Industry leaders seek long-term policy support

Textile and apparel in New Year

FE Report | Published: January 01, 2019 00:25:21 | Updated: January 13, 2019 16:54:43

Textile and apparel industry leaders want to see in the New Year the continuation of the business- and investment-friendly climate and steps to address the challenges facing the sector.

The challenges include implementation of the new wage structure, inadequate infrastructure, shortages in energy supply, scarcity of land, high bank interest rate and some customs-related issues, they pointed out.

The business leaders sought long-term government policy support to help entrepreneurs plan their investments in order to achieve the 2021 vision of the government.

They also expected that the government would take necessary measures to ensure good governance, eliminate corruption and improve the ease of doing business.

The business leaders spoke about their expectations while talking to the FE on Monday.

Md Siddiqur Rahman, president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), said, "With the continuation of the government, we want it will ensure good governance for businesses-friendly environment and do required research for further growth of the industry in the country."

The new wage structure for the garment workers came into effect in December 2018 and the workers would receive enhanced wages from the first month of the New Year, he said.

Terming the new wage structure a 'major challenge' in 2019, he said it would be very difficult for the garment factories, especially for medium- and small-sized units, to implement it.

Even many factories might not be able to continue their business in the event of failure in implementation of the wage structure, he said, adding that the government should provide an 'exit policy' for such units.

The BGMEA chief also strongly suggested fixing the exchange rate for exporters, saying that they are facing tough competition from their rivals in neighbouring countries due to depreciated rate of their currencies.

He also demanded that the genuine businesses be given bank loans at a single digit interest rate in line with the directive of the authorities concerned.

Regarding the foreign direct investment (FDI), Mr Rahman said they welcome FDI in the readymade garment (RMG) backward linkage industry, especially in the woven sub-sector.

This sub-sector has immense potential to grow further, as garment exporters meet 60 to 65 per cent of their requirement of woven fabric through import, said the BGMEA leader.

Echoing the views of Mr Rahman, Bangladesh Textile Mills Association (BTMA) president Md Ali Khokon said some 9.0 billion metres of woven fabric, out of a total of 12 billion metres required annually, are imported.

Of 9.0 billion metres woven fabric, some 6.0 billion meters are imported from China and the remaining 3.0 billion metres from India, he explained.

"Scarcity of land is one of the major impediments that hinder investment in the woven segment," he said, adding that the FDI can be attracted to woven fabric manufacturing segment through ensuring all the required facilities.

The government should allocate lands for backward linkage industries in the proposed economic zones along with utility connections and central effluent treatment plants, the BTMA leader added. 

He also suggested stopping 'bondage leaking', saying that there is no official records of commercial import of fabrics.

Mr Khokon also noted that businesses want to see no further hike in energy prices. Besides, all the banks should lower the bank interest rate to a single digit, he added.

Bangladesh Garment Accessories and Packaging Manufacturers and Exporters Association (BGAPMEA) president Abdul Kader Khan also echoed the views of the BGMEA leader regarding the implementation of the new wage structure.

Though work orders have been increasing in recent times, the prices of apparel items are not increasing in the same pace as the work orders and the cost of doing business, he said.

"As a result, we-the accessories and packaging makers-have also been suffering from price squeeze," he said.

He also sought long-term and low-cost financial supports from the government to overcome the challenges like meeting the compliance requirements and to sustain their competitiveness.

Some 30 to 35 types of accessories like zippers, buttons, labels, hooks, hangers, elastic bands, thread, backboards, butterfly pins, clips, collar stays, collarbones and cartons are the major garment accessories produced in Bangladesh, he said.

And the backward sector is now capable of meeting the demand for accessories by nearly 90 per cent, helping the country reduce its dependency on import largely over the years, he added.

Mr Khan also demanded the continuation of the improved facilities in Chittagong port. 

Vice president of the Exporters Association of Bangladesh Mohammad Hatem expressed the hope that the continuous growth of economy will sustain with the continuation of the same government and facilitate the businesses to grow further.

He, however, pointed out some customs-related issues, saying that they are the major regulatory obstacles in the New Year.

He also demanded necessary steps to address these issues.  

"We receive raw materials at FoC (free of cost) where buyers bear the larger share of investment, involvement and risks. But we face a wide range of obstacles in this regard," he noted.

The knitwear makers source nearly 90 per cent of raw materials from local market and majority of them don't need any bond licence, he said, adding that but many bankers force the knitters to have bond licences.

They also face various hassles while releasing goods from the Chittagong port in case of return of any shipments, he added.

The country fetched $30.61 billion in the last fiscal year from RMG exports that included knit and woven items. 

The primary textile sector meet 90 per cent of the knit fabric requirement while it supplies 30 to 40 per cent of the woven sector's requirement. 



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