Fire a few days back, building collapse yesterday and workers’ vandalism over poor wage today. These are the headlines the largest forex earning sector makes, for several years now. Risky buildings can exist only when a government goes into hibernation and risky workplaces when an employer turns covertly criminal. As the government never wakes up to its task, tragedy revisits time and again. Culprit manufacturers enjoy the culture of impunity and workers continue to get killed. This sorry garment story is known to all. But stories that remain unknown are equally ominous, if not more. Syed Ashfaqul Haque with Inam Ahmed exposes the unethical face of leading garment buyers.

A good number of international buyers are raking in fortunes, investing virtually nothing for their orders in Bangladesh.

With a clause of deferred payment in letter of credit (L/C) — the formal loan agreement for a purchase — they are literally fleecing the Bangladesh garment sector and contributing eventually to the misery of the workers.
With such L/Cs, these greed merchants get products shipped out and release payments to manufacturers after months of delay.
This means they virtually get their products on credit and pay manufacturers only after selling those.
The Daily Star has obtained four such L/Cs in one of which payment was disbursed six months after shipment.
With payment being deferred, Bangladeshi manufacturers are actually forced to subsidise the buyers. Garment-makers take loan, free of interest for 90 days, against the L/C in executing orders. So, for the period beyond 90 days, manufacturers have to fork out 15pc interest.
Frustrated, yet manufacturers are ever obliging because they do not want to upset the buyers and stay without work. If shut, a small knit factory with 35 machines loses about $9,000 a day in production and $1,000 in overhead costs. For a small woven factory with 120 machines, the loss goes up to $14,000.
Since victims do not complain, the central bank and garment owners’ association choose to turn a blind eye to this unethical practice.

This newspaper has also gathered how criminalisation of the business has, over the years, gradually been nudging the world’s number-two apparel-maker down the hill.
Order worth a dollar that a buyer places actually does not add up to a dollar. On different pretexts and through underhand dealings, they take back almost 25 cents, leaving the manufacturers to complete the job with the remaining 75 cents.
With these cents, manufacturers buy fabrics and accessories, make clothes, pay establishment costs, ship out clothes, and are expected to pay workers reasonably and make good profit as well.
But profit has been hard to come by for the last few years. The way most of the big international buyers squeeze price off orders in one way or the other can only be dubbed as blatantly criminal, unethical and ruthless.

read