Before the world economy could completely recover from the impacts of the COVID-19 pandemic, a new crisis arrived in the form of the Russia-Ukraine war. The war has sent shockwaves throughout Europe and beyond, with Bangladesh’s vital readymade garment industry feeling the burn. With energy shortages and a sharp decline in apparel orders, the RMG industry faces a severe crisis. Adding to that the high inflation rates and fears of a looming recession, it’s clear that consumer confidence in Bangladesh is at an all-time low. It’s a challenging time for Bangladeshi exporters, but can they rise to the occasion and weather the storm?
Power crisis takes its toll
In 2022, as the Bangladesh government was scrambling to solve the country’s energy crisis, citizens had to feel the effects in more ways than one. With malls and shops ordered to close by 8 pm every night and shut down of diesel-run power plants, it was clear that the crisis was taking a toll on daily life. Schools were ordered to close an extra day each week, and mosques were asked to refrain from using air-conditioners outside prayer times.
The government imposed these drastic measures as it depended on imported cheaper fuels from Russia, which has led to a doubling of fuel prices. This escalating Ukraine war further exacerbated the deeper problems in Bangladesh’s power sector. With the country relying heavily on imports of fossil fuels and 63% of its power coming from it, a power crisis was bound to happen following the dollar crisis. And power shortage has already noticeably affected the RMG sector. Industry insiders urged the government to take immediate action to address the crisis and support manufacturers as they struggled with dwindling export orders and negative export earnings growth.
Many industries were forced to minimize their working hours by announcing two days of holidays in a week in September 2022. This caused export earnings and remittance inflow to decrease, as foreign orders were canceled and buyers refrained from placing new orders in Bangladesh. It’s still dire for the RMG sector and threatens to cripple the country’s economy. But is there hope on the horizon?
In November 2022, the President of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), Faruque Hassan, claimed that no major power issues were affecting the RMG sector at a press conference and reassured that the situation had greatly alleviated.
As the sector moves through 2022, many wonder how the industry is sustaining after such a crisis. As the energy crisis in Bangladesh continues to rage on, the RMG industry is fighting to keep its head above water. We sat down with Mr. Mahbubur Rahman, the Deputy General Manager of one of the leading global manufacturers of clothing and textiles based in Bangladesh, to better understand the current crisis.
“The energy crisis has decreased from what we have seen during September-November,” Mr. Rahman told us. “The Bangladeshi RMG industry has seen some improvement in the power crisis since the start of the Russia-Ukraine war. However, certain areas and factories are still facing blackouts due to power rationing. The energy crisis, which had previously been hindering the growth of the sector, has somewhat abated as a result of the war, but the issue is far from resolved.”
The government has been working to improve the power situation in the country, with plans to increase power generation capacity and improve the distribution system. However, as Mr. Rahman noted, implementing these plans is still in progress and will take time to see significant improvements.
Strategies to address the energy crisis
Renewable energy has been heavily discussed as a solution. “We have installed one of the largest rooftop solar power projects with a cumulative capacity of 40 megawatts (MW),” mentioned Mr. Mahbubur Rahman. “Additionally, the company operates an Independent Power Plant (IPP) with a capacity of 20MW.”
Experts say that adopting eco-friendly practices and using renewable energy sources can reduce the industry’s environmental impact, save energy, and reduce costs. Companies are taking steps to reduce their power consumption, from installing solar power projects to using energy-efficient bulbs and fans.
“It’s never too late for industries to make changes to protect the environment,” said Mr. Mahbub. “The best solution is going back to nature by using solar and wind energy as alternatives to traditional power sources. Our company has been using power-saving equipment and automation to reduce energy consumption. Some RMGs are still lagging in this regard and need to take initiatives to adopt eco-friendly practices.”
As the RMG industry fights to survive in the face of the energy crisis, it’s clear that going green is no longer a luxury – it’s a necessity.
The RMG industry is the backbone of Bangladesh’s economy. Manufacturers and the government must work together to combat the crisis and keep the sector afloat. Riding on the back of the RMG industry, Bangladesh has become one of the fastest-growing economies in the world. A testing time for this industry is a challenge for the whole nation that must be handled collectively.
