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RMG exporters fail to gain from order boom

Businessmen blame gas, electricity shortages for production disruption

Shakhawat Hossain

The country’s readymade garment exporters have failed to cash in on higher demand of apparel products as reflected in rising exports orders from international buyers due to chronic energy supply crisis.
Garment sector leaders and entrepreneurs said the demand for apparel items for the coming summer season increased substantially with signs of improvement in economies of the US and the European Union.
But, they added, most of the garment manufacturers in Dhaka and Chittagong were forced to cancel many orders or not to receive them, fearing probable shipment failure due to disruption in production caused by crippling gas and electricity shortages.
The demand for gas in the country is 2,250 million cubic feet daily as against production of 1,960 million cubic feet to 1,980 million cubic feet daily. The country generates 3600-3800 megawatt electricity against a demand of 5,000-5500 megawatt.
Abdus Salam Murshedy, president of Bangladesh Garments Exporters and Manufacturers Association, observed that they had missed a ‘big opportunity’ to overcome a poor export performance in recent times because of the power shortage.
Knitwear and woven – the two sub sectors of the main export-earning garment sector — recorded negative export growth at 20.03 per cent and 16.21 per cent respectively from their targets during the first six months of the current fiscal.
‘This negative growth could have been avoided if the exporters could take higher number of orders,’ Murshedi told New Age, adding, ‘Now the chance of attaining the annual target is very bleak.’
The government has fixed exports target at $17.6 billion in the current fiscal year with woven and knitwear has been given target of around $14 billion
Aslam Babu, an official of an EU-based buying house in Dhaka, criticised the authorities saying that it was unfortunate that factories had to defer deadlines of shipments on a number of occasions as production was hampered by electricity and gas shortages.
Many manufacturers are being forced to export their items through air cargo to maintain the shipment – an alternative arrangement which is pushing up the costs by at least 10 per cent.
The exporters had faced a similar situation during the shipment of winter orders between November and February. The buyers have already placed their orders for the summer, shipment of which will begin next month, according to exporters and buyers.
Meanwhile, the production cost of garment items rose due to price-hike of cotton globally. But the exporters could not make up for the enhanced cost by charging higher prices from the buyers because of lack of bargaining capacity.
Asked about the issue, the president of Knitwear Manufacturers and Exporters Association, Mohammad Fazlul Hoque, said they hoped ‘a lot from the government when it announced the stimulus package to overcome the difficult situation’.
He, however, termed the stimulus package eyewash and said the government failed to meet the needs of the country’s number one export earning sector.