A buying entity with years of experience in servicing overseas buyers from USA, Europe, Australia, South Africa and Israel, Nahid Trade International (NTI) feels achieving the target of US $ 50 billion by 2021 is a daunting task, more so with ever-increasing cases of defaults and factory closures. In an exclusive interview with Apparel Resources, Nipun Nawaz, CEO of NTI, shares his contentions about the small- and medium-sized factories failing to deliver on time (some exceptions being Atashi Fashions Ltd., JFK Fashion Ltd., Trade Sweaters Ltd., Showan Knitwear Ltd., Dalas Fashions Ltd. and Donglian Fashion Ltd., with whom NTI is working currently), their closing down due to compliance issues, its implications on the industry and the need to have a robust mechanism to address the same.

Running a flourishing sourcing business for many years now and catering to a wide range of clients from all over the world, Nipun is a worried man today. Hit by multiple problems, Nipun’s business has taken nosedive that may well ring alarm bells for the other buying houses as well, whose numbers in the country are quite substantial. He shares his personal experiences to caution others who might have to face the same consequences if things are not taken care of right now.

“Recently, six factories that I have been placing orders with have shut down…,” laments the CEO of NTI, underlining those six factories, as a matter of fact, are amongst a large chunk of small- and medium-sized ones that had to wind up operations due to compliance issues. “Approaching new and larger factories and explaining them the whole situation is not a problem, but those factories require large quantity orders. Also, some of them have their capacities booked even till 2020,” maintains Nipun who, dealing in smaller volumes, is primarily dependent on the small and medium-sized players for his requirements. Adding to his woes are factories failing to stick to delivery deadlines, and some even resorting to dishonest ways to make fast money.

“Sometime back I placed an order of 89,000 pieces with a knit factory. The owner took the money, used it for some other purpose and after two-and-a-half months refused to do the order. The advance amount was also not returned…,” rues Nipun, who consequently had to lose out on 10 of his existing buyers due to these contentious issues and has to be content now with a handful of European and Israeli clients, amongst which are names like Castro, Honigman and Fox. “If consignments don’t reach the buyers on time, we not only have to dole out discounts but also are penalized in form of order cancellations at times,” adds Nipun, according to whom sweater and denim though are the emerging product categories in Bangladesh, but are failing to woo the prospective buyers, evident from the 30-35 per cent decline in order volumes in the recent times.

Non-availability of funds and high interest rates to carry out compliance work is another major reason behind the large-scale closure of factories, maintains Nipun, who underlines that garment manufacturers – already challenged by diminishing profit margins, increasing labour costs, infrastructural drawbacks and allied problems – prefer to call it quits rather than continuing with a nonviable venture. “The bigger and compliant factories are only getting business while the smaller ones are slowly fading out… If smaller entities don’t develop and flourish, where is the growth then,” asks Nipun. According to him the only solution to this is Government intervention, and bringing all the factories under a single regulatory authority, who apart from handholding and providing for small garment manufacturers to carry out corrective action plans can also keep tab on defaulters and corrupt entrepreneurs and take punitive actions. Failing this, Nipun does not foresee a very promising future for the apparel industry – the country’s largest foreign currency earner and employment provider to around four million people.

“This is the wakeup call for the exporters, the BGMEA and the Government… If the present scenario continues buyers might start pulling out of Bangladesh in bulk, which definitely is not going to augur well for the industry,” cautions Nipun on a concluding note.