Lack of orders shuts over 100 RMG factories in Chattogram

One after another, export-based ready-made garment (RMG) manufacturing factories in Chattogram have closed their operations since April – due to a lack of orders and an inability to bear maintenance costs. 

From April to June, a total of 111 RMG factories of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), Bangladesh Textile Mills Association (BTMA), and Bangladesh Export Processing Zones Authority (BEPZA), in the district, have ceased their operations.

According to the Industrial Police, there are 1,229 factories of different industries, including RMGs, in Chattogram. Of those, 64 factories of BGMEA, 23 of BKMEA, three of BTMA, and 21 factories of BEPZA are now closed. Additionally, 217 factories of other industries were not reopened after the general holidays were over. 

Quamrul Hasan, former senior assistant police super of Chattogram Industrial Police, said due to the government's incentives, some factories are still operating while some are firing workers to survive.  

Mohammad Atik, director (labour and safety) of BGMEA, said, "These factories are closing mainly for two reasons – a lack of foreign orders and the complexity of getting shipment fees. If the ongoing situation is not improved, many factories may close in August and September."

Most of the closed BGMEA factories worked on sub-contracts. These factories usually took orders from other export-oriented factories as well as from different local fashion houses. A factory of this kind needs a minimum of 500 to maximum 1,500 workers. At least 50,000 workers of these factories are sitting idly now without work or salaries.

On the other hand, 17 packaging and garments accessories factories, out of 235 in the district, are also closed now.   

Lotifur Rahman Aziz, the first vice president of Bangladesh Garments Accessories and Packaging Manufacturers and Exporters Association (BGAPMEA), said, "The RMG sector will fall into a deeper crisis if the packaging and garments accessories factories close. In that case, raw material will have to be imported from abroad and, thus, lead time will increase. Though the government announced our sector as the recipient of a Tk20,000 crore incentives package for SMEs, many entrepreneurs of the sector could not draw the money from the banks. So, many businessmen are closing their factories due to the financial crisis." 

According to RMG businessmen, the running factories have orders till July. If the novel coronavirus pandemic situation is not improved by this time and sufficient orders are not there, the small and medium RMG factories will fall into a severe crisis, they fear.

Humayun Masud Chowdhury is the managing director of Gold Mart Fashion Ltd, which stopped its operations last month. He said, "It is a weaving factory, which primarily produces shirts and jackets. There were more than 400 workers at my factory. However, I had to stop running the factory, for the time being, as there were no foreign orders. Additionally, the production cost and factory maintenance cost are higher than the profits of the sub-contract." 

According to BGMEA, till March, 326 factories of the association in Chattogram were in operation. However, in June, the number dropped to near 250 factories. Of the 326 factories, 184 exported RMG products directly while 142 factories worked on sub-contracts. 

Chhobi Das Gupta, proprietor of Sense Fashion in Char Chaktai area of the port city, said, "My factory is surviving on a few local orders. I know many factories, which worked on sub-contracts, are closed now as there were no big foreign orders."

Shahnaz worked for an RMG factory in the Chattogram Export Processing Zone (EPZ). She said, "The factory reopened after the general holidays were over. However, after continuing for several days, it closed its operations again. I got the salary for the month it closed its operations. However, I did not get the Eid bonus. Now I am worried over how I will survive if the factory remains closed." 

In Chattogram EPZ, 156 RMG factories are still operating. However, six factories owned by four foreign companies are closed now. Around 4,000 workers worked there. Md Khurshid Alam, general manager of the CEPZ, said, "The closed factories are owned by European companies. They have applied to us to reopen the factories after they overcome their loan crisis and other problems. We hope these factories will be able to resume production in the next one or two months."