Ctg RMG sees surge in orders as Dhaka reels under labour unrest

Highlights

• Orders have started to increase for factories in Chattogram due to labour unrest in factories in Dhaka and surrounding areas
• Major Chattogram-based RMG manufacturing companies to receive increased orders include KDS Group, Four H Group, Pacific Group, and Asian Group
• Industry insiders say medium and smaller factories are also seeing growth
• To ensure timely shipments, many factory authorities in Dhaka are also subcontracting production to factories in Chattogram

Deluxe Fashions Ltd – a Chattogram-based knitwear manufacturer under the Clifton Group – received 20% more orders year-on-year in October.

According to the company, orders totalled $2.8 million, up from $2.4 million in October last year. It received export orders for 180,000 dozen undergarments, an increase from 150,000 dozen.

This upward trend was also observed in September, when orders reached 175,000 dozen, up from 145,000 dozen during the same period last year. The increase was attributed to a shift in orders resulting from labour unrest in Dhaka following the political changeover.

"There is no labour unrest here, and garment factories are able to meet export timelines. As a result, buyers are placing orders. Our factories have received 15-20% more orders this September and October compared to the same period last year," Mohiuddin Chowdhury, chief executive officer of Clifton Group and a former BGMEA director, told The Business Standard.

Similarly, orders have started to increase for factories belonging to other major garment groups in Chattogram, including KDS Group, Four H Group, Pacific Group, and Asian Group, according to industry leaders.

Industry insiders say medium and smaller factories are also seeing growth; even those concerned about staying operational during the economic downturn are now receiving steady orders.

Leaders of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) in Chattogram noted that since the fall of the Awami League government on 5 August, law enforcement agencies have struggled to maintain stability in garment industry hubs around Dhaka, Gazipur, Savar, and Ashulia.

In contrast, the situation in the port city has been stable, with no reported unrest in Chattogram's garment factories. Currently, all 446 garment factories in the region are operating at full capacity, the leaders added.

To ensure timely shipments, many factory authorities in Dhaka are subcontracting production to factories in Chattogram, they said. Similarly, foreign buyers are increasingly visiting the port city, resulting in a notable rise in orders for factories here over the past two months.

Belayet Hossain, CEO of Asian Group and former BGMEA director, told TBS, "With many factories in Dhaka and surrounding areas closed due to unrest, their owners, upon buyers' consent, are now subcontracting production to factories in Chattogram. This has led to increased orders and activity for factories here.

"This may be temporary. To sustain this momentum, factories in Chattogram must prioritise improving working conditions. Buyers evaluate compliance standards when placing orders."

Belayet also stated that the labour unrest in Dhaka's factories seemed to be a deliberate act of sabotage, adding, "Labour unrest could not take root here because factory owners in Chattogram were vigilant and proactive."

Emran Hossain, senior sourcing manager at the international buying house BF Corporation, told TBS, "Instability in Dhaka factories has disrupted timely production and shipping, prompting buyers to view Chattogram as a viable alternative.

"Chattogram is already a top choice for buyers as it offers swift production and export capabilities. However, since there are fewer compliant factories here, buyers often turn to Dhaka as well."

According to BGMEA data, Chattogram exported garments worth $543 million in the first four months of the current fiscal year.

Exports grew by 7.94% to $106 million in July and surged by 55.98% to $166 million in August. In September, exports dropped by 20% to $132 million due to flooding. However, October saw a 4.13% increase, with exports reaching $137 million.

Garment factories in the Chattogram Export Processing Zone, the BGMEA, and the Bangladesh Knitwear Manufacturers and Exporters Association contribute around 9-10% of the total export earnings in the RMG sector.

A decade ago, this figure was 12-15%. The industry in Chattogram also employs over 700,000 workers.