Faysal Atik and Kazi Nafia Rahman, bdnews24.com
Published: 2021-01-15 00:36:54 BdST
They fear a fresh downturn in the industry of around 4 million workers, executives, and small and medium investors.
The clothing industry that fetches 80 percent of Bangladesh’s export earnings is one of the forces driving the economy.
The sector faced a tremendous challenge after the coronavirus outbreak reached Bangladesh and other countries in the region in March last year.
In April, exports plummeted and continued to shed two-thirds of earnings year-on-year to drop below $1 billion per month on an average in the following months.
A cleaner wearing protective gear sprays disinfectant at a readymade garment factory in Dhaka's Mirpur amid the coronavirus outbreak. Photo: Asif Mahmud Ove
The industry weathered the crisis thanks to the credits taken by the owners from the government stimulus package to pay the workers.
A slight growth from September to November raised hopes of a robust rebound during the Christmas holiday season in the West.
But the year 2021 has brought no good news.
“I’m desperately trying to stay afloat,” said Khan Monirul Alam Shuvo, managing director of Fashion.com Ltd.
Mohammad Atique, who runs Arion Dresses in Chattogram, said he would be able to continue business in January and February, but has no orders yet for March.
Washim Zakariah, director of Posh Garments in Dhaka’s Tejgaon who has been involved with RMG business since 1988, said he never saw such dire situation in the country’s exports.
“This should be the peak season keeping us busy for 11 hours a day. Usually, the orders are booked 90 days beforehand. But this time we can complete all orders by February even if we work for just eight hours a day. We have no orders to deliver in March," he said.
Workers wearing face masks sew garment at a factory in Dhaka's Mirpur amid the coronavirus outbreak. Photo: Asif Mahmud Ove
Arion generally exports its products to Europe. It has been exporting garments on a small scale with 350 workers and officials since 2003. “The woven and knit sectors together are operating at 65 percent capacity. There are no advance orders for March,” said its owner Atique.
Dhaka EPZ's Softex Sweater has a monthly export capacity of $1 million. The factory also has no export orders for March.
Softex was running at 44 percent of its capacity in January, said Rezwan Selim, managing director of the company. The figure will drop to 20 percent in February, he estimates.
“Orders usually arrive three months in advance. There are no orders for March. The number of workers has been reduced to 850 from 1,300,” said Selim.
Shops are closed in Europe, one of the largest markets of Bangladesh’s apparel products, due to lockdowns, he said. “Orders have dropped alarmingly. It's a very bad situation. It's difficult to say how we will survive going forward.”
Police personnel charged batons to disperse disgruntled garment workers at Postogola in Dhaka on Wednesday. Photo: Mahmud Zaman Ovi
"Yarn prices have gone up while product prices have dropped in the new orders. Now, knowing that a small loss is certain, we are moving forward with the orders only to keep the factory operational,” he said.
Cotton prices have risen due to a decline in production, said Shuvo. The price of yarn per kilogram has increased to $3.6 from $2.6.
The peak season in the garments sector runs between November and March, he said. It’s difficult to complete projects even after working 10-11 hours per day in this period. There is no time to breathe.
"Summer in Europe starts in March. We were supposed to get orders for T-shirts now. But we haven’t received any,” said Shuvo.
"The prices of fabrics are exceeding the prices of clothes. There are no orders in the factory and the buyers are taking advantage of the situation,” he alleged.
The garment exporters are now looking forward to COVID-19 vaccines, hoping it will rid them of the uncertainties.
Leaders of the garment industry owners' association said the country's garment sector will get hit very hard as the second wave of the pandemic strikes countries in the developed world.
The impact of the second wave of the coronavirus is worse than the first one, said Anwar-Ul Alam Chowdhury Parvez, former president of Bangladesh Garments Manufacturer and Exporter Association.
“The situation in the UK, Germany and France is pretty bad. The US isn’t faring too well either. Sales in Christmas, including in the fashion world, were poor. They had to stop selling,” he told bdnews24.com.
“It wasn’t so bad in the first wave, but now it is very bad. Everyone targeted Christmas to make up for the losses. But it didn’t work out. In Europe and America, about 50 percent of the sale happens all year round keeping Christmas in sight. Everyone faces losses when that drops. Many did not issue orders after bookings.”
Head of Evince Group, Parvez said, “Getting orders has now become a matter of luck. The buyers have lowered the prices. Many are not being able to take orders on the reduced prices. Those in deeper crises are now forced to take the orders at a reduced cost.”
According to data from Export Promotion Bureau or EPB, Bangladesh exported RMG worth Tk 15.54 billion in the first half (July-December) of the 2020-21 fiscal year with a 3 percent year-on-year drop, trailing the target by 4.12 percent.
Although the export earnings from knitwear went up by 3 percent in these six months in comparison with the same period last fiscal year, the earnings from woven garments slipped by 10.22 percent.
Parvez, who is the president of Bangladesh Chamber of Industries or BCI, admitted that the decline in export had piled the pressure on the workers’ income.
“Although their usual work hour is eight hours, we are making them work six to seven hours. Why should we make them work overtime with no orders in the queue? We don’t have orders lined up for eight hours of work time,” he said.
“People lost jobs in factories that have closed down. This happened due to not getting orders, not as part of retrenchment,” Parvez added.
“Even if the orders begin to come through as before, repaying the loan from the stimulus package will create complications. Most of the factories will go out of business if the loans are to be repaid within 18 months. Because full scale operation will require working capital, and [industries] will fall short if that is used for loan repayment.”
The loans from the government’s Tk 100 billion stimulus package for the garment sector to pay the workers are supposed to be repaid starting from January.
BGMEA President Rubana Huq has made an appeal to the government for a six-month extension of the moratorium on the repayment.
“We sent an open letter to the relevant quarters considering the overall situation as the finance minister was abroad for a long time and recently returned to the country,” she told bdnews24.com.
“Our task now would be to swiftly meet him and brief him on the precarious situation.”