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Wal-Mart wants rebate on garment orders

Demand for 2pc discount may hurt exports

Refayet Ullah Mirdha
Readymade garment (RMG) exports are likely to suffer yet another blow as Wal-Mart, the world's largest retailer of clothing, wants a 2 percent rebate on its current orders of Bangladeshi RMG products.
An export-oriented garment factor)' owner told The Daily Star that Wal-Mart had instructed him to give a 2 percent rebate on sales of RMG products.
Industry insiders said the US-based Wal-Mart buys RMG products worth $1.7 billion a year from Bangladesh, adding that currently it buys the products from more than 200 garment factories in Bangladesh.
The major products that Wal-Mart purchases include T-shirts, shins, polo shirts, pullovers, home textiles, bed sheets and trousers.
Other major buyers of Bangladeshi RMG products are Tesco, JC Penny, Zara, GAP, H & M, Adidas, Puma, Marks and Spencer, PVH, G-STAR and S Oliver.
Iftequer Hossain, the owner of Total Apparel, a local buying house, said Wal-Mart has asked for the rebate on its current orders. "This rebate on sales to Wal-Mart may continue through next year as it continued in other countries,” he said, adding that the rebate is yet to be fixed on the already-shipped
RMG products.
However, a senior official at the Dhaka office of Wal-Mart told The Daily Star: "We do not know anything about 2 percent rebate or discount of Wal-Mart."
President of Bangladesh Garment Manufacturers and Exporters Association (BGMEA) Anwar-ul-Alam Chowdhury Parvez said such rebate would further hamper the exports of local garment. "Such rebate will hit the profitability of the local RMG suppliers," he said. Industry people said the price index for exportable local apparel items declined by more than 1 percent over the last fiscal year, while the cost of doing business in Bangladesh,
particularly in the RMG sector increased by 15 percent.
According to the industry, inadequate gas and power supply, higher freight charges in both the local and international markets, yarn price hike, implementation of the minimum wage for workers, higher transport costs and higher prices of capital machinery were the main reasons for higher cost of doing business over the last one year.
The country's RMG sector with frequent labour unrest and higher cost of production would not be able to sustain such discount, industry people opined.
An apparel exporter said international buyers exploit the local RMG manufacturers' inexperience in international marketing by enforcing different conditions on exports of local garment items.
"Most of the RMG business is done through middlemen. Wc should develop our own marketing network," he said.
The continuing downward pressure by international buyers on clothing prices is hitting profitability in the RMG sector, which would ultimately undermine efforts to improve working conditions, industry leaders have warned.
At a meeting of Multistakeholders Forum-Bangladesh (MFB), held in June in Dhaka, local manufacturers pressed the major international buyers for increasing prices of RMG products.
Bangladesh earned $10,699 billion through exports of woven and knitwear -- the two sub-sectors of RMG - in fiscal year 2007-08, according to the Export Promotion Bureau.
reefat@thedailystar.net