Umpteen industrial units across Bangladesh that manufacture goods for both local and international markets have closed down for a slew of problems that include currency devaluation and global demand dive, insiders said.
Besides the two generic problems, financial crisis fueled by sluggish global demand, high cost of production and banking complexities also weighed in to cause the closure of the factories since the beginning of the year 2023.
Sources say most of such factories are small and medium in size. And a good number of those that export goods failed to survive owing to losses they incur because of the currency-exchange-rate gap, according to exporters.
According to Industrial Police data, some 313 factories under its jurisdiction have gone bust since January to mid-August of the current calendar year.
Of the closed units, 60 are members of Bangladesh Garment Manufacturers and Exporters Association (BGMEA), 16 listed with Bangladesh Knitwear Manufactures and Exporters Association (BKMEA), nine are textile mills registered with Bangladesh Textile Mills Association (BTMA) while five under Bangladesh Export Processing Zones Authority (BEPZA).
The rest 223 are non-RMG units and mostly cottage industries, according to the official count.
Some 44,500 workers were employed in those units while 60 BGMEA members accommodated 16,943 workers, the data showed. A total of 223 non-RMG units employed 16,173 workers.
To save the situation, however, 114 new factories came up during the period creating fresh employment for some 12,500 workers, the data showed.
The IP data also reveal that about 9,600 workers were reemployed in 60 factories, including 22 textile and ready-made garment (RMG) units that could reopen through navigating the headwinds.
Asked about the ordeals, Md Shahidullah Azim, vice president of BGMEA, said most of the factories were closed down because of lack of work orders.
"Some were shut following labour unrest as they fail to make timely wage payments due to deferred LC (letter of credit) opening up to 180 days, delayed payments resulting from noncooperation from their respective banks," he alleged.
Mohammad Hatem, executive president of BKMEA, attributed much of the hardship to a yawning exchange gap between local-currency taka and US dollar. Small units failed to survive due to the financial losses they counted because of the exchange-rate gap.
Citing a central bank's report, he noted that more than 14 per cent of garment factories were bank defaulters.
He also said some 100 BKMEA members did not get their membership renewed this year. The number was 800 last year, he said, adding that they are not in business now.
"I couldn't mention the number but there are textile mills that were not in operation mainly because of shortage of gas supply," BTMA president Mohammad Ali Khokon said.
"Some are shut as they could not open LCs and import raw materials," the association leader goes on telling hard-luck tales of those that went up in red.
He also mentions global economic crisis that has eaten up demands for clothing in the export destinations.
Some millers also have alleged that mills were not reopened after last Eid due to gas shortage, dollar crisis and failure to import raw materials while prices of their produce plummeted.
Asked for his view, Saiful Islam, former president of Leathergoods and Footwear Manufacturers and Exporters Association Bangladesh (LFMEAB), admitted closure of some factories in leather sector, too, during last one year.
"Demand for leather goods as well as prices have fallen in global markets, resulting in decline in profitability," says Mr Islam, also president of the Metropolitan Chamber of Commerce and Industry (MCCI).
According to Bangladesh Jute Mills Association (BJMA) some of such mills are also not in full operation but run partially as they took bank loan on mortgage.
"In absence of policy supports, jute sector has also been struggling to sustain business," says BJMA secretary-general Abdul Barik Khan.
He alleges diversified jute goods exporters are not getting 20-percent cash incentives due to "bureaucratic tangles" while millers cannot buy jute for financial crisis.
According to official data, though RMG sustained a growth of over 10 per cent in the last fiscal, jute and leather sectors witnessed negative growth by 1.74 per cent and 19 per cent respectively.
Apparel earned US$46.99 billion out of the country's total export earnings worth $55.55 billion.
Leather and leather goods fetched $1.22 billion and jute and jute goods earned $912 million in the last fiscal.
Munni_fe@yahoo.com