Furnace oil price spike will hurt economy, specially Apparel Industry

The Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) yesterday urged the government to reverse its decision to increase the furnace oil prices.

The government last Monday raised the price of furnace oil, widely used in industrial units, by 34 percent or Tk 9 per litre, to Tk 35.

In a statement, BKMEA said the sudden rise in furnace oil prices will greatly hamper knitwear manufacturing and exports as production costs will go up and hurt the competitiveness of the local products in the global market.

“During the economic re

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cession knit manufacturers maintained the stronghold of their products by providing competitive price and quality and that's why Bangladesh did not feel the pinch of the worldwide downturn,” said BKMEA.

The international buyers are continually leaning towards Bangladesh for export orders now-a-days because of China's increased labour wages, Pakistan's political instability and Japan's China plus-1 policy, the statement said.

The manufacturers increased their dependency on furnace oil and continued production according to the previous orders to ensure smooth exports and retain the buyers, amid nagging power and gas crisis, which is already a threat to the export-oriented industries, the association said.

“If the industries have to buy furnace oil at a higher price to finish the production, the cost will shoot up and we will incur huge losses. Many industry owners will even be forced to shut down their factories,” BKMEA said.

“Production will have to be stopped and existing export orders will be hampered, which will, in turn, hurt Bangladesh's economy. We fear of losing the world market share that was built by many years of hardship.”

Bangladesh exported $4,311.92 million, posting 43.37 percent growth, in the first six month of this fiscal year, which is the highest among all the export sectors and 42.01 percent of the total national export.

“To meet the national export target and develop the knitwear industry we strongly demand the government review its decision of increasing the furnace oil price,” BKMEA said.

-The Daily Star, Sun, 30/01/2011

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