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419 RMG factory closure to hurt Bangladesh’s export and employment

The COVID-19 pandemic has hit Bangladesh textile and garment industry hard. 419 export-oriented factories have been shut down in the last two months as the global brands/buyers stopped placing work orders. Among them 348 garment factories are listed with Bangladesh Garment Manufacturers and Exporters Association (BGMEA) and 71 factories are listed with Bangladesh Knitwear Manufacturers and Exporters Association BKMEA.

419-RMG-factory-close-hurt-Bangladesh
Figure: The COVID-19 pandemic just made it enormously tough not only for the troubled garment factories but also for large and compliant factories.

BGMEA said, among 348-member readymade garment (RMG) factories, 80 factories opted for permanent closure and the rest 268 are waiting for work orders to recommence production.

Closed BGMEA factories are located in 91 at Gazipur, 79 at Ashulia in Dhaka, 70 in Narayanganj, 67 in Chattogram and 40 units are located in the Dhaka city.

348-BGMEA-factories-closed

While BKMEA said, that 71 of its member factories had remained shut for the last two months due to lack of work orders and a few of them opted for permanent closure.

Chairman of the BGMEA Standing Committee on PR Khan Monirul Alam ensured about the closure.

“In recent years wave of closure has hit the apparel industry, and this is generally caused by monetary difficulties and economic struggles mostly because the increase in production cost and we have a disapproving currency exchange rate.”

Rubana Huq, President, BGMEA

According to BGMEA data, global buyers canceled apparel orders worth US$3.18 billion due to the Coronavirus pandemic.

“As far as we are informed, 268 factories out of 348 closed have gone for temporary suspension, and the rest are closed permanently. We do not have the exact data of employment by these factories, but an estimate of 400-500 thousand workers would not be an exaggeration,” said Rubana Huq, President, BGMEA.

The closing of RMG factories was not a new phenomenon, the trend started after the catastrophic Rana Plaza building collapse in 2013 as more than 1000 apparel factories had been shut since then due to workplace safety issues, she mentioned.

71-BKMEA-factories-shut

“In recent years wave of closure has hit the apparel industry, and this is generally caused by monetary difficulties and economic struggles mostly because the increase in production cost and we have a disapproving currency exchange rate,” Rubana Huq added.

Already the RMG industry was in a difficult transition stage – several factories were closed during April-December 2019 – the COVID-19 pandemic just made it enormously tough not only for the troubled garment factories but also for large and compliant factories, the BGMEA President pointed out.

Such shrinkage of industry capacity will surely reflect on Bangladesh’s export figure and employment, and the apparel sector would have to go a lengthy way to fight with this unprecedented COVID-19 pandemic and resulting economic recession.

 

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Editorial on “Time to rewrite the fashion industry”
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Exclusive Interview- Dr. Rubana Huq, President, BGMEA
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