Over 300 garment factories in Bangladesh to close down

Despite its booming garment exports, all is not well in Bangladesh’s garment sector. The Bangladesh Garment Manufacturers and Exporters Association (BGMEA) has said that 319 factories are set to shut shop due to intense global competition and challenges like devaluation of the US dollar.

At a press conference in Dhaka, BGMEA President Siddiqur Rahman conceded that the imminent closure of more than 300 garment factories is a matter of concern.

“It is a matter of concern that 618 factories shut down in past three years after their productivities dropped due to various reasons. 319 more factories are also going to close down,” he said.

The garment sector is facing the challenge of gas and power crisis, high interest rate of bank loans, devaluation of the US dollar, and fall in price of its products, Rahman said.

He demanded halving the tax at source for the sector to 0.3 per cent in 2016-17 like the previous fiscal.

He also suggested that no value added tax should be imposed on garment accessories, and duty-free import of fire extinguishers should be allowed to help the entrepreneurs tackle the challenges.

Rahman said the export from the sector has been growing by an average of 10 per cent over past five years, but warned that it may not be enough to reach the country’s export target for 2021.

“We need 12 per cent annual growth in order to reach the export target of $50 billion by 2021. But the growth was only 6.81 percent over past 22 months,” he said.

“So we are 3.19 percentage points behind from the expected average growth and 5.19 percentage points behind from the expected growth for the 2021 target,” he added.

Bangladesh is second only to China in apparel exporter of western brands. Sixty per cent of the export contracts of western brands are with European buyers and about 40 per cent with American buyers.