The Financial Express

Hundreds of apparel factories out of operation

More to follow suit if the crisis prolongs, fear industrial circles

| Updated: April 19, 2021 17:56:28

Hundreds of apparel factories out of operation

Many small and medium scale manufacturing units, located in major industrial belts, that had faced closure during the first wave of Covid-19 are yet to resume operations, according to sources.

Most of these units used to do subcontracting jobs. They could not resume operations for non-availability of work orders, they added.

A total of 630 factories in Dhaka, Gazipur, Chattogram, Narayanganj and Khulna, remained closed since the beginning of the coronavirus outbreak in the country in March last year, according to Industrial Police data.

Of the factories, 130 are members of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), 72 are registered with the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) and 23 are the members of Bangladesh Textile Mills Association.

Some 16 factories are located in different export processing zones under the Bangladesh Export Processing Zones Authority (BEZA), it showed. The rest 389 are non-RMG factories, data showed.

There are 7,982 factories in the six industrial zones that are overseen by the IP purview . Over 4800 are non-RMG factories.

When asked, first vice president of BGMEA Syed Nazrul Islam said that the overall situation is not good. A sizeable number of factories, especially the small and medium-sized ones, have gone out of the business mainly because of the pandemic.

Though the big ones are somehow surviving, it has become very difficult for the SMEs to run business in a situation when the buyers were placing less work orders and, asking for discounts and deferred payments.

Echoing Mr Islam, vice president of BGMEA Md Shahidullah Azim said it has become difficult for the small units to pay workers' wages and bear other costs for a long time.

A good number of factories did not get payments against their shipped goods . Many overseas buyers have declared themselves bankrupt.

Besides, majority of the SMEs did not receive the government's stimulus package offered to offset the Covid-induced losses, he added.

As many of the factories did subcontracting jobs, they did not have regular banking activities and, as a result, they did not get support from the banks in the crisis period, he explained.

Both the leaders expressed the fear that more factories would face closure in the coming months if the current situation prolongs.

When asked, Dr Khandaker Golam Moazzem, additional research director at Center for Policy Dialogue, said businesses largely depend on the demands for products, but the demand both in local and global markets has gone down significantly.

Many garment factories have remained closed for a temporary period and it is very usual for factories in other sectors too, he said, stressing the need for identifying whether there were factories that had gone out of operation before the pandemic.

It is difficult for the SMEs to survive for a long time as they operate businesses through regular production, he said, explaining that these types of factories are largely dependent on regular cash flow.

Citing CPD's research, he said they found some 232 garment factories were closed during the pandemic while the small and non-member factories did not get funds from the government's limited support.

Many SMEs also could not avail the government's relief package, he said adding non-RMG sectors were not provided with the working capital support.

He attributed factors such as cash flow crisis along with the sluggish local and international demands and failure to reach the government's 'limited support' to the closure of many small and medium industrial units.

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