Take action now to save textile industry: BTMA to govt

The Bangladesh Textile Mill Association (BTMA) has called on the government to take immediate action to save the industry by ensuring uninterrupted gas supply, restoring cash incentives for exports, reducing interest rates, and expanding the Export Development Fund (EDF).

The BTMA also urged the government to provide more support to the textile industry, such as by providing subsidies and tax breaks.

Several mills have already closed down and more factories may permanently shut down by next December if the situation does not improve, BTMA President Mohammad Ali Khokon said at a press conference in Dhaka today.

The gas price has increased, but the crisis has intensified. Factories in Gazipur, Narayanganj and Savar are experiencing zero pressure of PSI (pound per square inch) against standard requirement for 10 to 15 PSI, he said.

The BTMA president categorically said, "Provide us with gas worth $100,000, and we will fetch export earnings worth $400,000."

"Bangladesh's major export sector is garments, accounting for about 85% of total exports. Local textile mills significantly contribute to the production of these exported garments. According to the BTMA, local textile mills contributed around $27 billion out of a total garment export value of $47 billion last year. Additionally, these mills supplied an additional $12 billion for domestic consumption, making its total contribution nearly $39 billion," he said.

Pakistan's textile industry is also facing a crisis due to gas shortage, mammoth taxation, and high fuel, electricity and gas tariffs that led to the closure of some industrial units.

Local media reports that more industrial units are likely going to succumb to the economic chaos, with exports nosediving within the next six months.

The BTMA president told TBS, "Even though Pakistan faces a gas crisis, their extensive devaluation of local currency and local production capabilities keep their export sector ahead, despite the gas shortage. As a result, they are in a better position compared to us."

Khokon at the press conference said, "The factories are now operating at half of the maximum production cost. If the production cost per kilogram of yarn is $1.25, and production is halved due to the gas crisis, then the production cost doubles to $2.50." 

He went on to say, "EDF has been reduced, and the payment time has also been reduced. Working capital has decreased by 40% due to currency devaluation. The rate of interest has also increased. The interest rate has increased from 9% to 15.5%.

"Due to these reasons, local industries have fallen behind in competition, as neighbouring country India has increased yarn imports by nearly 13% in the past year. The facilities provided in India are not available here, leading to several industries already permanently closing. By mid-December, several more factories are likely to shut down. 

"As a result, dependency on imports will increase, potentially causing local market share to be overtaken by foreign entities."

A certain quarter is misguiding the prime minister by providing false information about the industry, Khokon said, adding that they want the local market share to be overtaken by foreign entities.

The textile industry is also facing a crisis due to the smuggling of yarn and fabric into the country, he said.

In a presentation at a press conference, it was shown that despite India graduating from LDC status in 2004, various investors in that country receive different types of incentives in the sector. It is stated that in some cases of investments worth Rs500 crore, the Indian government provides support through various means totalling Rs250 crore. Additionally, nearly 20% of encouragement is received from the government in terms of textile product exports.

The BTMA president refuted a recent comment by the NBR chairman that since Bangladesh is not a cotton-producing country, the textile sector in the country will not be viable in the long term.

Citing examples from Japan, Italy, Germany and Britain, Khokon said despite not being cotton producers, they have excelled in textiles due to government policy support.

"To those who claim that Bangladesh's textile industry is unsustainable due to the lack of cotton production, I urge you to wake up from your slumber, acquaint yourselves with the world, and then make such assertions," the BTMA president said.

Questioning about inflated export figure always discouraged

Responding to a question regarding export inflated export data, Khokon said, "In a meeting of the Ministry of Commerce last year, when we said our exports do not reflect the export data shown by the Export Promotion Bureau (EPB), the central bank governor and others scolded us, saying, why were we saying that exports are less. Then we, including the then president of Bangladesh Garment Manufacturers and Exporters Association (BGMEA), became silent."

He added, "We have been deprived of many benefits with the false information of export growth, which was a kind of conspiracy."

According to export data released by the Bangladesh Bank last week, it was seen that actual exports were overstated by at least $10 billion in the previous data.