Publish: 12:59, 13 Nov, 2022

Uncertainty grips RMG sector due to gas crisis

Online Desk
Uncertainty grips RMG sector due to gas crisis

The Readymade Garment (RMG) industry in the country is passing a trying time as buying order has decreased due to inflation in the European market and the fuel crisis amid the Russia-Ukraine war.

In this situation, businessmen urged the government to buy gas at a hiked price or manage an alternative fuel system to sustain the RMG industry and save the employment of lakhs of workers.

Bangladesh Garment Manufacturers and Exporters Association (BGMEA) Vice President Shahidullah Azim told Bangladesh Pratidin that if Bangladesh can’t export RMG products, then there will be no benefit from buying orders.

“Our production has decreased 40-50 per cent due to the gas crisis. As we operate the factories by generator, it increased fuel cost up to 166 per cent. We urged the government to supply alternative fuel which might be fulfilled by coal.” 

Azim also said the country’s textile sector needs 17 per cent gas. Of these, the RMG sector needs 6-7 per cent. Rests of the gas are being used to produce electricity and fertilizer. Around 4-5 crore people, directly and indirectly, depending on the textile industry (RMG, spinning and buying houses).  If the government supply 17 per cent of gas for the textile sector, then it will be possible to run all factories.

Concerned people said the prices of Liquefied Natural Gas (LNG) have increased due to the ongoing Russia-Ukraine war. Owners of industries can’t buy LNG at a higher price.

Bangladesh had a chance to buy LNG from the spot market. However, now it is not possible because of the recent price hike.  Moreover, a sharp shortage of dollar reserves, Bangladesh can’t easily buy LNG from the spot market.  As a result, the production of the industries and factories has decreased by around 50 per cent. The export target in the current fiscal year is $46.8 billion which will not be fulfilled, for this reason, apprehended the RMG owners. 

According to the RMG sources, around 90 per cent raw-materials of the knitwear sector and 40 per cent of the woven sector are provided from the local market. The production of the knitwear sector was reduced by around 50 per cent due to the fuel crisis. As a result, RMG exporters can’t supply products according to the orders which reflected the RMG sector.

RMG export decreased more than 7 per cent in September this year which might reduce by around 20 per cent in October, they feared.

To get rid of this crisis, businesses suggested the government to buy LNG from the spot market even with a higher rate as they are ready to give Tk 22 for a unit of gas instead of Tk 16. They said, if the government expense $1.2 billion to import gas, they can earn $7-8 billion.

Businessmen think another way can save the RMG sector is by withdrawing VAT, tax and advance income tax as they can import gas at a lower price.  

Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) adviser Aslam Sunny said that the government doesn’t want to earn Tk 30 by expensing Tk 5. For this reason, fuel import has remained stopped. 

“Buyers are giving orders to our neighbouring countries hearing our fuel crisis. As a result, our five lakh workers are on the way to unemployment. If these skilled workers go village home once, they will not return to their workplace again which will impact our RGM sector and economy. Our export is decreasing despite possibilities,” he lamented.

@ The article was published on print and online versions of The Bangladesh Pratidin on November 13, 2022 and has been rewritten in English by Golam Rosul.

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