The Bangladesh Textile Mill Association (BTMA) has presented a bleak image of Bangladesh’s core textile industry, urging the Government to act quickly to prevent its collapse. The industry, a critical supplier to the country’s readymade garment (RMG) sector, Bangladesh’s economic powerhouse, is confronting a slew of issues that threaten its survival.
The BTMA’s key interests include gas supply, export incentives, interest rates, and the Export Development Fund (EDF). The recent cut in export cash incentives is viewed as a significant blow to the industry, jeopardising the US $ 22 billion invested in local textile manufacturing.
At a press conference in Dhaka, BTMA President Mohammad Ali Khokon argued that the reduction in incentives will erode Bangladesh’s competitiveness in the international market, particularly against India, which offers a variety of incentives despite graduating from least-developed country (LDC) status in 2004.
Mohammad Ali Khokon emphasised that numerous mills have already shuttered, and additional facilities may be permanently closed by next December if the situation does not improve.
“On top of that, the gas crisis has emerged as a critical hurdle for textile mills. Factories are experiencing insufficient gas pressure, significantly impacting production capacity,” BTMA President added.
The issues confronting the textile sector are linked. The gas issue, along with a drop in EDF and rising loan rates, has dramatically raised production expenses. This, in turn, has reduced Bangladesh’s competitive advantage over regional rivals such as India, which benefits from a devalued currency. The result of these issues is a reduction in manufacturing capacity, with numerous mills already facing permanent closure. The BTMA warns that this tendency is likely to continue unless the Government steps in.