Character is not created in a crisis; it is revealed. This was evident in how Bangladesh’s RMG industry responded to last year’s political transition, said AKM Saifur Rahman Farhad, VP, Bangladesh Garment Buying House Association (BGBA) and CEO, Wikitex-BD. Wikitex specialises in high-value, non-traditional exports like formal suits, corporatewear and airline uniforms.
After the political shift on August 5, many international buyers hesitated to place new orders, fearing instability and delivery delays. To address these concerns, BGBA took quick action. It encouraged members to meet buyers in person, participate in trade fairs and strengthen ties with suppliers and shipping companies. These efforts reassured buyers, keeping orders steady. Still, challenges persist. Farhad pointed out that long production lead times remain a major issue. While fast fashion demands speed, delays in customs clearance, port inefficiencies, HS code complications and occasional worker unrest can extend delivery times from 90 to 120–140 days.
In an exclusive interview with Apparel Resources, Farhad shared insights on the sourcing opportunities and challenges facing Bangladesh’s RMG industry.
AR: Where do you see Bangladesh as a sourcing destination in the next few years?
AKM Saifur Rahman Farhad: A lot of people thought that buying houses might become less relevant with the rise of e-commerce and Direct-to- Consumer (D2C) brands. But the reality is different—around 70 per cent of factory orders in Bangladesh still come through buying houses. I believe that’s because we offer something invaluable: deep market insights, strong supplier networks and the ability to anticipate trends.
Bangladesh will continue to be a top apparel sourcing hub for at least the next two decades. Over the past 30 years, we’ve built a strong manufacturing base and it’s not easy for new players to match our scale and expertise overnight. Some buyers have tried sourcing elsewhere, but very few have found alternatives that truly work.
I’m also seeing a shift in demand. Beyond traditional markets, there’s growing interest from Asia, the Middle East and Africa. Categories like sportswear, corporate uniforms, heavy jackets and formal suits are booming. The challenge? We don’t have enough specialised factories to fully tap into these opportunities.
Competition is increasing, especially from Vietnam, India and Indonesia, but Bangladesh still has an edge. Vietnam’s factories are already at full capacity and India and Indonesia struggle with labour shortages and rising wages. These factors work in our favour.
Another game-changer could be shifting global trade policies. If the US imposes new tariffs on Chinese imports, more buyers will look to Bangladesh. In fact, we’re already seeing Chinese investors acquiring factory space here.
AR: What key challenges does the RMG industry need to tackle to unlock its full potential?
AKM Saifur Rahman Farhad: Many critics have been talking about Bangladesh shifting to high-value apparel for years, but it’s not just about having skilled workers. It involves serious investment in technology, financing and infrastructure. Right now, that’s a big challenge. Banks aren’t offering financial support like they used to, so factory owners are struggling to upgrade on their own. Take auto cutters, for example, which can cut labour costs by 30 per cent – 40 per cent and boost efficiency by 30 per cent, but installing one costs over US $ 200,000. Currently, banks impose significant costs, especially when it comes to opening LCs, which often require collateral and incur high banking fees. As a buying house, the costs associated with transferring money between factories and buyers can add up, with expenses sometimes reaching 5 per cent to 10 per cent due to various charges and hidden fees. This situation has led many to seek alternatives to traditional banking. Customers, for instance, are increasingly reluctant to make upfront payments or use LCs. In Bangladesh, third-party payment gateways have become a good option. These platforms typically charge lower fees, around 2 to 4 percent, while also offering financing options for both buyers and factories. Political stability is also key. Without a reliable business environment, it’s tough to make long-term investments.
Beyond that, we need to diversify into new markets, adopt cost-saving tech and push for more Free Trade Agreements (FTAs). Right now, Bangladesh only has an FTA with Bhutan, which doesn’t do much for trade.
AR: What steps is BGBA taking to streamline processes, speed up lead times and boost efficiency?
AKM Saifur Rahman Farhad: In Bangladesh, extended lead times are often necessary due to customs clearance challenges at the port, issues related to HS codes and inefficiencies in some factories in processing goods promptly. Moreover, production challenges on the factory floor can further complicate the situation. BGBA primarily engages with key organisations such as Bangladesh Bank NBR (National Board of Revenue) and EPB (Export Promotion Bureau) to address these concerns. We are actively requesting these entities to grant us export permissions using local source fabric and trims and reduce the high tax rate, which currently stands at 10 per cent. We propose a reduction to 7.5 per cent to facilitate smoother operations. Moreover, we are advocating for policy support that can stimulate the economy. We have approached the Governor of Bangladesh Bank regarding the ARQ fund, which is a foreign currency fund linked to our export value. The Governor has acknowledged the challenges we face and has approved this fund for scheduled banks. We are optimistic that we will be able to utilise the ARQ (Agent’s Retention Quota) fund for new product and market development. In our discussions with the NBR, we are also urging a reduction in the tax rate and requesting the withdrawal of the export limit imposed on buying houses.
AR: How do buying houses navigate price negotiations with international buyers, especially when input costs like raw materials are rising?
AKM Saifur Rahman Farhad: Price challenges are everywhere across the board, impacting retailers, manufacturers and end customers alike. The economic landscape in regions such as Europe, the UK and the USA is experiencing stagnation and even decline, leading to increased price pressure from consumers. In the same way, manufacturers are also feeling the heat to keep costs down.
At BGBA, our responsibility is to handle this landscape effectively. We aim to make a balance where we do not underpay manufacturers while also ensuring that customers are not burdened with excessive prices. Our approach is bargaining, negotiating from an ethical pricing perspective and seeking for a win-win situation that allows us to maintain our margins. We emphasise this point to both customers and manufacturers because sustainable pricing is crucial. If factories cannot maintain viable prices, they risk shutting down, which in turn affects our margins at BGBA. Customers often find themselves paying higher prices for products sourced from countries like China or Vietnam. However, we want to highlight that the products we manufacture in Bangladesh offer comparable quality. While our labour costs may be lower, they are not drastically less, so typically not in the range of 20 to 30 per cent reduction.
Ultimately, we always advocate for a minimum ethical price point that reflects fair compensation for quality products. Reducing prices further without compromising on quality is a challenge, but it is essential for the sustainability of all parties involved.
However, the factory also plays a strong role in this situation. When we approach the factory with an order, we may find ourselves in a position where we don’t have a fair price to offer, especially when we have a target from the buyer. The reality is that, without any negotiation, the factories tend to accept these orders. If they refuse, the buying house cannot proceed with placing the order. Therefore, it is the factories that are often willing to accommodate lower prices, rather than us initiating this process.
