The Bangladesh Garment Manufacturers and Exporters Association (BGMEA) moves to build a database of global apparel buyers engaged in fraudulent activities or contractual breaches, causing financial losses for local exporters.
"A number of our members have been cheated by a small number of foreign buyers. The BGMEA is taking steps to prevent such fraud," said a BGMEA circular issued on Saturday to all of its members.
The notification requested the members to submit details of fraud or suspicious activities by May 16 using a designated form.
"This matter is urgent," the notification concluded.
Sources said the move follows a recent rise in such incidents reported by BGMEA members. The apparel association will collect documentation from factories unwilling to continue business with specific global buyers due to doubts about their practices.
In a December 5, 2023 circular, the BGMEA advised members to cease business with Topland International (HK) and its parent company, Celebrity Pink, citing alleged contractual violations.
The circular accused Topland of issuing letters of credit (L/Cs) or work orders that obligated Bangladeshi factories to purchase raw materials from specific suppliers designated by Topland. This allegedly caused delays in manufacturing and exports due to unreliable deliveries from these nominated suppliers.
On May 30, 2023, the BGMEA issued another warning to member factories, urging them to avoid business dealings with Hapa Fashion Pvt Ltd.
The trade body alleged the company issued faulty L/Cs or work orders, forcing factories to purchase essential materials exclusively from its designated suppliers.
Because of late deliveries from these nominated suppliers, three BGMEA members complained about facing difficulties in exporting goods on time.
According to the BGMEA, Hapa Fashion even did not comply with the decision its arbitration tribunal made in presence of both the parties.
"There are some so-called buying houses engaging in fraudulent activities in various ways, including issuing fake documents," said BGMEA President SM Mannan Kochi. "These frauds cause financial problems for garment manufacturers."
"We want to warn our members by identifying these companies," he told The Financial Express on Sunday.
BGMEA Vice President Arshad Jamal Dipu said there have been some disputes over issues like those mentioned.
"Nowadays, many orders are placed based on contracts instead of LCs," he added. "Factories purchase raw materials through back-to-back LCs from their lien banks against these contracts. However, they often face difficulties in this process."
Mr Dipu said there are some middlemen who have caused problems for factories on multiple occasions, including during the ongoing dollar crisis.
munni_fe@yahoo.com