturday to discuss the outcome of these meetings,” he added.

He also said that they were doing calculations regarding minimum price and manufacturing costs.

“Benchmarking minimum price and manufacturing costs is not as easy as it looks; there are a lot of calculations and complexities but we are moving forward and we have already formulated a policy,” he added.

“Meeting around 100 to 150 factories, determining the production cost per minute is a very complicated job and must be done with utmost perfection,” he added.

He also said that they are focused on perfection and want to achieve that in a way that makes it lasting.

However, some manufacturers said that the calibration of the minimum clothing price and production cost is not so complicated, but the way the joint committee works is more complicated.

The cost per minute varies from factory to factory and it is almost impossible to determine the minimum price and cost of production with this method.

But Fazlee Shamim Ehsan said after all they are moving forward with the latest and modern methods so that this initiative can be carried out smoothly.

According to the committee, at the beginning of the initial policy, they will calculate the production cost per minute of these three types of garment factories; general small and medium, compliant and environmentally friendly.

The committee also said the production cost per minute will be determined by calculating workers’ wages and allowances, gas and electricity bills and other expenses.

Then the minimum cost will be calculated by finding out how long it takes to make a garment.

Then the value of yarn, fabric and equipment will also be added and all material will be checked and sorted while taking UD against the purchase order, the committee said.

According to the apex bodies, this is a common scenario that has prevailed for many years regarding the unhealthy price competition of garment products for export among manufacturers.

Although it has been repeatedly criticized by business leaders and manufacturers, no initiative has ever been taken to mitigate it, until now.

Then they formed the joint committee to find the empirical facts by consulting with broader stakeholders including yarn, fabric, dye, processing, embroidery/embellishment and accessory manufacturers to understand the associated costs and their dynamics, including the lead time and its impact on the overall cost. to make a garment.

The exercise will also include product-specific Standard Minute Value (SMV) analysis as well as production processes and techniques, efficiency and other factors relevant to determining the minimum price and manufacturing cost of apparel products. .

The objective of the analysis is to draw a complete and complex picture of the overall manufacturing cost of the main clothing items and their justification by the minimum price.

The committee will then submit a detailed report to the boards of the respective associations within the next three months.

The move is aimed at ensuring ethical pricing from international retailers and brands and ending unhealthy price competition locally, sources said.

However, earlier, BKMEA Executive Chairman Mohammad Hatem said that they want to compare the minimum price in six months even though they cannot do it in three months but they are determined to do so.

In the financial year 2020-21, Bangladesh earned export earnings worth $31.45 billion from the garment sector, and in the first 8 months (July to February) In the current fiscal year (FY22), the sector has earned export revenue worth $27.50 billion. .