Bangladesh Garment Manufacturers and Exporters Association fears that the “extraordinary” rise in gas prices and high inflation could lead to the deterioration of law and order in the form of worker unrests.
The country’s largest garment exporters’ group advised the government to raise prices in phases rather than going for an unusual cost hike in one go.
Faruque Hassan, president of BGMEA, sent a letter to Tawfiq-e-Elahi Chowdhury, the prime minister's adviser for power, energy and mineral resources, and State Minister for Power and Energy Nasrul Hamid on Wednesday.
The government has recently raised gas prices for industries and power stations by a maximum 178 percent, effective from the February billing. In a second price hike in just over six months, the cost of gas was raised by a maximum of Tk 19 per unit this time.
The gas price for industrial units of all sizes has been set at a flat rate of Tk 30 per cubic metre. Previously, large industrial units had to pay Tk 11.98, medium units Tk 11.78 and small industries Tk 10.78.
The price of gas for power plants has been raised by about Tk 9 to Tk 14 a unit.
The BGMEA said in its letter that the gas price hike has already pushed up the prices of raw materials and production cost of apparel.
The interest rates of bank loans also soared due to inflation as competing in the market became “next to impossible”.
“As a result, it will be difficult for the garment industry to sustain. The abnormally high commodity prices due to the global financial crunch will inflict suffering on the workers and cause grievances. This might cause law and order to deteriorate.”
Almost 40 million people in the country are directly or indirectly involved in the apparel industry, and the readymade garment sector generates more than 80 percent of the exports. The home textile, terry towel and other clothing sectors make up another 5 percent of the exports.
The business leaders advised stopping corruption in the power sector, illegal connections and other irregularities to diminish system loss. They also sought the withdrawal of customs duty and VAT on imported fuel products for one year to offset the global crisis.
The government collects and distributes gas using three methods - natural gas from domestic sources, long-term LNG import contracts and purchasing LNG from international open markets.
BGMEA demanded that the government consider the difference in the cost of collecting gas from these three sources while setting gas prices.
The government aims to end subsidies through their new prices, but the ministry did not clarify whether the government will also make profits from the price hike.