How falling real prices threaten Bangladesh’s apparel sector

Published : Sunday, 14 June, 2026 at 4:22 PM Count : 28

For the past decade—since Rana Plaza, in fact—Bangladesh’s garment industry has been told to improve: raise wages, invest in safer factories, decarbonise, install solar, reduce emissions, improve chemical management, meet new reporting demands, prepare for digital product passports, and prove every claim with data.

Many, if not all, of these demands are reasonable. As a garment manufacturer myself, I’m not arguing against better wages, safer factories, or cleaner production. These are things our industry must be doing for its own sake. There’s one question, however, that still doesn’t get a straight answer: Who is going to pay for it? Because, from where I am standing, the economics appear unsustainable.

While our costs have been rising sharply and continuously, the unit prices paid for apparel have been falling in real terms. No business survives indefinitely when prices fall, and costs keep climbing. In the RMG sector, the pressure is now visible everywhere. Take labour where wages have quite rightly been rising (many would argue not enough). Minimum wage in this sector has gone from Tk 5,300 to Tk 12,500 over the past decade, a rise of around 135 percent.

Energy costs have moved in the same direction. Electricity prices are up around 69.75 percent over the last decade, with a further 16.7 percent tariff increase reported in June 2026 as the government cuts subsidies. For a factory, energy isn’t optional. This means manufacturers are being asked to transition to cleaner energy while conventional energy is becoming more expensive.

So, if you want to do business with brands, you will need to invest in decarbonisation plans, renewable energy targets, Higg reporting, GRI, CSRD preparation, science-based targets, ZDHC, zero liquid discharge, audits, certifications, and so on. To offer some examples, a Higgs assessment alone runs to around $4,000 a year once platform fees and verification are included. Other audits and certificates can cost $2,000 to $5,000 each. Larger factories can absorb some of this. Smaller ones often can’t. All of these costs stack up, and the cost of compliance is becoming more onerous year by year.

Solar is a good example of how these issues play out in practice. Brands want renewable energy in their supply chains, which is fair enough. But solar installation depends on factory size, roof space, available finance, grid rules and payback periods. It’s not a quick fix, and it’s certainly not cheap. Zero liquid discharge is similar. For some facilities, it might be feasible, but for others, it means major capital expenditure and high running costs. Neither can be treated as a simple checkbox. Yet too often, there is an assumption that suppliers can just absorb these investments without any adjustment to price. This is the nub of the issue: costs keep rising, but unit prices don’t.

The OTEXA data on Bangladesh’s US apparel exports is stark. Between 2015 and 2025, the nominal unit price of Bangladeshi apparel shipped to the US rose by about 6.4 percent. US inflation over the same period was around 35.8 percent. In real terms, the price Bangladesh received per unit fell by roughly 22 percent. In the past two years, unit prices have even been falling in nominal terms.

In 2025, the average unit price was around $3.08 per square metre equivalent. This was down from $3.11 in 2024. Meanwhile, global inflation is rampant. Quite simply, a manufacturer cannot pay 2026 wages, 2026 energy bills, and 2026 compliance costs on 2015 economics. And, of course, there are consequences. When margins keep being eroded, factories can’t reinvest in machinery, efficiency, worker training, and cleaner technology. When prices stay low, factories become dependent on volume just to cover fixed costs, which creates a race to the bottom that rewards whoever accepts the lowest margin, not whoever invests most responsibly.

When buyers demand higher standards but don’t pay prices that support those standards, the system creates incentives for shortcuts. Most reputable manufacturers don’t want to cut corners. But if the commercial model doesn’t work, weaker actors will always find a way to make it work for them. The other consequences of constantly falling margins are that the industry becomes less attractive for serious long-term investment. Investors look at returns while banks look at repayment capacity. Manufacturers look at risk. Falling real prices and rising costs don’t make a compelling case for spending heavily on decarbonisation or automation.

My central argument is that the conversation about responsible sourcing must move beyond audits and statements of intent. There are practical steps that would help. Buyers need to recognise cost inflation in price negotiations. Wage rises, energy hikes, and mandatory compliance investments are not supplier problems alone. If a buyer requires higher standards, the price has to reflect the cost of meeting them.

Long-term purchasing agreements should be more common. A manufacturer won’t confidently invest in solar panels or wastewater systems if orders can disappear next season. Predictable volume and a stable commercial relationship are preconditions for serious investment.

Compliance needs rationalising. The industry doesn’t need endless duplicate audits and certificates. Buyers should recognise equivalent standards, share data where possible, and reduce repetitive assessments. Every unnecessary audit is money and time that could go into actual improvement.

Critically, brands should co-invest in decarbonisation. If you want lower Scope 3 emissions (indirect greenhouse gas emissions), you have to help fund the transition in your supply chains. Grants, low-cost finance, shared investment models, price premiums tied to verified improvements—these are more credible than asking suppliers to do more with less. Payment terms also need to improve. Factories shouldn’t be financing production, compliance and sustainability investments while waiting to be paid. Faster payment is one of the simplest levers available.

And there needs to be more honesty in the public conversation. Consumers are told that fashion can be cheap, fast, ethical, low-carbon, traceable, and compliant with every new regulation. Maybe that’s possible in theory, but it isn’t possible at prices that keep falling in real terms. Somebody always has to pay a price.

Bangladesh’s garment industry has shown tremendous resilience over the past decade, recovering from crises, improving safety, and holding its position as one of the world’s most important sourcing destinations. But resilience isn’t the same as an unlimited capacity to absorb cost. The future of responsible sourcing has to be built on fair commercial terms, long-term partnerships, and an honest acknowledgement that sustainability without viable suppliers isn’t sustainability at all.

Mostafiz Uddin is the managing director of Denim Expert Limited. He is also the founder and CEO of Bangladesh Denim Expo and Bangladesh Apparel Exchange (BAE).

FP/MI