Fuel price hike hits Bangladesh apparel industry

BANGLADESH: Fuel price hike hits apparel industry

By Siddique Islam | 8 January 2013

A hike in the price of fuel will hurt production and transportation costs in Bangladesh's clothing sector and affect its competitiveness, manufacturers have warned.

More than 5000 garment-making factories will have to pay an extra US$22m annually to use diesel-run generators, according to estimates from the Bangladesh Garment Manufacturers and Exporters Association (BGMEA).

"We [also] have to pay more for transportation following fuel price hikes," Shafiul Islam Mohiuddin, president of the BGMEA, told just-style.

He added that this is putting additional pressure on apparel makers who have seen overall production costs jump 12% in the last two years.

"Many export orders were already confirmed prior to the hike in prices of petroleum products," added Atiqul Islam, BGMEA former-vice president.

He urged the government to roll-back prices of diesel and furnace oil to ensure stability in the readymade garment (RMG) sector.

At the beginning of January the government increased the price of diesel and kerosene by 11.5% to BDT68 (US$0.85) per litre, and octane and petrol by 5.32% to BDT99 (US$1.24) a litre.

It is the fifth fuel price hike since the Awami League-led government came to power in December 2008.

Sectors: Apparel, Manufacturing, Sourcing