Industries panicked about continuing stresses on profitability

Amid the ongoing crisis, factories are running without firing any employees. But, firms are panicked about the continuing stresses on profitability.

For instance, Walton Hi-Tech Industries, despite its over 17% decline in revenue, secured Tk484 crore in operating profits, and Tk469 of that has been lost into the financial costs, mainly due to the forex losses.

Letters of credit opened for imports at Tk84-89 per dollar were settled at Tk103 or even more per dollar.

Walton has built its capacity for 100% vertical integration of manufacturing. However, resin, chemicals, and some basic raw materials are still subject to imports. Hence, importing cannot be completely averted.

The government can come up with the protection of local industries that helped to secure self-sufficiency in the relevant product segments.

Walton and six-seven other companies are locally manufacturing electronics and white goods while imported products are still selling a lot contributing to forex reserve depletion and hurting local manufacturers.

Some 40% of the local television market is still under the control of gray market importers and that is not allowing the big local factories to utilise their installed capacity enough.

The global supply chain has come through unforeseen disruptions since the pandemic that hurt industries and consumers.

But, the crisis this time is different. It is technical and related to forex and the macroeconomic situation.

We can overcome it if the dollar does not depreciate further now. If the LCs opened at Tk103 in December need to be settled at Tk115 or more would come as the next wave of blows for us.

The most important thing would be if we learn from the crisis and do not repeat the mistakes.

Bangladesh's electronics industry is only one-decade-old, has displayed tremendous growth, and still shows all its potential in terms of catering to the growing local market and also exporting abroad.

Walton, a bold venture, eyes a status of a top-five global brand in the future and is acting accordingly. But, it is yet to be so big that might need no policy support.

Walton is winning in the export markets too. If we impose a lot of things, the industry would be hurt.

Industry experts should be meaningfully engaged during the policy formulation regarding industries till the final stage.

Engineer Golam Murshed, MD, Walton Hi-Tech Industries