Bangladesh RMG: Urges immediate solution of gas and energy crisis to ensure smooth production

Leaders of the country’s highest export earning RMG sector said they are trying to come out of the ongoing negative trend of export but facing energy and gas crisis as the main barriers in their efforts.

They also demanded immediate solution of gas and energy crisis to ensure smooth production as well as to stay in the competitive international market

Talking to UNB, Bangladesh Garments Manufacturers and Exporters Association (BGMEA) president Abdus Salam Murshedi said, “We are unable to become competitive by any means in international market due to energy and gas crisis. We face difficulty to run our factories and as a result we lack efficiency.”

He said the competitive countries are performing well because of their strong infrastructures and incentives provided by the government under different packages.

“But, we are lagging behind day by day. The government has to ensure gas and electricity for our production. Otherwise, we will not be able to get back in the positive trend of export,” he added.

Referring to the government’s intention not to give any gas and electricity supply to new factories, the BGMEA president urged the government to ensure smooth supply to the existing industries so that they could stay in the international market

When contacted, Bangladesh Knitwear’s Manufacturers and Exporters Association (BKMEA) president M Fazlul Hoque said, “We are performing badly in the American market In the European market the situation is a bit beter. We are being undone by our competitors in the international market”

He said that they are trying very hard to come out of the sluggish trend of export but faces crisis of energy and gas to maintain their smooth production.

He observed that they are not being able to fulfill the orders by the buyers due to the problems and also demanded immediate solutions to these problems.

Bangladesh Textile Mills Association (BTMA) president Abdul Hai Sarker said most of their mills are facing difficulty to fulfill the orders of the buyers due to frequent energy and gas crisis.

“Some of the factories remained inoperative for 7 to 9 hours due to these problems, if the trend continues the buyers will leave one by one,” he added.

Demanding solutions to these problems, he said, “If we fail to fulfill the requirements of the buyers, you will see more negative growth in future.”

Despite a positive growth in January, country’s export earnings continued the downtrend with 4.69 percent negative growth in the first seven months of current fiscal (July-January) compared to the corresponding period of the previous fiscal (2008-09).

According to the recent statistics provided by EPB, Knitwear export stood at US$ 3543.01 million in seven months to January, a decline of 6.85 percent compared to the corresponding period previous year. It is also 13.62 percent below the target

Export of woven garments also showed a declining trend. Export during the period stood at US$ 3152.92 million showing 6.99 percent negative growth.

Home textiles and textile fabrics also maintained their negative trend as their exports totaled US$ 165.65 million and US$ 42.30 million respectively in July-January period.

The total export earning for the July-January period stood at US$ 8702.96 million, which is less than 12.03 percent of the target Export earning amounted to US$ 9131.05 million during the same period last fiscal (2008-09).

EPB statistics showed the country’s overall export during the month of January stood at US$ 1426.21 million as against US$ 1378.05 million in January previous year.
Buyers’ price pressure hits RMG profitability
Sources :The profitability of Bangladesh’s readymade garments (RMG) is now hit hard by the persistent pressure from international buyers to lower the item’s price, say industry insiders.

Such pressure also undermines efforts to improve the sector’s working conditions, they said.

When garment factory owners struggle to raise workers’ wages and sometimes they delay in paying them their dues because of the rise in operational costs and global competition, a denial of fair prices of RMG products by major portion of the foreign buyers has made the situation worse for the industry.

Many RMG owners also point to the fact that the wages issue leads to frequent labour unrests, which result in the loss of productivity and global competitiveness.

Meanwhile, in a letter sent to the head of government early last month by a group of 16 international buyers mounted its pressure to review the minimum wages of Bangladesh’s RMG workers, according to the leader of the trade body for the apparel sector.

?But this letter didn’t mention a single word on the necessity of the price-hike of apparels so that owners can go for pay-hike of workers,? said Abdus Salam Murshedy, the president of Bangladesh Garment Manufacturers and Exporters Association.

In this context, Murshedy pointed his finger at the higher cost of doing business. He said such cost rose around 25 percent last year, but the clothing item prices remained either unchanged or declined because of the recession and intense competition globally.

Erratic gas and power supply, higher freight charges, hike in yarn prices, implementation of minimum wages for workers, higher costs of transport and capital machinery are the factors that led to the rise in the cost of doing business.

Faruque Hassan, owner of Shafi Processing, a local garment factory, points his finger at the exorbitant airfreight charge of $4.30 a kg.

Ghulam Faruque, chairman of SQ Group, a local garment factory, suggested the PMO ask buyers to increase the prices of per unit of garment products so that the owners can go for workers’ pay-hike.