Bangladesh garment sector pinched by recession

Associated Press
By JULHAS ALAM , 08.05.09, 12:27 PM EDT

DHAKA, Bangladesh -- Bangladeshi entrepreneurs say the garment sector, a mainstay of the country's exports, has started feeling the pinch of the global economic crisis with about 25 factories shutting in the past two months.

In June the sector contracted 0.1 percent month-on-month after growing 9.6 percent in May, Abdus Salam Murshedy, president of the Bangladesh Garment Manufacturers and Exporters Association, told reporters late Tuesday.

He said prices for Bangladeshi garment products have fallen 20 to 25 percent in the global market and the situation is taking a "serious turn". About 25 factories were shut down over June and July.

"The buyers do not want to offer good rate anymore," he said as the entrepreneurs late Tuesday held a meeting with Members of Parliament in the capital, Dhaka, to discuss the crisis.

Impoverished Bangladesh annually earns $12 billion, or almost 75 percent of the country's annual export earning, from garments. The industry employs more than 2.4 million people, mostly women.

Bangladeshi entrepreneurs must also deal with competition from other exporters such as India and Vietnam.


"We are under tremendous pressure to keep us afloat," Murshedy said.

The World Bank in November said Bangladesh's garments industry might start feeling the impact of global recession in the May-June period.

Murshedy said the next three months till October would be the most challenging period for the industry as domestic issues including frequent power outages and a gas crisis are aggravating the situation.

The garment factories depend on privately owned, diesel-run generators to supply electricity because of power outages during this summer.

He demanded the government bring the entrepreneurs under a special stimulus package to support the sector at least until June 2010.

The entrepreneurs also said there has been no new investment this year in the sector and they see no chance in next few months.

"If there's no new investment, it will further stall the growth," said Annisul Huq, a garment manufacturer and president of the Federation of Bangladesh Chambers of Commerce and Industry.

"We need urgent move by the government to offset the impact on the garment sector," he said.

The United States is the largest market of Bangladesh's garment product while Europe is the second largest destination. Bangladesh manufactures garment products for global brands like Banana Republic, Disney ( DIS - news - people ) or Gap ( GPS - news - people ).

The entrepreneurs said they are now focusing on Japan to create new market.


Copyright 2009 Associated Press. All rights reserved. This material may not be published broadcast, rewritten, or redistributed