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Committee to fix minimum price, production cost of RMG products

Published : 20 Feb 2022 09:25 PM

An initiative has been taken by Bangladesh Garments Manufacturers and Exporters Association (BGMEA) and Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) to fix the minimum price and production cost of readymade garments to ensure fair price.

On January 1, a 15-member joint committee was formed to determine the minimum price and cost of production. The joint committee has made a preliminary policy. They would determine the price by calculating the production cost per minute of the factory.

BKMEA Vice-President Fazlee Shamim Ehsan, also the convener of the joint committee, said, “A few internal meetings of the committee have already been held. We have formed the committee to set a fair price. Many factories often accept orders at a price that is less than the cost of production due to pressure from buyers or lack of knowledge about the production costs. Setting minimum price and manufacturing cost would bring the entire procedure under an organized management. Under this procedure, the internal abnormal competition among the local factories will be omitted.”

He further said the committee wants to set a standard by calculating the production cost per minute of the factory. 

“Meetings with around 100 to 150 factory owners will be held to finalise the issue,” Fazlee Shamim Ehsan added.

Earlier this initiative was taken by only BKMEA. However, now BGMEA and BKMEA have formed a joint committee in this connection.

BGMEA President Faruque Hassan told the Bangladesh Post, “We will sit with the owners of the factories producing specialized RMG items. A report regarding the minimum cost of products in different factories will be formulated initially. The entire procedure of setting minimum price and manufacturing cost of RMG products is time consuming. After taking the opinions from all the stakeholders, we will be able to ensure this practice.” 

According to other sources, at the outset of the initial policy, the production cost per minute of three categories of garment factories (general small and medium, compliant, and environmentally friendly) will be identified. The cost of production per minute will be determined by calculating the wages and allowances of the workers, gas and electricity bills and other expenses. Then the minimum cost will be calculated by finding out how long it takes to make the RMG products. The cost of yarn, cloth and equipment will be added to this as well. The whole matter will be checked and sorted while taking Utilization Declaration (UD) against each purchase order.

BKMEA Executive President Mohammad Hatem told the Bangladesh Post, “An unhealthy competition has been going on among factories for a long time over the price of export-oriented garments. Many factory owners are not getting a fair price due to these anomalies.”

“Hopefully, we will be able to come to a solution regarding this issue this time,” he added.