Loss of billions of dollars, work orders feared

Industrialists, manufacturers and small enterprises say they are staring at financial loss that will run into billions of dollars during the ongoing two-week coronavirus lockdown and fear defaulting on loans.

Exporters apprehend that their long-time clients might divert orders to other countries if they fail to deliver goods on time.

To offset the huge financial burden in the short-term and maintain buyers’ trust, the business community has long been urging the government to keep industrial production out of the lockdown’s purview.

Economists are of the opinion that industrial belts should be allowed to operate maintaining the highest standard of health guidelines so that both lives and economy can be saved.

During the government-enforced lockdown that started on July 23 to halt spread of Covid-19, only tannery, essential food and pharmaceuticals are being allowed to operate.

Shipment deadlines missed

Stakeholders say around 40 per cent export order in July may be cancelled if they fail to start production by August 1.

“Our buyers are putting pressure on us for timely shipment of goods. We are trying to convince the government but haven’t been successful yet. We don’t know how we’ll pay our workers,” Abdus Salam Murshedy, president of Exporters Association of Bangladesh, told The Business Post.

All export-oriented sectors are facing the same issue, he said.

Bangladesh Knitwear Manufacturers & Exporters Association (BKMEA) Vice-President Fazlee Shamim Ehsan said that goods worth around $3 billion are usually exported in July.

“We fear that products worth an estimated $1 billion will miss shipment deadline this month because of the lockdown,” he said.

He said initial assessment showed that they have to either sell around 40 per cent products at discounted prices or stock them.

Bangladesh Garment Manufacturers and Exporters Association Vice-President Shahidulllah Azim told The Business Post that most of their members had missed shipment deadline during the lockdown.

“We fear that buyers might cancel orders worth $400 million to $500 million,” he said.

Production cost to go up

Shakawat Ullah, general secretary of Bangladesh Tanners Association, said that they could not function properly because of workers shortage amid the lockdown.

DBL Ceramics’ Vice Chairman MA Rahim said restrictions on movement were making it difficult to properly manage their raw materials in the field.

“We fear that our raw materials will be damaged and the production cost will go up,” he said.

During the lockdown, micro and cottage industries had to stop production and incurred massive financial losses.

Anjuman Ara Kakoli, an entrepreneur, said she used to supply goods to a local brand.

“They stopped taking goods from me and are yet to pay the dues. The company told me that they will not place new orders for a while,” she said.

Kakoli employs around 50 women from the rural areas.

Meanwhile, jute goods exporters also missed shipment deadline during the lockdown. Buyers have been putting pressure on local producers to cut product cost.

“But raw jute prices increased over the last six to seven months. We missed shipment deadline because of the lockdown. Buyers are hardly placing new orders. I don’t know what will happen,” said Esrat Jahan, CEO of Tulika and director of Bangladesh Jute Goods Exporters Association.

Dr Khondaker Golam Moazzem, industrial economist of center for policy Dialogue (CPD), said the government imposed strict lockdown when global demands are rising.

It is unclear if the latest spell of lockdown will be extended. “Because of the lockdown, buyers hesitate to place orders, which ultimately affect exports,” he said, suggesting the government to allow export-oriented factories to operate maintaining health guidelines.

BKMEA’s Ehsan said they need government policy support for recovering from the situation. “Many businessmen will become loan defaulters if we don’t get support from the government,” he said.