Factory fires, vandalism, and murder cases: Who will benefit?

The latest wave of labour unrest and attacks on industrial hubs – the torching and looting of factories of a leading conglomerate being one such incident – has caused fresh worries among industrialists about security of their investment and future of exports.

Concerns over worker safety and the growing threats from extortionists – who demand money and business deals under the threat of murder cases – have also left Bangladesh's business community more anxious than ever.

Within a week since Gazi Group's factories were burned and looted, the country's industrial zones of Ashulia, Savar and Gazipur started to face sudden labour protests and attacks, prompting factory owners to meet the home adviser for help. The interim government ordered a joint drive of army and police to restore discipline in industrial zones.

Being implicated in murder cases has come as a new phenomenon as faced by Fakir Group, a leading apparel exporter.

All these incidents have put the private sector, exporters in particular, into an unprecedented risk: the potential loss of orders to other countries like India and Pakistan. This shifting trend could have severe consequences, stalling investments and job creation and jeopardising the country's foreign exchange earnings and increasing the risk of loan defaults.

Six factories of Gazi Group were reduced to ashes, severely disrupting the livelihoods of nearly 10,000 workers. Beximco Industrial Park in Gazipur, home to over a dozen factories and employing around 40,000 workers, also faced attacks. Even Ha-Meem Group, Bangladesh's top garment exporter with nearly $800 million in exports in FY24 and over 100,000 employees, was not spared. Al Muslim, Envoy and Pearl Garments, three other garment factories also faced attacks.

These incidents are part of a broader wave of attacks targeting dozens of factories across sectors such as garments, textiles, and pharmaceuticals – particularly those owned by Awami League-linked politicians-turned-businessmen – in areas such as Ashulia, Savar, Gazipur, and beyond. The assaults have instilled deep fears among industrialists regarding the safety of their workers and assets.

"This is suicidal," said Mustafa K Mujeri, senior economist and former director general of BIDS, in response to the factory attacks.

"The factories being vandalised are national and productive assets," Mujeri told The Business Standard.

He said while there may be allegations of corruption or other offences against individuals, their establishments should not be targeted. Such attacks disrupt GDP growth, investments, job creation, forex reserves and revenue collection, ultimately causing widespread suffering, said Mujeri.

For instance, Gazi Tyres, a manufacturer of import-substitute tyres, saves the country millions of dollars annually as it produced tyres worth at least Tk500 crore in 2023. But for Gazi Group, the last few weeks have been nothing short of a nightmare.

Miscreants targeted six of its factories, with the Gazi Tyres plant suffering the worst fate. On 5 August, the day Sheikh Hasina stepped down as prime minister and fled, the first attacks began. By 8 August, the factory was in ruins – its finished products, raw materials, and machinery were looted or destroyed. Though operations resumed briefly on 9 August after hasty repairs, a devastating blow struck on the night of 25 August when hundreds of looters stormed the factory again. This time, they set it ablaze, and the fire raged for 22 hours before being extinguished.

"Nothing is left in the factory that can be immediately used," lamented a senior production officer at Gazi Tyres.

The future of the factory's production now hangs in the balance, and with it, the question of how Bangladesh will fill the void left in a market where Gazi Tyres met 60% of the demand – from rickshaw tyres to those for motorcycles, buses, and trucks.

"We've been fighting against imports from giant tyre manufacturers such as China and India," said a senior official at Gazi Group, who requested anonymity. Gazi Group started its journey into tyre manufacturing on a small scale in 1980, producing rickshaw tyres in Lalbagh, Old Dhaka. After 2000, the group expanded its investments, eventually producing tyres for motorcycles and large vehicles by 2011.

According to initial estimates, six of the group's factories, which produce tyres, pipes, pumps, doors, gas stoves and water tanks, have been destroyed by fire, resulting in financial losses of no less than Tk1,500 crore.

The official also said the impact extends beyond the 7,250 employees directly affected by the closures. Hundreds of small suppliers, banks, and insurers are also facing significant disruptions due to the indefinite shutdown of these units.

"I'm worried about my children's education. How will I support my family?" said an official from Gazi Tyres' sales team.

What happened with Fakir Group?

Fakir Group, which employs over 25,000 people and exported nearly half a billion dollars' worth of garments in 2023, has been spared from the flames but now faces a different kind of threat. In the power vacuum following the fall of the Awami League government, local leaders of a political party allegedly moved swiftly to take control of key industrial areas, particularly in Gazipur, Ashulia, Savar, and Narayanganj. Here, new extortionists have emerged, demanding money and garment waste, known locally as jhut.

Factory owners who fail to meet these demands face dire consequences – a reality that Fakir Group has already encountered. Three of its owners have been implicated in two murder cases, casting a shadow of fear over the entire industry. Surprisingly, one of the two cases was not a murder but a natural death from stroke on 3 June this year. However, according to the case documents from Araihazar police station in Narayanganj, it has been falsely recorded as a murder committed on 4 August.

Fakir Kamruzzaman Nahid, managing director of Fakir Fashions, has accused a local influential group in Araihazar of wrongfully including his name in a murder case. He told TBS, "An influential group involved in extortion and the illegal garment waste business has maliciously added our names to the case."

Nahid, along with two other individuals associated with the case, is listed as accused numbers 11 to 13, with former prime minister Sheikh Hasina appearing at the top of the list.

On 23 August, Fakir Fashions requested the Director General of National Security Intelligence (NSI), Major General Abu Mohammad Sarwar Farid, to identify and hold the culprits accountable.

Businessmen in Ctg targeted with murder case

Several businessmen in Chattogram have raised alarms over a disturbing development: a group associated with a major political party has reportedly compiled a list of 72 individuals, including former ministers, lawmakers, and business figures, in a draft of a fabricated murder case. This draft, allegedly prepared by a lawyer, is being circulated to businessmen with a menacing ultimatum – pay up, or your name will be added to the case.

"I'm deeply concerned. I fear for my safety and that of our establishments and factories," said a prominent businessman in Chattogram.

Possible consequences of these incidents

Businesses and economists said that figures like Golam Dastagir Gazi, owner of Gazi Group and a former minister, or Salman F Rahman, vice chairman of Beximco Group and an adviser to the former Prime Minister Sheikh Hasina, should be held accountable if they committed any crimes, but their businesses should not suffer as a result.

Their business activities have already taken a significant hit. While Gazi Group's struggles have been highlighted, the impact on Beximco and a foreign investor is equally concerning. A major Chinese buyer, who supplied materials to Beximco's textile unit for cutting and finishing, now finds himself in a dire situation as he cannot retrieve finished products worth $10 million from the factory.

"Will he ever do business with this country again?" remarked a garment exporter who was contacted by the Chinese buyer but couldn't get it due to his factory's inadequate compliance issues.

When factory owners in a country experience insecurity and fear of vandalism and unrest, it sends alarming signals to both local businesses and foreign investors, said Dr M Masrur Reaz, chairman of Policy Exchange Bangladesh, a think-tank.

Referring to the incidents involving Gazi Tyres and Fakir Fashions, he expressed grave concern, warning that such events will disrupt business activities, hinder investments, and job creation, and make investors nervous.

"For local businesses, this instability erodes confidence in the safety and continuity of their operations," he said. "They may hesitate to invest in growth, fearing that their assets, employees, and profits are at risk."

"The situation is even more concerning for foreign investors," Masrur added, saying that a climate of insecurity and unrest raises serious concerns about the country's overall business environment, governance, and rule of law.

Mir Nasir Hossain, former president of the FBCCI, said the ongoing situation is denting buyers' confidence and if they shift orders to other countries, it would be difficult to bring those back to Bangladesh.

AKM Shaheed Reza, chairman of Reza Group, a garment exporter, said inflow of orders has come down as many buyers decided to go slow about giving orders to Bangladesh.

"We did not receive any export order in the past two weeks, a very unusual thing," said a deserted Reza thinking about the future business potential.

A managing director of a leading private bank fears that these unwanted incidents – from vandalism to murder case threats, worker unrest and factory closure – will increase the banking industry's nonperforming loans.