Textile Millers Feel Pinch of Financial Crisis

The Bangladesh Textile Mills Association said global financial crisis and depreciation of currencies in competitor countries started putting impact on country’s business, so government should support them with favourable fiscal measures.

In a statement on Sunday, the BTMA demanded government steps in devaluating local currency and made appeal for reducing interest rates and enhancing incentives.

‘The [textile] sector as a whole is gradually being impacted by the global financial crisis,’ said the BTMA statement signed by its president Abdul Hai Sarker.

‘This impact has been magnified by the actions of our competitor countries like Pakistan and India,’ the statement said.

The BTMA, that groups local spinners, weavers and textile processors, cited that devaluation of currency by India had created opportunity for Indians to export cotton yarns to Bangladesh at dumping prices.

It argued that as local spinners procured cotton from global sources at high prices during the past one-and-a-half year, so cost of producing yarns locally goes up. On the other hand the Indian suppliers were blessed with local cotton that lower cost of production and help exporting at much cheaper price.

‘The [local] mills now can not sell yarns under the price competition, so produces are being piled up in factories. On the other hand exports of Indian yarns at a dumping price have increased significantly resulting in a drop in sale of the local yarns. ‘If such situation continues, local mills will get closed down,’ BTMA said.

It cited that competing countries including, India and Pakistan and Vietnam, had adopted strategic plan to face the challenges and strengthen their market position.

‘Our competitors — India and Pakistan — in textile and clothing market have experienced depreciation of their currencies by 25 per cent and 30 per cent respectively just within a few months and at the same time they have also lowered interest rate,’ the BTMA cited, adding that ‘Thailand, Korea, Indonesia, and Vietnam, also have depreciated their currencies by 12 per cent 15 per cent, 17 per cent and 20 per cent respectively.’

The association pointed out that the ongoing economic slowdown in the west had not only affected country’s markets there, also put impact on the local industries seriously.

Under the circumstances, the BTMA feel that the Bangladesh government will take an action plan immediately to save foreign currency earning economic sectors especially, the textile and readymade garment ones, which earn nearly 80 per cent of country’s entire export proceeds.

The BTMA demanded rationalisation of currency exchange rate, reduction in interest rates and optional subsidy in the utility services. The duty drawback on locally produced textiles should be enhanced to 15 per cent from the existing 5 per cent which, BTMA argued, would increase competitiveness of local exporters over their competitors.