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How will increased electricity price affect Bangladesh RMG business competitiveness?

Textile Today Question of the Month

Bangladesh Energy Regulatory Commission (BERC) has increased the bulk electricity price on a weighted average by 8.4% to Tk5.17 from Tk4.77. When the supply chain of Bangladesh’s textile and readymade garments (RMG) sector is taking a hit as its main sourcing destination, China, is the epicenter of the recent coronavirus outbreak. Prices of all garment accessories, including yarn and sewing threads, have already gone up.

Samit Hassan, Director, Silver Line Group

Samit-Hassan-Silver-Line-Group

The increased price of electricity will affect the competitiveness of the business in many ways. The competitiveness will decrease because the company will have to increase the prices of the garments that it delivers into the marketplace.

Increased prices mean the firm’s product would be less attractive compared to others that are provided by competitors in the global market. If the business is not careful, it could be pushed out of the market due to decreased competitiveness in the marketplace.

Industry associations should have consultations with the government about the cost of electricity and the impact as the government could consider offering subsidies to the garment companies who sell their products to the international market.

Sheikh Shaheenul Islam, Director (Marketing & Merchandising), Windy Group

Sheikh-Shaheenul-Islam-Windy-Group

The increase in electricity definitely will affect in garments sector as well as another sector. But if the government can ensure uninterrupted energy supply to Textile industries then textile industries can even pay more to the government as enterprisers can save capital investment from generations.

Also, some big textile industries are generating own electricity which is sometimes excess than they require so the government can make a policy to buy the excess electricity and use it in the national grid.

So by making proper policy and for excess electricity from industries and make sure 100% energy to run the industries to save foreign currency from generators, the industry can pay to the government the reasonable price by saving capital beside new industries can set up as by that way factory set up cost will be lower.

Shahidullah Azim, Managing Director, Classic Group

Shahidullah-Azim-Classic-Group

Due to coronavirus, the overall apparel sector is facing a critical moment. Moreover, buyers are canceling orders. My one shipment approval is pending worth US$ 350k.

Production clearance is pending 175k in UK and US. Production cost is increasing but the price is being decreased. If regularly energy price increases, it is not possible to survive. We need support from the government to reduce energy prices.

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