BGMEA cautions members against two Pakistani fabric suppliers

Highlights:

• BGMEA has told member factories not to do business with Pakistan-based SM Traders and SM Denims Mill for ignoring an arbitration ruling.
• The tribunal ordered them to pay $72,885 or replace defective fabric supplied to Sterling Designs Limited.
• The dispute involved over 30,000 yards of defective fabric linked to an export order.
• Despite agreements and repeated reminders, the companies allegedly failed to comply or reimburse costs.

The Bangladesh Garment Manufacturers and Exporters Association (BGMEA) has advised its member factories not to enter into new business dealings with Pakistan-based fabric suppliers SM Traders and SM Denims Mill Limited, citing their failure to comply with a decision of the BGMEA Arbitration Tribunal.

The directive was issued through a notice signed by BGMEA Acting Secretary Major Mohammad Saiful Islam on Tuesday (9 June).

According to BGMEA, member factory Sterling Designs Limited lodged a complaint against the Karachi-based companies, alleging that they failed to supply fabric in accordance with contractual commitments and did not comply with the tribunal's ruling on the dispute.

The matter was heard by the BGMEA Arbitration Tribunal in the presence of both parties.

Following the hearing, the tribunal directed the Pakistani companies either to pay compensation of $72,885 to Sterling Designs Limited or supply fabric of the agreed quality.

The tribunal also instructed both parties to resolve the dispute within seven days.

BGMEA said the suppliers failed to implement the decision despite repeated reminders.

As a result, the complainant factory has suffered financial losses, reputational damage and other business complications.

Under these circumstances, BGMEA has advised its members to refrain from conducting business with SM Traders and SM Denims Mill Limited until the dispute is resolved.

The association also warned that any member factory ignoring the directive would bear responsibility for any future financial losses or complications arising from dealings with the two companies.

Mohammad Habib Ullah, director of Sterling Designs Limited, told TBS that his company had maintained a long-standing business relationship with the two suppliers.

"We were using their fabric to fulfil an export order. However, 30,369 yards of the fabric supplied by them were defective while our export activities were ongoing," he said.

According to Habib Ullah, the suppliers advised Sterling Designs to procure replacement fabric from another source and assured the company that the cost would be reimbursed.

The company subsequently purchased replacement fabric and completed the export order in June 2025.

"After that, they neither took back the defective fabric nor reimbursed the cost of the replacement fabric. We had already paid for the defective fabric through an LC. We held discussions with them at least 10 times, but although they made promises, they did not keep them," he said.

He added that the dispute was later referred to BGMEA, which arranged a hearing involving both parties.

"A decision was made that they would repay the money in 10 cheques through BGMEA, but they did not do that either," he said.

Sterling Designs Limited is a sister concern of Standard Group.

BGMEA officials said the association's arbitration system has long played an important role in resolving disputes related to payments, product supply and contract execution in international trade.

When foreign buyers or suppliers fail to comply with arbitration decisions, BGMEA often issues precautionary notices to protect the interests of its members.

The association has taken similar measures in the past.

In March this year, BGMEA advised members not to establish new business relations with India's Styleverse Lifestyle Private Limited and several affiliated companies over allegations of unpaid dues to Bangladeshi exporters.

It also issued a caution against US-based Zintex LLC over alleged non-payment of export proceeds.

In 2023, BGMEA directed members not to conduct business with India's Hapa Fashion Private Limited, citing allegations that the company had failed to fulfil commercial commitments and comply with an arbitration decision.

Industry insiders said such precautionary measures help protect the interests of Bangladeshi garment exporters and maintain discipline in international trade.