Exporters fear drop in orders due to fresh lockdowns

Imposition of fresh lockdowns, nighttime curfews and construction of military field hospitals are going on as the second wave of coronavirus pandemic has already started in many European countries especially in the United Kingdom, according to those concerned with the garment sector.

The onset of second wave already has negative impact on the garment sector of Bangladesh as some buyers are advising to suspend their orders with the production yet to commence and some buyers are notifying about the closure of their outlet or store by mail.

On November 5, media of the United Kingdom reported that the fresh national lockdown may last longer than the estimated four weeks if the coronavirus infection rate does not fall quickly.

The local garment owners say that the impact of the second wave of coronavirus infection in the garment sector will be clearly felt by mid-November. However, they have feared that there may be a negative trend in garment export earnings till next March as in October.

Coronavirus pandemic has led to a decline in garment exports since last March. The export figure took horrible turns in April and continued in May. However, the garment sector has been trying to turn around since June. Although, bad situation has prevailed in July, August and even in September. However, at the end of October, income from this sector stumbled.

Due to the second wave of coronavirus the local garment businessmen want the government to extend the loan payment of their employees’ salary to the commercial banks to five years instead of one year.

In this regard, the Vice-President of Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) Mohammad Hatem said that the Finance Division has promised that the extent of payment of salary loan may be for five years instead of one and half years.

He also feared that the local garment sector may be in serious trouble due to the second wave of Covid-19 and for the sake of the survival of the sector, time for loan payment needs to be extended for five year from one and half years.

Garments sector has become the economic backbone of Bangladesh by employing 4.5 million workers and representing by far as the number one industry in the country with a contribution up to 80 percent of exports. In consequence, Bangladesh has become the second-largest individual country for apparel manufacturing in the world behind China with numbers of well-known western brands producing much of their products therein.

According to Export Promotion Bureau (EPB), Bangladesh earned 1,045 crore dollar by exporting ready-made garments during July-October of the 2020-21 fiscal year which is 89 percent less than the target and 1.2 percent less than that in the same period of last fiscal year which was 1,057.73 crore dollar.

According to EPB, garment exports in March this year stood at 225 crore US dollar and went down by 20 per cent from the previous year. In April, income from this sector almost hit the bottom. However, this month has witnessed a garment export worth 37 crore US dollar which is 85 percent less than the same period of last year. However, the income increased to 123 crore US dollars in May but it was 62 percent less than the same time of previous year. In June of this year, revenue increased to 224 crore US dollars. Even then, export from the garment sector is going through a negative growth which was about 6 percent in June.

Senior Vice-President of Bangladesh Garment Manufacturers and Exporters Association (BGMEA) Faisal Samad said, "We are apprehensive about the second wave of coronavirus pandemic. Some shipments are being delayed for even up to three months.”

BGMEA leaders said, "This will have a negative effect on cash flow. That is why we have applied for an extension of time to pay the incentive."

In this regard, Director (Labour) of BGMEA Rezwan Selim said, "The position of garment sector is much better now. There are lots of works going on in all the factories. Export earnings have also been better between September-October.”

“But November doesn't seem to be getting any worse. However, there are fears that export earnings will decline in December and January due to another lockdown abroad”, he feared.

He also said, "The worst scenario would be in case of the sweaters factories. Now, it is the time to have no work and no order. Sweater factory owners cannot pay salaries and allowances in November and December every year. This time there is a risk that the situation may get worse.”

ask/wi