Factory closure is inevitable now

When will Bangladesh be free of the present energy crisis? No timeline can be set because of absence of tangible measures to increase domestic share of energy resources in the national energy mix. As a result of this utter lack of progress to take energy exploration seriously and go on a war-footing for all-out exploration of existing and probable gas fields that Bangladesh has and the failure at policy level to extract proven coal reserves, the industrial sector is already showing the first signs of factory closures.
According to a recent report published in this newspaper "Umpteen adversities like global demand fall, high cost of production and US dollar problems have forced closure of a good number of garment factories across Bangladesh". Besides, financial crisis fuelled by sluggish global demand and banking complexities has also been responsible for closure of the factories since the beginning of the year 2023. Most of these factories are small and medium in sizes. A good number of those used to exporting goods failed to survive owing to losses they incur because of the currency-exchange-rate gap.
Against this perspective, 134 readymade garments (RMG) factories shut down in 2023. As these are smaller factories, jobs lost are estimated to be a little more than 45,000. Of course, if one looks at the bigger picture, i.e. four dependants against each bread earner, the number of people directly affected by these job losses is about 225,000 people who will now face an uncertain future. True, the big groups of RMG companies are faring well. However, at least half the sector is dominated by small and medium factories which are directly in the line of fire.
The fire they face is a gamut of challenges. In global perspective, export markets are facing their own economic downturn leading to falling demand due to inflation, high cost of living, increasing cost of energy. In Bangladesh, production costs are spiralling out of control that include a near 50 per cent hike in wages and an ever-increasing cost of energy supplied to industry and massive dearth of dollars. It is worth noting here that when the government raised energy prices, it had promised industry of uninterrupted gas supply. This has remained elusive. There isn't enough gas for everyone and every sector. While RMG exports constitute 85 per cent of the export basket, other industrial sectors operate on gas too. Frankly speaking, with gas as the primary energy source for industry, prospective sectors like pharmaceutical, ceramics, construction, etc. will all demand a share of the ever-depleting gas reserves.
So, in the midst of all these crises, the smaller entrepreneurs are going to be run out of business. Had things been rosier on the export side, some of these closures could have been cushioned by bailouts from their larger counterparts, but that's not happening this time around. Large RMG conglomerates are facing their own demons as their liabilities are several times more than the small factories. What other proof do policymakers need to get things moving on exploration? Granted that any exploration of any magnitude (like the pipeline from Bhola to the nearest grid point on the mainland) will take about three years to bear fruit, foot dragging is going to cost the industrial sector dearly.

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