Over 400 RMG factories closed in 3 years
More than 400 garment factories have shut down across the country over the past three years due to a combination of global economic pressures and domestic challenges, Commerce Minister Khandakar Abdul Muktadir said.
“The government is still working to make a complete list of the factories that have shut down, so the names of many others could not be presented in parliament,” Commerce minister disclosed the figures on Thursday in the parliament in response to a question from Chuadanga-2 MP Md Ruhul Amin during the session chaired by Speaker Hafiz Uddin Ahmed.
He said, of the factories that closed between July 2023 and June 2026, 282 were members of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) and 120 belonged to the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA).
According to the commerce minister, the closures were driven by a combination of global and domestic factors, including the impact of the Covid-19 pandemic, the Russia-Ukraine war, the Israel-Palestine conflict in the Middle East, the US-Iran conflict, and the global economic downturn, which have put pressure on the garment business.
Domestic political instability, a liquidity crisis in the banking sector stemming from money laundering, free trade agreements between India and Vietnam and European markets, and declining interest among foreign buyers in small and medium-sized factories were also among the reasons, he said.
The minister said small and medium-sized factories have come under particular pressure as foreign buyers are reluctant to place orders with them because monitoring such factories is more difficult.
Earlier this year, BGMEA also said that around 400 garment factories had closed over the past three years due to rising business costs, order shortages, high energy costs, loan interest rates, and infrastructure constraints.
According to recent BGMEA data, many factories are unable to operate at full capacity because of gas supply shortages. At the same time, production costs have risen significantly over the past three years due to higher energy costs, lending rates and wages.
Despite the factory closures, the government is providing various cash incentives and trade facilities to support exports, the commerce minister told parliament.
He said export-oriented domestic textile manufacturers are receiving a 1.5 per cent alternative cash incentive instead of bonded warehouse and duty drawback facilities. Exporters to the Eurozone are also receiving an additional 0.5 per cent special incentive.
Small and medium-sized enterprises in the knit, woven, and sweater segments are receiving an additional 3 per cent incentive, while a special 0.3 per cent cash incentive is also available for the garment sector, according to the minister.
Other policy support, including bonded warehouse facilities, back-to-back letters of credit, duty drawbacks, export processing zone facilities, tax holidays, and incentives for foreign investment, is also continuing, he added.
Bangladesh could lose preferential market access in several developed countries after graduating from the least developed country (LDC) category, potentially affecting around $17.5 billion in exports, Muktadir said.
To address the challenge, he said, the government is pursuing free and preferential trade agreements with various countries and blocs.
He said Bangladesh has concluded an Economic Partnership Agreement (EPA) with Japan, while negotiations for a Comprehensive Economic Partnership Agreement (CEPA) with South Korea are underway.
The government is also pursuing EPA, CEPA, and/or free trade agreements with the European Union, the Regional Comprehensive Economic Partnership (RCEP), the United Arab Emirates, Singapore, Indonesia, and China, he said.
The commerce minister said the government is also working to diversify Bangladesh’s export markets and reduce dependence on traditional markets in the United States and Europe.
The country is participating in trade fairs in Brazil, the Middle East, Japan, Canada, Australia, Africa, Central Asia, and Latin America to expand market access.
In the 2026-27 fiscal year, Bangladesh plans to participate in 50 international trade fairs in promising markets around the world. The initiatives aim to attract new buyers and markets while strengthening the branding of Bangladeshi garments, the minister said.
A 2 per cent special cash incentive for exports of new products to new markets is also continuing. Bangladesh missions abroad have been tasked with stepping up efforts to identify new markets and strengthen economic diplomacy, he added.
The Export Promotion Bureau (EPB) also organised and participated in various sourcing fairs, including the Global Sourcing Expo, during FY2025-26 to help create new buyers and markets, the minister added.
