Dependency on outsourcing RMG export reduced by 60pc in 30 yrs

Buying house dependency on outsourcing readymade garment export orders has been reduced by more than 60 per cent over the last three decades, BGMEA sources said.

Skilled human resources, better production, forward linkages, own fashion and designing technology and offshore negotiation skills have enabled the exporters to outsource export orders at their own initiatives.

Currently the big exporters prefer free on board (FOB) ways than cutting and manufacturing (CM) as they are capable of getting orders and shipments bypassing third party involvement.

Md Shahidul Islam, former vice president of BGMEA said: "We have the skill to outsource export orders at our own initiatives."

He said the big exporters' experience in offshore dealings and the world's large buyers' local office are helping reduce dependency on the buying houses.

The former BGMEA leader says currently more than thirty per cent small and medium exporters rely on buying houses as they do not have enough capacity in offshore dealings and cannot fulfil buyers' requirements.

He said small and medium exporters still pay five to 15 per cent commissions to the buying houses.

An exporter said: "We cannot deal with the foreigners like our big exporters as our forward linkage and other backward linkages are not enough to export on FOB basis."

He said: "As we get export orders on CM basis and the buying houses manage our buyers from getting orders and shipment so we need to pay the buying houses at different stages."

Abdus Salam Murshedy, former BGMEA president said: "Our exporters are now improving the offshore dealings and increasing efficiency so they can negotiate with the buyers."

He said it is certain within next five years at least 80 per cent exporters would depend on direct negotiations with the buyers.

He said three decades back when Bangladesh just started to export readymade garments it was cent per cent dependent on the buying houses and paid a good portion of profit to them.

But skills, large investments and forward linkage developments have reduced the dependency to more than 60 per cent. He said, "Still we need to improve fashion, designing, production engineering and forward linkages."