Uninterrupted gas supply, improved port performance and long-term policy support, including tax measures, are the crying need, as the country’s primary textile sector looks to retain its competitive edge and keep going in future also, says Tapan Chowdhury, the chief of a platform of local textile mill owners.
“We are struggling to be price-competitive,” says the president of Bangladesh Textile Mills Association (BTMA) in view of the drawbacks mentioned above. He was talking to the FE in an interview.
Bangladesh is not a cotton-producing country and the price of the raw material is fluctuating in the international market. The local garment factory owners press for reducing the prices of the raw material when the rates fall in the international market. But when the prices go up abroad, the local clients do not do the price adjustment.
Besides, the production and business cost in the country has gone up significantly because of the high gas tariff, says the managing director of Square Pharmaceutical Ltd and Square Textiles Ltd.
Local garment makers are the bulk consumers of the yarn and fabrics produced by the primary textile sector. It meets 80 to 90 per cent of the knitwear sector’s demand while the percentage is around 40 per cent for the woven garment segment.
A total of 424 spinning mills, 794 weaving mills and 241 dyeing, printing and finishing mills have registered with the BTMA.
The $6.0 billion industry currently has an annual yarn spinning capacity of 2,410 million kg. Its woven fabric producing capacity is 3,580 million metres and the dyeing, printing and finishing capacity is 2,795 million metres.
The best advantage of sourcing the raw material from the local market is that if there is any problem in any area like dyeing or printing, it can be addressed immediately, opines the BTMA leader.
The other advantages include short lead time and quality products. But in the event of import, the whole consignment can be at stake because of a single flaw, he hastens to add.
Despite challenges remaining there, the battle is on to be competitive, he asserts.
Uninterrupted gas supply is a prerequisite for running a spinning mill which is a capital-intensive industry, the BTMA leader says. Many factories are getting into difficulties because of the low pressure of gas. On the other hand, the government is currently discouraging captive power generation, he adds.
Most of the spinning mills run on captive power produced on their own. Such a mill that needs to be operational round the clock cannot run on diesel, as it is not cost-effective, he observes.
It is the government that helped the entrepreneurs set up such industries by lending them policy support that also included encouragement for generating captive power at a competitive rate, he discloses.
“Entrepreneurs have made big investments in spinning mills following the government’s policy support including incentive which other sectors did not get and that support helped the sector flourish,” says Mr Chowdhury.
It was known that there would be a gas shortage. But where the country lagged behind is it made a delay in making the decision, he observes.
A good number of spinning and weaving mills wound up operation during the last couple of years, he reveals. He termed closure of many of the mills natural as they failed to go for upgradation, he opines.
Many of them did not survive as they did not generate captive power and had age-old machinery against the backdrop of an acute shortage of gas supply, he says.
Despite all odds, many of the millers are going for expansion, depending on their own power supply capacity, he says. “To make the existing project viable and overcome the risks we have to grow.”
He suggests further improvement of the existing infrastructure including power and port.
At the Chittagong Port, the cargo delivery slowed down as container handling had been severely disrupted following the damage to two gantry cranes and there is no adequate number of jetties. The businesses also suffer and face harassment at the hands of customs officials, he alleges.
According to him, now the third generation is coming up. They like transparency and move forward in a planned way. They are taking over the businesses.
About policy support he says, “We hear about the LNG, but there no specific guideline in this regard, especially about the time and rate.”
There are frequent changes in power tariffs while tax measures are changed every year. Such policies worry the entrepreneurs as far as their investments are concerned.
He suggests adoption of long-term policies for at least five to ten years so that the entrepreneurs can draw up their investment plan.
“Workers, backward and forward linkage industries are the strength of Bangladesh. Still the country has immense potential to grow further,” he ponders. He favours time to time wage hike for workers in line with the rising living cost.
“To be in the race, we have to grow,” he says. “Despite all difficulties, we have to run as we are committed and have responsibility towards the people who are working in the industry.”
The BTMA leader, however, slams the moves to attract foreign direct investments as there are many corporate groups that cannot make fresh investment due to problems like poor infrastructure and scarcity of land.
“Banks are ready to offer financing as money lies idle. But the businesses cannot seize the opportunity as there remain hurdles to investment,” he opines.
Monira Munni
munni_fe@yahoo.com
