Study on implications of the inadequate electricity and gas supply in the RMG industry in Chittagong EPZ

Abstract

The readymade garments (RMG) industry occupies a unique position in the Bangladesh economy. It is the largest exporting industry in Bangladesh, which experienced phenomenal growth during the last 20 years. By taking advantage of an insulated market under the provision of Multi Fiber Agreement (MFA) of GATT, it attained a high profile in terms of foreign exchange earnings, exports, industrialization and contribution to GDP within a short span of time. The industry plays a key role in employment generation and in the provision of income to the poor. Nearly two million workers are directly and more than ten million inhabitants are indirectly associated with the industry. Over the past twenty years, the number of manufacturing units has grown from 180 to over 4000. The sector has also played a significant role in the socio-economic development of the country. Garments industry is the largest export industry for our country and it contributes75% of total export. The industry is associated with its strength, weakness, threat and opportunity. In 2005-06 the industry faced a great instability due to the protest of the worker. After that under the state of emergency the sector enjoyed a stable growth and finally reaches at the matured stage. During recent period, the RMG sector has been facing with huge trouble particularly loss of production and cost of production is increasing extensively with insufficient supply of gas and electricity. Many of the garments factories are considerably relying on alternative power source as generators. But these steps are only creating losses and increasing cost. In this study an attempt has been made to estimate of loss and increase in cost due to inadequate electricity and gas supply in RMG. Questionnaire has been circulated among the selected RMG industries and relevant data were collected to identify the impact of shortage of power supply under different circumstances which supplements the survey evidence to attain the objectives of the study.