Readymade garment industries in Chittagong, hit by fallout from global recession, have experienced a 28 percent drop in orders in the first quarter of the current fiscal year, industry leaders said yesterday.
“As a result of a downward trend in orders, at least 20 factories owners were compelled to shut their factories in the last four months,” Nasiruddin Chowdhury, first vice president of Bangladesh Garment Manufacturers and Exporters Association (BGMEA), told the press in a briefing in the port city.
“Nearly half of the 742 factories in the port city have lost their competitive edge,” he said.
To bail the RMG industry out of recession fallout and further gloom, the BGMEA leader sought policy support, including cash incentives.
Citing emergency packages rolled out by many countries to their RMG sector, Nasiruddin said: “Our competitors such as India, Pakistan, Vietnam and Cambodia had devalued their currencies.”
He also said China had awarded 63 types of subsidies to sustain the industry. “India disbursed a fund of 5,173 crore rupees along with 10 percent cash incentive and a 5 percent subsidy on interest on loans. Pakistan also reduced bank interest rate to 6.5 percent from 7.5 percent previously,” Nasiruddin said.
“While all our major competitors took such measures to save the industry, Bangladesh also needs to take steps to prepare the industry for global competition,” he said. “We fear more factories will shut down and the dream of creating a $25 billion industry will be shattered.”
Nasiruddin sought 10 percent cash incentives on the export value of garments and special measures to rehabilitate the country’s 270 sick factories, keep bank interest rate below 7 percent and cut bank service charges, rescind VAT on RMG units and reduce tariff at Chittagong port.
He demanded that 12 captive power plants be set up through public or private investment on a priority basis and urged the government to close the garments factories having 100 percent foreign ownership. “Those factories are creating uneven competition in the market,” Nasiruddin said.
Source: The Daily Star, 03 June 2009