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The readymade garment industry is going to face a rough patch since their key export destination Europe is likely to slip into a protracted war with Russia that has already threatened Finland and Sweden with armed movement for their desire to join the NATO.
The integration of the two countries into the North Atlantic Treaty Organisation is anticipated to wage another war with Russia that is currently fighting Ukraine – a close neighbour of the Russian Federation that opted for a seat in the military alliance led by the US.
“We are already suffering due to the Russia-Ukraine war. Export to Russia has come to a standstill while raw materials’ price and freight cost have shot up due to fuel price hike,” said Fazlee Shamim Ehsan, vice-president, Bangladesh Knitwear Manufacturers and Exporters Association.
“Inflation has gone up globally while Bangladesh is also facing high commodity price. If there is another war, the global economy will encounter a massive disaster.”
The European Union is the trusted market for RMG that enjoy GSP facility, and should Russia attack any EU countries, the clothing industries of Bangladesh will be in hot water as export will drop.
However, the NATO said if Finland and Sweden apply for membership, it will consider their application with earnestness.
On the other hand, Russia has issued warning that it will do everything for its national security, i.e. armed movement if necessary.
The Russian Federation shares land and maritime border with Finland and Sweden and sees Finland and Sweden joining NATO a clear threat to its own security.
In Fiscal Year 2020-21, the apparel sector earned $ 19.43 billion from the EU market which represents 61.77 per cent of the total apparel export, according to the Export Promotion Bureau (EPB).
In the first three quarters of the current fiscal, Bangladesh earned $ 15.76 billion (excepting UK) from this market while the growth rate was 31.51 per cent.
Besides, $ 609 million was alone earned from Sweden and $ 31 million from Finland in FY21.
In the first nine months of the current fiscal year, $ 551 million came from Sweden and $ 24 million from Finland.
The NATO is an intergovernmental military alliance between 30 member states – 28 European states, the United States and Canada.
Finland which shares a 1,340-kilometre frontier with Russia resisted joining the security alliance for long and maintained non-aligned militarily position since the end of World War II.
But in the wake of Russia’s invasion of Ukraine in February, support for the NATO membership in Finland as well as in Sweden increased dramatically.
Russia will respond to Finland joining the NATO with “military-technical” retaliatory measures, Moscow warned Thursday.
“Finland’s accession to the NATO will cause serious damage to bilateral relations between Russian and Finland,” the Russian foreign ministry wrote in a statement.
The warning came in response to the Finnish leaders officially endorsing the idea of their country joining the military alliance, a historic move that sets the stage for a membership application in the coming days.
“Russia will be forced to take retaliatory steps, both of a military-technical and other nature, in order to stop the threats to its national security that arise in this regard,” according to the Russian foreign ministry.
According to the industry people, Sweden and Finland are not a big market for Bangladesh but these countries are members of the EU. If any EU country faces political or economic crisis, it will affect other members as well.
Due to high prices of fuel and raw materials, Bangladesh’s reserves have already started shrinking. If the EU plunges into a new war, the global inflation will go further up and RMG export to the European Union will decline, ultimately hitting Bangladesh’s forex reserves.
“I think the EU, the NATO and Russia will be able to handle this crisis diplomatically because if Russia attacks Finland and Sweden, war will spread across the world,” Shahidullah Azim, vice-president, Bangladesh Garment Manufacturers and Exporters Association, told The Business post.
“We have nothing except observing the situation. But we do not want any war.”
Md Khosru Chowdhury, managing director, Nipa Group, said Finland is not a big market but earning from Sweden is quite good and it is growing rapidly.
“If Russia invades Finland or Sweden or any other EU countries, there will be the World War III very likely. We do not know how we will handle this crisis,” he made an apprehension.
