Demise Of A Goose

Lights go off in an RMG factory,
Leaving jobless and worry for industry.
Reasons unearthed for its demise,
Miss out the one,unpleasant to surmise.

Closure of one of Bangladesh's biggest RMG units augurs ill to the golden goose of Bangladesh economy. Already reeling from safety and poor conditions of work issues at the factory,Corona served further blow to the ailing industry that accounts two-third of the exports of the country. Following the repeated pleas from the exporters, government announced soft credit packages to get rid of Corona related difficulties. However,the assistance did little to help as many misused it by paying back old loans or laundering money abroad. Gravity of the matter even prompted Central Bank to warn the banks about misuse of Covid assistance package.

During the pandemic,one after another major brands in the West shut down their operations.Closure of Opex added another bad news. In its successful years,annual turnover reached $500 million. One of its factories is located at the neighbourhood I grew up and live. I witnessed first hand how such factories helped local economy. House rent ,grocery business and thriving kitchen market swelled the local economy. Nowadays, the brand made lots of headlines for workers' agitation. Angry workers often blocked the key Dhaka-Chattogram highway,lifeline of Bangladesh's economy. Many put forward the reasons behind the closure as housing the 45,000 workers at one place,successor issue,loosing orders,mismanagement etc. But it once again reveals the ugly truth that our conglomerates cannot stay long in the business. Lifespan of most of our conglomerates does not last long.

Few years ago I read a feature that revealed the top 10 companies of Bangladesh in each of the 4 decades. I discovered that companies dominated in a decade or better to say under a regime did not manage to continue the domination in the subsequent decades. Many just shrunk or wound down businesses in the face of odds. This shed some light on the prevailing business environment in Bangladesh.

Most of businesses started their journey under a favorable regime. In addition,the era of permit raj,quota,licence etc that involve lots of bureaucratic operations witnessed the crony businesses to grow. Later many of the groups splintered or dropped from the race when the tide turned against them.

Opex started its journey back in 1984.A former military officer hailing from a family that has a firm footing in myriad sectors set up the conglomerate. As it was the trend then many members of the family became MPs and ministers, and obviously the group gained a lot from the influences of the power grab. Quota was still in play and certain ministries were responsible for its distribution. And those close to the power corridors grabbed the opportunity.

I find some of the reasons put forward hard to swallow. Adverse situations that it faced over the last 10 years could also be a reason for its demise. Recurrence of workers agitation at factory premises that had reputation for clearing payments in line with the image of a top conglomerate not only hampered the operations of the factory but also strangulated Dhaka-Chattogram highway,lifeline of Bangladesh economy.

Furthermore, it is not clear whether it received ample government assistance to keep the factory floating. Many upstart and fake factory received assistance with little effort since this government assumed power. According to a news report,banks discontinue back-to-back LC facility sensing its troubles. A company with $500 million turnover a decade ago ended up in such a sorry state.

Look at the banks that invested here. A bad patch on a good company,once shined under a favorable regime, rendered their money bad. And closure of factory means wiping out of 45,000 jobs. Another example of what crony capitalism does to an economy.

Fate of Citycell,Opex is the inevitable flaws in industrialization and doing business in Bangladesh,pretty common where governance is weak,rule of law is subjective and business is mingled with politics. It is dead wrong to put forward only business and economic reasons as sole factors for demise of a factory.

Notes And References:

1 “Opex:Businesses Will Think Twice Before Building Such Large Factory Units”,Saddam Hossain, Dhaka Tribune,October 28,2021Link here