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RMG exports face major setback as more factories shutter

  • Published at 10:34 pm November 28th, 2019
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File Photo: Workers seen sewing apparel products at a RMG factory Mahmud Hossain Opu/Dhaka Tribune

The ready-made garments (RMG) sector is not in good shape and it has created a huge negative impact on the economy

Export earnings from the country’s apparel sector have suffered a debacle recently as more factories are being shut day by day, making thousands of workers jobless. 

The ready-made garments (RMG) sector is not in good shape and it has created a huge negative impact on the economy. 

Bangladesh Garment Manufacturers and Exporters Association (BGMEA) President Rubana Huq said: “A total of 60 factories, members of the association, have been closed from January to October due to financial crisis. As a result, some 29,594 workers have lost their jobs.”

Bangladesh is the world's second largest ready-made garments (RMG) exporter after China, with the sector accounting for more than half of manufacturing employment and around 84% of  export earnings of the country.

“The growing financial crisis in RMG indicates that the sector, on which our export earnings depend heavily, is gradually deteriorating. No sign of improvement can be seen yet,” Rubana added.

According to another data, more than 100 factories, including 40 BGMEA members, have shut down their operations in the first seven months of this year. 

About 60,000 workers have lost their jobs as garment factories have closed due to higher cost of production and lower prices offered by foreign buyers.

A Bangladesh Bank report also shows evidence that the export sector of the country is facing a major blow. Export declined by 17.19% in October this year compared to October last year.

Export earnings was around $3.72 billion in October 2018, which declined to $3.08 billion in October this year.

Industrialists involved in RMG sector said the export earnings declined mainly because of the decrease in foreign orders to buy apparel products. Additionally, Bangladesh is facing some new competitors like Myanmar, India, Pakistan and Vietnam in the global market.            

Siddiqur Rahman, vice-president of Federation of Bangladesh Chambers of Commerce and Industries (FBCCI) and former president of BGMEA, said: “European countries are currently dealing with recession but the US market is comparatively in good shape. However we could not take advantage of US market properly.” 

“Our competitors, like India and Pakistan, have devalued their respective currencies against the US dollar but we did not. That is why we are losing orders and losing the competitiveness. The factories are being shut as they could not sustain the losses anymore,” he said.

Currently BGMEA has over 3,000 apparel factories registered as members. Earlier in May this year, 22 factories were closed in just 18 days. The owners could not pay salaries and arrears of workers, which eventually forced them to shut down in the face of protests.

According to Bangladesh Bank data, export earnings declined 6.82% in the first quarter of FY 2019-20. Country’s exports earnings was $12.73 billion ($1,272.12 crore) in the first four months of FY20, while it was $13.66 billion ($1,365.17 crore) in the same period of last fiscal year.

Meanwhile, a report by Export Promotion Bureau (EPB) says, RMG sector had around 83% contribution in export earnings in the first four months of FY20. The figure is even close to 85% if other contributors related to the sector, such as Hometex and Teri Towel, are included. So in the first quarter, RMG sector earned $10.58 billion. The figure shows growth declined by 6.67% compared to the same period of last fiscal.