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The opportunity paradox

Bangla New Year has been celebrated with sheer participation from people throughout the country. Like each year grand procession praying goodness for the nation has been staged by the Institute of Fine Arts. But following that now we are passing three days in row shutdowns (as writing on 24th April) while us were expecting a good start of the New Year. Disappearance incidents and the following protests throughout the country have in stabilized everything once again. The industry desperately expects that things will be smoothened quickly and country will not fall in sheer political instability in coming days.

 We are receiving lot of ‘Opportunity news’ for our industry (especially RMG) for last many months and highlighted those in our publications accordingly. As per those stories Bangladesh is to reach US$ 42 billion RMG export by 2020 (as per Mckinsey report) and even furthermore up to 60 billion USD (as per BGMEA expectation) within that period. But everybody adds few conditions in their expectations. Definitely those ifs are not being likely to take place in near future. Especially when industry is receiving directions not to operate after 6.00 PM (during irrigation time); gas situation is not improving at the face of increasing demand, and new factories are not getting gas connections; it can be said that the country is not moving towards to catch those opportunities.

We are receiving much news on garment factory closure. Cotton yarn price turmoil held last financial year is now quite visible with its great bad impact on the industries. Many small garment factories have fallen under gigantic forced loan repayment failure. They had to use most of their credit limit for fulfilling their commitment. Those master L/C value was not enough to cover necessary back to back. Hence clear loss they faced could not be covered for most of the closed factories resulted huge forced loan on them, which has affected their term loan repayment also. Some factories faced export failure as well, not only due to failure in covering cost gap (as yarn purchasing price was higher than they calculated during order receiving) but also the buyers refused to take those even after completing showing excuses (mainly because of the subsequent demand shortage created due to economic recession) .  Good number of factories is suffering closure following huge back log and stoppage of bank support for opening back to back L/C. Hence even though we have orders in our market our factories cannot receive those as they don’t have that much money to complete those without short term loan support from the banks in terms of back to back L/C. Incentives offered by government was barely enough to help the industries.

For the reasons stated above, the opportunities (left out orders of China) that started to come to Bangladesh are searching new destinations around South Asia and Asia Pacific. Bangladesh is really falling short to overcome its weaknesses like infra structural development along with energy security for the factories as long term hurdles. Policy making is not vigil enough to tackle short term hurdles also. Political instability is likely to come forward as another threat for at least next two years. Hence the opportunities we were talking about are not being represented on the export figure yet. Export growth has declined while everybody was expecting a rise. The country earned $ 6.996 billion by exporting knitwear apparels during the period (July-March) as against the target of $ 7.767 billion. Though not declined, the sales of woven garments remained static ($ 7.108 billion) during the period and the growth over the same period in last fiscal declined slightly.

If anyone has any feedback or input regarding the published news, please contact: info@textiletoday.com.bd

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