Bangladesh, the world’s second largest exporter of apparels of western brands, will close 319 more garment factories amidst intense global competition and challenges like devaluation of the US dollar, a top trade association has said.
Expressing worries over the drop in productivities, Bangladesh Garment Manufacturers and Exporters Association’s (BGMEA) President Siddiqur Rahman on Saturday said Bangladesh’s garment industry was facing myriad challenges.
“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,” Rahman said. The garment sector is facing the challenge of gas and power crisis, high interest rate of bank loans, devaluation of US dollar and cut in price of its products, he said. Noting that the export had been growing by an average of 10 per cent over past five years, Rahman demanded halving the tax at source for the sector to 0.3 per cent in 2016-17 like the previous fiscal year. 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.
“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 per cent over past 22 months,” Rahman was quoted as saying by the bdnews24.com.
“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 forty percent with American buyers.
In 2012 the textile industry accounted for 45 per cent of all industrial employment in the country yet only contributed 5 per cent of the Bangladesh’s total national income.
BGMEA is one of the largest trade associations in the country, representing the readymade garment industry.