Home ›› 05 Mar 2022 ›› Front
Apparel exporters continue to export goods to Russia and receive new work orders, despite the US and their allies’ decision to ban seven Russian banks from the SWIFT system against the backdrop of the Ukraine-Russia war.
Though a number of exporters recently got paid by Russian buyers through the SWIFT network of banks in United Arab Emirates (UAE), they too are looking for an alternative payment system, industry insiders say.
Moreover, some of these buyers have requested Bangladeshi exporters to ship goods directly to the St Petersburg port, and avoid crossing the Black Sea and Sea of Azov – which have become risky because of the ongoing conflict.
Data from the Export Promotion Bureau (EPB) shows that Bangladesh’s exports to Russia reached $665 million in FY21, and of that figure, $607 million came from apparel and textile products.
On the issue, Managing Director of Fabrica Knit Ltd Mizanur Rahman said, “I received payment through the SWIFT system on Wednesday. I think the Russians are paying us using an offshore banking system.
“I usually export apparel goods worth around $10 million to Russia annually, and currently have orders worth around $3 million. I am still receiving new work orders. I think this sanction will not affect our exports.”
Helal Uddin Ahmed, managing director of Fashion Flash Ltd, said, “My goods have already been shipped to Russia and I am working to fulfill new orders. The buyers are also looking for an alternative to the SWIFT system, and it would probably be the CIPS.
“If they start paying through the CIPS [China’s Cross-Border Interbank Payment System], then we will have to get our payment through China, then convert the money to USD.”
SWIFT is a messaging system that connects international banks. Based in Belgium, SWIFT verifies banking transactions, and it is supervised by major central banks including the US Federal Reserve.
If the SWIFT authority cuts any bank or country off from its system, it becomes difficult to continue transactions with that country.
Currently, Bangladesh does not carry out direct banking transactions with Russia. Instead, it uses third party banking systems such as the United Arab Emirate (UAE) and Hong Kong – who have direct banking relationships with Russia.
China launched the CIPS – its own international payment system – in 2015 as an alternative to SWIFT and 23 Russian banks are currently connected to it.
Industry insiders have told The Business Post that apparel makers have been exporting to Russia through the Port of Singapore and the Port of Colombo. But Singapore too has imposed sanctions against Russia.
Nafis-Ud-Doula, director of Impress-Newtex Composite Textiles, said, “The Port of Colombo is still open for everyone’s use as it is operated by China, and exporters are now using this port.
“Only some Russian banks are cut off from the SWIFT system, not all. Russia is paying us through the UAE, which is helpful. Besides, the CIPS can also help us receive payment in case any of our buyer’s banks are banned from SWIFT.”
Some exporters halt shipments
Some exporters, however, have halted shipment following recommendation from the Russian buyers, as the Black sea and Sea of Azov have become impassable due to the war, and many European Union (EU) nations have imposed no-fly zones for Russia.
It should be noted that a Bangladeshi vessel named MV Banglar Samriddhi recently got hit by a missile at a Ukrainian port in the Sea of Azov, which killed one Bangladeshi sailor.
A number of exporters said some Russian buyers are now unable to take delivery of goods because their banks are facing sanctions, or they had planned to receive products through EU nations.
These buyers however have assured exporters that they will find a way to take delivery of existing orders, and place new ones as well.
Besides, the Danish shipping giant Maersk, Switzerland-based MSC and France’s CMA CGM all announced on March 1 that they have suspended bookings for goods transportation to and fro, Russia, which has disrupted exports.
Renaissance Group’s annual export volume to Russia hovers around $15 million, and this company also provided work orders to other garment factories on subcontract basis.
A Renaissance employee, on condition of anonymity, said around a million dollars’ worth goods are currently ready for shipment or in production, but they are currently unable to deliver these goods because Maersk is no longer facilitating delivery to Russia.
Two apex bodies – the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) and the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) asked their members to stop all shipments to this particular destination due to possible risks.
On the matter, BGMEA President Faruque Hassan said, “It is not yet clear whether any Bangladeshi exporters are dealing with the seven banks banned from SWIFT. We will collect information from exporters and then decide the next course of action for getting any payment stuck in those banks.
“We are calling upon the importers to ensure payment through alternative means. It could be facilitated through a third country such as China, as they have good ties with Russia. In case of more SWIFT bans and the situation deteriorating further, we would like to take payment through China.”
