Export oriented readymade garment (RMG) factory owners face significant losses due to the four-day factory closures caused by the quota reformation movement. Production halts and communication breakdowns with buyers have created backlogs, while export and banking operations were also disrupted.
Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) Vice President FazleeShamimEhsan told The Business Post, “We do not know how we will send goods to buyers on time.
“We will have to send the products through costly air freights, accept the penalty from buyers, and bear the high freight costs.”
Ehsan explained that the country’s exporters will incur an extra cost of minimum Tk 1,000 crore due to the late shipment discounts demanded by the buyers and the high cost of air shipments.
“Most importantly, we missed a lots of shipment deadlines, which may lead to order migration to our competitors. Due to the enforced internet shut down, we may lose our customers’ confidence as well.”
Bangladesh is already in a trailing position in terms of retaining its export growth. The country posted a 6.8 per cent year-on-year negative growth during the July-April period. During this time, the apparel sector, which contributes about 85 per cent to the exports, posted a 6.7 per cent year-on-year negative growth.
Protests hurt the economy
In latest movements on record from Thursday, Bangladesh witnessed the “Complete Shutdown” procession called by the BaishamyaBirodhi Chhatra Andolon, a platform comprising students demanding the reformation of the quota system in government jobs.
The student-centric protests turned into a movement, which then turned into severe violence on the day. The situation has nomalised since the armed personnel of the Bangladesh army have been deployed to help contain the situation and support the civil administration.
This crisis left nearly 200 people dead reportedly across the country as protestors clashed with the ruling party supporters and members of the law enforcement. The state then issued an emergency curfew from Friday midnight for an indefinite period.
Since Thursday evening, Bangladesh has been facing severe enforced outage of internet, and the government is yet to confirm as to when the connection may be restored as it tries to restore connectivity in parts.
Complete normalcy is yet to be achieved.However, factories have started production from Wednesday via a special permission.
Tk6,500cr in direct losses
Industry insiders are still in fear of missing orders, deadlines and incurring long-term losses.
Bangladesh Garment Manufacturers and Exporters Association (BGMEA) President SM Mannan Kochi said, “We have already faced nearly Tk 6,500 crore in direct losses. The indirect losses are uncountable as of yet.Our key challenge is to release the backlogs as soon as possible.”
BGMEA Senior Vice President KhandakerRafiqul Islam said, “We are facing several crises due to the protests. Brands are worrying about receiving their goods on time and they are likely to seek discounts while Inland Container Deport (ICD) may charge demurrage as well.
“We will talk to the buyers’ forum to offer us relief from penalties and to ICD owners for cutting the demurrage payables. We, however, will not able avoid the costly air freights. That is our main tension.”
Rafiqul sighed that the government does not have any solution for the release of backlogs, except for policy support.
However, BKMEA VP Ehsan believes that the department of customs and central bank’s cooperation is of utmost important in this situation.“Customs should provide export-oriented goods’ clearance in short time and on a priority basis. The Bangladesh Bank should ask all commercial banks for the same.
“If the two entities do their job with responsibility, we able to clear the backlogs in a short time. Otherwise, we [exporters], our county as well, will suffer for months on end.”
