Kazi Zahidul Hasan :
With new coronavirus spreading rapidly around the world, Bangladesh’s apparel industry is counting the cost of the outbreak owing to supply chain disruption, weakening global demand and called off shipments, industry leaders said on Sunday.
To contain the coronavirus outbreak, he said, countries introduced aggressive measures including city lockdowns, business and factory shutdowns, transportation cut-offs, and mandatory home quarantines for citizens, and thus hurts consumption and its impact is spilling over the domestic garments industry.
“The industry has been almost entirely crushed owing to impact of the COVID-19 that caused serious disruption in supply chain. On the demand side, the impact has already been felt as global brands and buyers have called off shipments in the past few weeks due to the outbreak of coronavirus,” M.A. Rahim (Feroz) Vice President (Finance) of Bangladesh Garment Manufacturers and Exporters Association (BGMEA) told The New Nation.
He said apparel manufacturers have seen significant disruption in their production caused by supply chain disruption from China’s virus outbreak since the end of January, which we expect to last at least into March. But still there is no sign of improvement; even the outbreak is spreading rapidly around the world, including Europe and America.
“Now, we are preparing for the worst as COVID-19 outbreak sweeps across European nations and America, two major export markets for Bangladeshi apparel products,” said M.A. Rahim adding, “The RMG industry, which is already seeing the worst export slump in decades, would face serious consequences from the potential demand fall from these export markets. This can lead to closure of many factories turning thousands to jobless.”
The BGMEA leader apprehended that Bangladesh’s apparel exports, which have witnessed a 5.71 per cent negative growth in the first eight months till February of the current fiscal year, are poised to decline further following the lockdown in Europe and America.
He also warned that a sustained epidemic would have a much more pronounced effect on the Bangladesh’s apparel industry and the economy as a whole unless the government announce fiscal and monetary measures to help businesses cope with the coronavirus epidemic.
Earlier, the governments of many countries, including Vietnam ($1.16 billion) and Cambodia ($2.0 billion), two key competitors of Bangladesh in global apparel trade, have already announced stimulus package to sustain industry production, jobs and address economic impact of coronavirus.
“The Government of Bangladesh should also arrange a ‘contingency fund’, which would be used to pay workers of the affected factories, and run their production, otherwise, the economy would sustain even bigger losses,” warned MA Rahim, the Managing Director of Dulal Brothers Limited (DBL Group), which is one of the country’s leading apparel exporters.
Bangladesh exported US$34 billion worth of garments in the fiscal year 2018-19, and most of the shipments went to European nations and the USA.
“Coronavirus clearly presents a significant threat to the industry as a whole. It may face disastrous situation very soon if the pandemic prolongs,” warned Mohammad Hatem, former Vice-President of Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA).
He cited Europe is now the epicenter of the global coronavirus outbreak where 60 per cent of garments are being shipped. The USA is the next biggest buyer for Bangladeshi apparel products is also facing the menace of the virus. “Most European cities have already gone into lockdown, while the USA declared a state of emergency restricting movements of people. In contrast, brands and retailers are closing stores there amid the virus scare and prevent losses,” he added.
He further noted that the deadly outbreak of coronavirus in Europe has forced consumers to stay home. Shops remain empty of customers despite offering hefty discounts in sales.
Mohammad Hatem, a renewed industry leader and the Managing Director of MB Knit Fashion Ltd, also said that many global brands and buyers have asked their Bangladeshi manufacturers to hold shipments off, requested to reduce their existing order quantity and not to make fabrics until further orders amid a slide in consumption in Europe and America.
“This situation has forced many industries to seize or cut their production. It will cause huge revenue losses turning them financially vulnerable,” he added.
Referring to closure of more than 50 small and medium factories last year due to lack of work, Mohammad Hatem, said many others may face the same fate if the outbreak prolongs at least next two months.
“The industry would face existential crisis if the government does not give economic fallout from the coronavirus the same importance as the health impact,” he said, adding, “The government’s economic policy makers must pay heed to the crisis and announce energy plan before the industry collapse.”
He said the industry leaders have already called on the government for the formulation of an emergency fund and sops to overcome the crisis.
“We have sough for concession on gas and electricity bills for one year and soft term loans from the government under the emergency fund so that the industry can survive from the unfolding crisis. The funding support is also necessary to pay off the workers during the upcoming Eid festival,” Hatem said.
