Industry leaders in Bangladesh’s apparel and textile sectors are raising alarms over the Government’s recent proposal to increase gas prices by a staggering 150 per cent for the industrial sector. They predict this increase could lead to an additional annual cost of approximately Taka 18,000 crore for captive power plants, which would significantly hinder industrial growth and economic stability.
In a letter addressed to Energy Adviser Muhammad Fouzul Kabir Khan, representatives from major trade bodies, including the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), Bangladesh Textile Mills Association (BTMA), and Bangladesh Terry Towel & Linen Manufacturers and Exporters Association (BTTLMEA), outlined their concerns.
Key Issues Highlighted:
Impact of Gas Price Hike: The proposed increase to Taka 75 per cubic meter is expected to raise costs for the garment sector by Taka 6,300 crore and for captive power plants by Taka 11,675 crore, totaling Taka 18,000 crore. This additional burden, representing 4.2 per cent of annual export revenue, threatens to diminish the sector’s competitiveness on the global stage.
Rising Production Costs: Over the past five years, production costs in the sector have surged by 50 per cent, driven by significant increases in gas prices (286.5 per cent), electricity (33.5 per cent), diesel (68 per cent), and bank interest rates (14-15 per cent). Recent wage hikes for garment workers and reduced export incentives have further strained the industry.
Global Challenges: The sector faces declining demand, with UNCTAD predicting a 5 per cent drop in global garment imports in 2024. Additionally, garment exports to the US and EU fell by 4.24 per cent and 4.83 per cent, respectively, from January to November 2024 compared to the previous year.
Gas Supply Crisis: Key industrial hubs, including Gazipur, Narayanganj, Mymensingh, and Savar, are experiencing production decreases of 50-60 per cent due to low gas pressure. Despite a previous gas price hike in January 2023, the promised uninterrupted gas supply has not been realised, disrupting production schedules and eroding buyer trust.
Declining Investments: Investment in the textile and garment industry is stagnating, with Bangladesh Bank reporting an 8.95 per cent decline in capital equipment imports for the garment sector and an 18.11 per cent drop for the textile sector between July and November of this fiscal year.
Industry leaders are urging the Government to suspend the proposed gas price hike and collaborate with stakeholders to develop a competitive and sustainable pricing policy. They also call for immediate action to address the gas supply crisis, including the provision of gas to factories via cylinders from CNG stations, and the formulation of a medium- and long-term strategy to ensure uninterrupted gas supply.
Emphasising the critical role of the apparel and textile sector in Bangladesh’s economy—contributing to industrialisation, employment, foreign exchange reserves, and women’s empowerment—industry leaders assert the need for Government prioritization of stability in this sector, particularly as the country transitions to middle-income status. They express their readiness to work collaboratively towards viable solutions.
