Home ›› 08 Mar 2022 ›› Front
Bangladeshi apparel and home textile exporters say they are not accepting new orders from Russia as the ongoing Russia-Ukraine crisis has worried them.
Stakeholders say exports of Bangladeshi garments to Russia, an emerging market for the second-largest apparel exporter, will become unstable and the export volume may decrease if the situation continues.
However, exporters are currently shipping the finished products based on previous orders and receiving payments.
As the US and its allies have decided to ban some Russian banks from the SWIFT system and exports via the Black Sea as well as the Sea of Azov have become risky, Bangladeshi exporters are sending goods through the St Petersburg port.
Several shipping lines have suspended bookings for goods transportations to and from Russia, and some Russian ships have been seized in the Baltic Sea due to the ongoing crisis, worrying exporters and buyers.
Bangladesh Garment Manufacturers and Exporters Association President Faruque Hassan said exporters do not feel safe about sending goods to Russia now.
“We are receiving payments for exporting the products manufactured based on previous orders. But I think the current situation is not favourable for receiving new orders,” he told The Business Post.
He further said Bangladesh exports clothes and home textiles worth around $1 billion to Russia directly and indirectly every year, but that would decrease due to the war. “When the situation will be normal again, we will continue trading with them.”
Data from the Export Promotion Bureau (EPB) shows Bangladesh’s exports to Russia reached $665 million in the fiscal year 2020-21, including $607 million of apparel and textile products.
Fabrica Knit Managing Director Mizanur Rahman, who exports apparel goods worth around $10 million to Russia annually, said he was exporting the ready goods and receiving payments through the SWIFT system.
“But I am not accepting new orders. We do not know how long the Baltic countries will allow transporting Russia-bound goods, and most of the European Union countries have imposed sanctions on Russia. It is now too risky for us and Russian buyers,” he said.
He also said his buyers had told him Russia was seeking alternative ways to continue sea trade.
Bangladesh Terry Towel and Linen Manufacturers and Exporters Association Chairman M Shahadat Hossain said he exports around $1 million of home textiles to Russia every year and the growth rate is excellent.
However, due to the ongoing crisis, buyers have asked him to halt production until alternative ways of trade are found.
“Russia’s payment system is much better than that in any country of the world. My Russian buyers pay 30 per cent in advance. Nobody else gives such a facility,” Shahadat, also the Towel Tex managing director, said.
“Buyers have asked me to wait until the situation becomes normal or find an alternative way.”
Fashion Flash Managing Director Helal Uddin Ahmed said, “I am executing the existing work orders but not accepting new ones. I will receive new orders when making payments will become safe.”
SWIFT is a messaging system that connects international banks. Based in Belgium, it verifies banking transactions and is supervised by major central banks, including the US Federal Reserve.
If the SWIFT authorities cut any bank or country off its system, it becomes difficult to continue transactions with that country.
Bangladesh currently does not carry out direct banking transactions with Russia. It uses third-party banking systems, such as those in the United Arab Emirates and Hong Kong, that have direct banking relationships with Russia.
China launched its own international payment system, CIPS, in 2015 as an alternative to SWIFT, and 23 Russian banks are currently connected to it.
Industry insiders say garment makers export their goods through the Port of Singapore and the Port of Colombo. However, Singapore has also imposed sanctions on Russia due to the war. Now apparel makers are exporting to Russia through the Port of Colombo, which is operated by China.
