Frequent general strikes and political unrest in recent times have taken their toll on the readymade garments sector, raising cost of production, industry people said.
And due to the rise in the production cost country’s RMG sector is losing its competitiveness, they said.
They expressed their concern that a number of small and medium level entrepreneurs would be forced out from the sector as they have been facing threat of discount, cancellation of orders and deferred payment from buyers.
RMG exporters said they were incurring huge losses as they had been forced to increase working hours and make shipments of their products by air to keep deadlines due to frequent general strikes.
They claimed that during the recent general strikes enforced by the opposition political parties the production fell by 30-50 per cent and the cost of production went up by 30-40 per cent.
‘Productivity in the RMG sector has been decreasing gradually in recent months due to political violence and general strike,’ said Abdus Salam Murshedy, president of the Exporters Association of Bangladesh.
He said, ‘Usually the production in the RMG sector is 20-25 per cent less than the capacity the sector possesses. But, the ongoing political unrest has widened the gap to 30-35 per cent.’
Murshedy, also the managing director of Envoy Group, said, ‘In general strike 20-30 per cent of workers remain absent at the factories and their absence hampers the production.’
A few number of entrepreneurs have been extending working hours to maintain the production, but the process will not bring any long-term positive result, he said.
Murshedy said that the ongoing situation would be harmful for the image of the country abroad and export orders would drop.
He said that RMG exporters had been forced to make their shipments by air to retain the foreign buyers which fuelled the production cost.
The entrepreneurs are incurring huge losses as they have to pay 10 times more for shipments by air than shipments by ships, Murshedy said.
‘Though the garments sector remains out of the purview of general strike, the transportation of garment products do not. So, it is very difficult to keep deadline for shipment,’ said Md Siddiqur Rahman, vice-president of the Bangladesh Garments Manufacturers and Exporters Association.
Siddiqur, also the chairman of Sterling Group, said that the production in the sector had reduced by 30-50 per cent and the cost had increased by 30-40 per cent due to the recent political turmoil and frequent general strikes.
Fazlur Rahman, managing director of Gemini Garments Ltd, said that continued political violence and frequent general strikes had been hampering all of the activities in his factory including import of raw materials and shipment of products.
‘We get orders from buyers for our competitive price and efficient shipment. But the recent political unrest has lowered our price competiveness and efficiency in shipment,’ he said.
Fazlur said that recently they missed the deadline for a consignment of men’s shorts.
‘Now we have to make the shipment by air and have to pay $48,000 for the shipment. A shipment by ocean-going ship costs $3,500,’ he said.
Gemini Garments has already lost a buyer from Italy and most of the buyers from EU and US are cutting their orders from Bangladesh because they do not want to see any interruption in their supply chain, he said.
Shahidullah Azim, managing director of Classic Fashion Concept Ltd, said that the production in his factory had reduced by 20-25 per cent due to the general strikes and they missed several deadlines for shipment.
‘Now I have to make shipment by air, otherwise I have to face discount or cancellation of orders,’ he said.
‘If I could make the shipment by ocean-going vessel, buyer would have paid the cost. But, now I have to pay $27,000 for shipment by air,’ Shahidullah said. He said that the price of petroleum products had fluctuated between $120 and $132 for per barrel in the global market in the first half of 2012.
But the price of the products went down to around $100 per barrel in the second half of 2012 in the global market and the rate did not change much since the beginning of this year which caused a lower import cost of fuel oil, the BPC official said.
The government, however, increased the price of fuel oil in different times in the period despite a lower cost in the global market, he said.
The BB data showed the opening of LCs for petroleum products had also posted a negative growth of 15.22 per cent in the first seven months of FY 2012-13 compared to that of 93.26 per cent in the same period a year ago.
The opening of LCs for petroleum products was $2.59 billion in the first seven months against $2.74 billion during the same period of FY 2011-12.
BPC chairman Md Eunusur Rahman told New Age on Sunday that the last irrigation session had got a respite from drought as the period experienced a heavy rainfall, he said.
Due to a good rainfall, the demand for fuel oil for irrigation was lower, he said.
The US dollar continued to depreciate against the local currency Taka in current financial year that also contributed to lower government spending on fuel oil, said a BB official.