Investment in the primary textile sector in Bangladesh has already slowed owing to the persisting gas and electricity crises and entrepreneurs yesterday warned that it might fall further if the energy situation does not improve.
The local primary textile sector received new investments worth $6.06 billion in 2021 and $4.15 billion in 2022 despite the coronavirus pandemic.
“The investment would have been much higher had there been no serious challenges such as the gas crisis and poor infrastructures,” said Mohammad Ali Khokon, president of the Bangladesh Textile Mills Association (BTMA), at a press conference at the Hotel Sonargaon in Dhaka yesterday.
“If the supply of gas with adequate pressure and electricity doesn’t improve significantly, there is a doubt whether there will be significant investments in the sector.”
He said some factors such as the severe fallout of the Russia-Ukraine War, the disruption in the global supply chain, the abnormal price hike of gas, and the acute shortage of US dollars are standing in the way of investment in the sector.
Bangladesh has been going through a gas shortage after the eruption of the war, which battered the global supply chains and pushed the prices of energy to higher levels.
The government in July paused the spot purchase of LNG due to a steep rise in price in the global market and a sharp fall in the foreign currency reserves. The move has affected industrial output as gas supply to factories is rationed.
Khokon urged the prime minister to resolve the energy crisis in the primary textile sector as soon as possible. “Otherwise, the situation at the factories will only worsen.”
Last month, the government raised the retail price of gas by 14.5 per cent to 178.9 per cent for industries, power plants and commercial establishments, as it looks to lessen its unsustainable subsidy burden amid a narrow fiscal space.
From this month, the price of gas used for power generation increased to Tk 14 for each cubic metre, up 178.9 per cent from the existing rate. For captive power plants and industries, gas will cost Tk 30 per cubic metre.
That is a 150 per cent hike for large industries, 154.7 per cent for medium industries and 178.3 per cent for small and cottage industries.
For captive power plants, the rate was increased by 87.5 per cent. Commercial establishments like hotels and restaurants will pay Tk 30.50 per cubic metre, up 14.5 per cent.
Even after the abnormal price hike of gas, the gas supply scenario has not improved in the primary textile sector and the production is still suffering, Khokon said.
The government has initiated the process to import LNG from the spot market to meet the gas demand for power generation during the upcoming Ramadan, summer and the ongoing agricultural irrigation season.
The BTMA chief welcomed the decision, saying this may lessen the gas crisis at factories.
The primary textile sector supports the country’s readymade garment sector, which accounted for about 85 per cent of national exports of $52 billion in the last financial year.
Currently, Bangladesh has 510 spinning mills with a combined production capacity of 3.8 billion kilogrammes of yarn a year.
The number of weaving mills, including small, medium and large factories, is 20,000 and their annual collective production capacity is seven million metres.
Twenty-five textile mills have a production capacity of 800 million metres and 40 denim mills can produce 700 million metres of fabrics every year.
Overall, the primary textile industry has seen a collective investment of investment of 1.70 lakh crore, according to the BTMA.
The primary textile sector is also going through some other challenges.
For instance, many mills are struggling to run their operations in full swing because of a shortage of scrap in the local market as a section of traders exports the textile waste.
Moreover, five mills involved in the manufacturing of yarn through the recycling of plastic goods are also experiencing a shortage of raw materials.
Currently, nearly 50 local mills make man-made fibre like polyester, viscose, staple fibre, flux fibre and lyocell, but Khokon said the production is not adequate to meet the rising demand for artificial fibre.
“The government should stop allowing the export of textile scrap to increase the supply of raw materials in the recycling industries.”
The country’s share in the $700 billion global manmade fibre is only $10 billion, which indicates that it has a lot of opportunities to raise its share.
The press conference was organised to brief reporters about the upcoming 17th Dhaka International Textile and Garment Machinery Exhibition, which will be held at the International Convention City, Bashundhara in Dhaka between February 15 and February 18.
More than 1,200 companies from 35 countries are expected to take part in the event.
The exhibition was supposed to be held in 2020 but it had to be deferred because of Covid-19.
