By News On Air Dec 19, 2024
In Bangladesh, the Beximco Group, the country’s largest conglomerate has laid off nearly 40,000 Ready Made Garment (RMG) workers across its 15 apparel units, citing a lack of work orders for its export-oriented garment and textile factories in Dhaka’s outskirts of Gazipur.
The Company notifications issued on December 15 informed all officials, employees and workers that the factories would enforce layoffs from December 16. The decision threatens the livelihoods of 40,000 RMG workers as the conglomerate struggles to manage escalating financial pressures.
According to the Business Standard newspaper of Bangladesh, Osman Kaiser Chowdhury, a director of Beximco Group and managing director of Beximco Limited, described the situation as unsustainable. “We were initially assured by the interim government that our businesses would be supported. Based on this, we kept the factories operational for four months. However, no support materialised,” he said, explaining the rationale behind the impending layoffs.
The lack of fresh orders since August has compounded the challenges. Osman said major global buyers have signalled a willingness to resume business if the group could secure Letters of Credit (LCs) from banks. However, the banking sector’s reluctance to support Beximco, due to its financial position, has left the company unable to fulfil these requirements, writes the Business Standard.
Beximco’s financial troubles are closely tied to its mounting debt. A recent report submitted by the Bangladesh Bank to the High Court revealed that the group’s loans stood at over Tk50,000 crore as of 30 November 2024, with over 50% – Tk25,524 crore – classified as defaulted. Out of the group’s 188 companies, 78 have borrowed from 16 banks and seven financial institutions.
The crisis at Beximco has broader political implications. Salman F Rahman, vice-chairman of the group, served as an adviser to ousted prime minister Sheikh Hasina on private industry and investment.
During his tenure, critics allege, he leveraged his influence to secure favourable terms for Beximco, including extensive bank loans. Salman was arrested on 13 August from Sadarghat area in Dhaka and now in jail.
With the group now under financial and operational strain, the fallout from its debt crisis may extend far beyond its apparel factories, raising concerns about broader implications for Bangladesh’s banking and industrial sectors, according to bankers.