LNG price should be rational

The government should fix the rate of liquefied natural gas -- imported to ensure adequate energy supply to the gas-starved primary textile sector -- at a tolerable level, said a top textile entrepreneur.

Some 196 members of Bangladesh Textile Mills Association have already received letters from different gas supplying companies like Titas Gas Transmission and Distribution Company informing them of resumption of their gas connections soon.

The rate for LNG is likely to be fixed at more than Tk 14 per cubic metre and that of natural gas will also go up from the existing Tk 8 in keeping with LNG price.

“Many of the textile millers might not afford this costly LNG,” Tapan Chowdhury, president of the BTMA, told The Daily Star in an interview last week.

The reason being, the ultimate buyers are not ready to pay higher prices to the millers.

“As a result, the garment makers will import the fabrics as they have bonded warehouse facility. And finally, the textile millers will lose the market to foreign companies.”

The LNG price should be between Tk 9 and Tk 10 to attract investment, he said.

“Many will set up new factories and many will expand the existing capacity, but if the rate is fixed high we cannot tap the benefits of the LNG import from Qatar. We have a lot of room for investment, especially in the weaving sector.”

It takes at least Tk 500 crore to establish a spinning mill and the entrepreneurs have to take loans at high interest rates.

“They should be given a special incentive like low-priced gas supply so that they are encouraged to invest.”

Bangladesh has nearly 450 world-class spinning mills that are able to supply 80 percent of the yarn for the knitwear sector, while the weaving mills can supply 40 percent of the fabrics to the woven sector.

The knitters are using the local yarn and fabrics due to satisfactory quality and shorter lead-time, he said.

Chowdhury, also the managing director of Square Pharmaceuticals, went on to urge the government to make bank loans available at a lower interest rate.

The sudden spike in interest rate is affecting businesses, he said, adding that the stockmarket has lost its credibility, so entrepreneurs have to turn to the banking sector for their financing needs.

The lowering of corporate tax can be a good incentive for bringing more reputed companies to the stockmarket.

“I am extremely proud as my group has two listed companies on the capital market. Our success was possible because of people's trust and confidence in us.”

About Square Group, he said he has a plan to expand his business in areas like pharmaceuticals, textile and garment, and food and beverage.

“The consumer market is very big -- both at home and abroad.”

Square Group has 55,000 workers now and in the next five years the number will grow a lot, especially the white-collar ones, he said.

It will also start production of pharmaceuticals in its plant in Kenya by the end of 2020.

“Square Pharmaceuticals has a 20 percent market share in Bangladesh's medicine market -- it is difficult for us to grow any further here.”

On the upcoming budget, Chowdhury said instead of collecting money from some companies the tax net should be widened.

“Awareness-raising and open dialogues could be good measures for bringing in more people to the tax net.”

The business environment is good as there is no political unrest. “I hope the smooth environment will continue.”