Textile Today questions of the month
In a recent move, gas distribution companies have proposed Bangladesh Energy Regulatory Commission (BERC) to increase the gas price to Tk 18.04 per cubic meter from Tk 7.76 now for industry. If the proposal is accepted then, gas price will be increased by 132 percent and it will push the production cost of the garments industry to increase by 5 percent as the cost of electricity, conveyance and all kinds of accessories items will be augmented.
Industry leaders claimed that they are paying an additional gas bill for what they are consuming. In addition, they are not getting enough and regular gas supply, however, they have to pay VAT on the gas bill.
Already, according to BGMEA, the prices of Bangladeshi garment items in USA market declined by 7.04% between 2014 and 2018 whereas the cost of production increased 30 percent. At the same time, garments manufacturers are giving 51% increased wage to their works from December 2018.
In this scenario, what should be the government policy in gas supply and its pricing for the textiles and garments industry?
Mohammad Joheb Rashid, Chief Executive Officer, Pakiza Knit Composite Ltd
Recently, the Gas Regulation Committee has proposed to Government to increase gas bill and electricity bill which will be an additional burden for the RMG industry. It is getting very difficult for the industry to cope with these expenses as the additional expenses are coming from various points every time.
The government needs to monitor where we can save money and reduce the unnecessary costs to help this industry. The government needs to focus on the overall situation of the industry when they will make policy. Otherwise, there is a possibility that this industry will become less important to the buyer which will affect the total economy of our country. The industry needs all the help and attention from Government to flourish and to keep itself as the major part of economic growth.
Osama Taseer, Director, Tiffinys Wear Ltd and President, DCCI
If the proposed increase of gas rate is effective, the production cost of the industrial sector will be increased. The government must have to ensure uninterrupted gas supply at cheap prices for the apparel and textile industry as the industry can remain competitive in business with the competing countries such as Vietnam, Indonesia, Myanmar, and Cambodia. Govt should take research initiatives on the valuation of LNG, reducing dependence on imported LNG, reducing system loss and making 3-5-year gas price policies.
Md. Abdul Wadud Chowdhury, Managing Director, Sadia Textile Mills
I think the government needs to ensure uninterrupted gas and power supply to all industries at a reasonable price. Every textile miller is losing their business due to interruption in gas and power supply. Recently we have established a dyeing factory and every month we do loss a huge amount because we did not get gas connection yet. Besides, I hope the government should give 10-12 percent of cash incentives for the primary textile sector.
Mansoor Ahmed, 1st Vice President, BKMEA
Production cost is increasing day by day but the price is decreasing, though our garment factories did huge progress on safety standards. Our export is growing due to our government support. Our government always tries to support manufacturers.
If we want to achieve the export target of $50 billion from the garment sector, the govt should not raise the gas price. We need energy policy for our industrial sector.
Abdullah Al Mamun, Vice President, BTMA
The proposal of gas distributors to hike prices is very unclear. There is no clear logic in the presentation seeking to increase the price of gas.
Our local textile millers will be left in a dire situation if a gas price hike is implemented. Besides we need a long-term policy on gas and electricity, it can be 5 or 10 years policy, so that manufacturers can make proper business decisions.
Syed M Tanvir, Director, Pacific Jeans Ltd
I think the main reason for the gas price hike is to import LNG. Our government is focusing to provide uninterrupted power and gas supply for the manufacturers.
Government has already established economic zones, where the government will ensure uninterrupted gas, power supply for the factories. I hope that the government should set a reasonable gas price which will be helpful for our textile and apparel sector.
Engr. Muhammad Mahiuddin, Executive Vice President of Robintex Group.
Day by day production cost is increasing due to worker wages, gas price hike and several other issues. I think the government should take proper decision for gas price implementation so the manufacturing mills can sustain their business.
Besides buyers should increase product price considering the production cost augmentation.