Bangladesh garment sector sees 400 factory closures in three years

Bangladesh Commerce Minister Khandaker Abdul Muktadir informed the National Parliament that over 400 garment factories closed between July 2023 and June 2026. This includes 282 BGMEA members and 123 BKMEA members.

The minister identified several factors contributing to these closures, including the global impact of the COVID-19 pandemic, the Russia-Ukraine war, conflicts in the Middle East, and tensions between the US and Iran. Domestic issues such as political instability and liquidity crises in the banking sector due to money laundering were also cited. Additionally, Free Trade Agreements (FTA) between Europe and competitors like India and Vietnam, along with a preference by foreign buyers for larger factories over small and medium enterprises, have pressured the sector.

To mitigate these challenges and prepare for Bangladesh’s transition from a Least Developed Country (LDC) to a developing nation—which threatens $17.5 billion in export benefits—the government is pursuing various trade agreements. Efforts include an Economic Partnership Agreement (EPA) with Japan, ongoing negotiations for a Comprehensive Economic Partnership Agreement (CEPA) with South Korea, and initiatives to establish trade deals with the European Union, RCEP, the UAE, Singapore, Indonesia, and China.