Significant increase in cost of doing business, compliance requirements and consequently losing out on orders are some of the major reasons behind large-scale closure of small and medium-sized garment manufacturing units in Bangladesh, say industry insiders.
“More than 70 factories closed last year. 1,200 units have closed down in last 4 years. Many factories which are not getting orders or sub-contracts have not closed yet, but there is no production. More than 50,000 workers have lost their jobs,” stated Vice President of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), AM Chowdhury Selim interacting with the media recently, adding “The cost of doing business has increased. Moreover, small- and medium-sized enterprises are unable to meet the compliance requirements set by Accord and Alliance. As a result, they have missed out on orders from international buyers.”
It may be mentioned here that there have been large-scale closure of factories in the Bangladesh garment industry in the last couple of years, highlighted from time to time by various media reports.
The hike in workers’ wages in such a scenario is also said to have played a vital role in increasing number of garment makers bowing out of the business.
“The salaries of workers are increasing day by day. This January, the factory owners had to increase the salary of workers to a minimum of Taka 8,300 per month. In December 2018, the minimum was Taka 5,300. Small- and medium-sized businesses are unable to pay the increased salaries,” further underlined Selim.