Over 400 Garment Factories Shut Down in Bangladesh Between July 2023 and June 2026 

More than 400 garment factories in Bangladesh have downed their shutters between July 2023 and June 2026, Commerce Minister Khandakar Abdul Muktadir told parliament on September 3.

Of the 405 factories, 282 were members of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), while 123 belonged to the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), reports Daily Sun.

Muktadir gave the figures in response to a question from MP Md Ruhul Amin during a question-and-answer session in the Jatiya Sangsad, chaired by Speaker Hafiz Uddin Ahmad. He said authorities were still collecting the names of all the factories that had closed down.

The minister blamed the closures on a combination of domestic and global pressures, including the Covid-19 pandemic, the Russia-Ukraine war, the Israel-Palestine conflict, the global economic slowdown and political instability in Bangladesh.

He also cited a liquidity crunch in the banking sector linked to money laundering, free-trade agreements involving India and Vietnam and European countries, and a growing reluctance among foreign buyers to place orders with small and medium-sized factories.

The garment industry, the backbone of Bangladesh’s export economy, generates around $47 billion to $50 billion a year and accounts for roughly 80% of the country’s export earnings.

The sector is now facing another difficult period, with factories under pressure from shortages of energy, higher production costs, political uncertainty, tougher US trade measures and stronger competition from rival manufacturing hubs.

Energy shortages have become a serious problem for factories. Industrial areas such as Chittagong have experienced daily power cuts lasting as long as eight hours, forcing manufacturers to rely on costly diesel generators. The disruption, combined with high inflation and rising global oil prices, has reduced production capacity at some factories by an estimated 25% to 35%.

The rising cost of synthetic fibers, dyes and chemicals has added to the strain. These materials account for around 65% of garment production costs, making it increasingly expensive for Bangladeshi factories to manufacture and compete on international markets.

US trade policy has also become a major concern, with Washington imposing a 37% “reciprocal” tariff on Bangladeshi exports, compared with an earlier average rate of around 15.7%.

The US accounts for roughly one-fifth of Bangladesh’s apparel exports, and the higher duties have squeezed margins and prompted some international brands to reconsider their sourcing plans.

Bangladesh’s political turmoil has further unsettled the industry following the student-led uprising that brought down the previous government.

Disputes between textile millers and garment exporters have also deepened. The Bangladesh Textile Mills Association has announced temporary, indefinite closures of some mills amid mounting debt and what it described as policy paralysis.

At the same time, concerns over supply disruptions have led some major fashion brands to shift upcoming orders towards more stable and competitive countries like India, Cambodia, Vietnam and Ethiopia, which has heavily affected its textile market.

To support the sector, the government is providing a 1.50% alternative cash incentive to export-oriented domestic textile manufacturers in place of bonded warehouse and duty drawback facilities, Muktadir said.

Textile exporters to the eurozone are also receiving an additional 0.50% incentive on top of the existing 1.50%, while small and medium-sized enterprises in the export-oriented garment sector are being offered an additional 3% incentive covering knitwear, woven garments and sweaters.

The government is also providing a special 0.30% cash incentive for the garment sector, according to the minister.

Related posts:

The New Currency of Textile Trade Isn’t Cost, It’s Trust Why Bangladesh’s Pivot Toward Türkiye Could Redefine South Asia’s Geopolitical Landscape U.S.–Bangladesh Trade Deal Offers Textile Relief, but Critics Warn Gains May Be Limited U.S. Seals Reciprocal Trade Agreement with Bangladesh, Slashes Tariffs to 19 Percent