Exports earnings from the country apparel sector, the $34 billion industry, declined by 62% to $1.23 billion in May due to supply chain disruption and slower demand in the export destinations.
According to the Export Promotion Bureau (EPB) data, the apparel sector, which accounts for 84.20% of total exports, witnessed a 62% decline to $1.23 billion in May, which was $3.24 billion in the same period last year.
Of the total earnings, knitwear products earned $608 million, which was $1.60 billion in the same period last year, while woven products fetched $622 million against $1.65 billion a year ago. However, the performance is better than the April, when it was only $375 million against over $3 billion in the same month of last year.
During July-May, apparel exports stood at $25.70 billion, down by 19 % against $31.73 billion in the same period last year. As per the data, knitwear products earned $12.75 billion, down by 18.74%, while woven goods fetched $12.96 billion, posting a 19.22% fall against the same period of last year.
Covid-19 pandemic has adversely impacted production of apparel goods as well as sales in the export destinations disrupting the supply chain across the globe. As a result, the exports of Bangladesh have seen a sharp decline in the last couple of months.
The country has gone through lockdown, which forced the RMG factory owners to keep production suspended till April, which was reopened in the last week of the month. The reopening helped to ship the goods already manufactured and to go on production for the under-processed goods, which helped to recover the loss in terms of percentage in April, sector people said.
“The export performance is an expected outcome as our business was anyway dipping because of many issues. And now with COVID-19, global sales revenue will dip up to 27%-30% and it will wipe off $297 billion from global apparel value in 2020,” BGMEA president Rubana Huq said.
Thus, BD’s export may decline by 30% during June-December 2020 and would be over $23 billion in the same period, she claimed.
As a policy support, the business leader called for developing a virtual marketplace of its own like Amazon, and exchange rate premium by Tk. 5 per US dollar while document purchasing on the local value retention.
She also sought special support for export to markets having high tariff, and for new products such as recycled yarn, PPEs, spare parts, automotive upholstery, fashion and hair accessories.
Urgent policy reforms are needed for workers housing, accommodation in economic zones, subsidizing food expenses through launching an unemployment fund, said Rubana. .
“Since the exports performance depends on the demands in global markets, which gone through closures due to lockdown to stop spread of Covid-19, while consumers of apparel goods, the main export item of Bangladesh, will cut expenses on clothing items”, Centre for Policy Dialogue research director Khondaker Golam Moazzem said.
So, it will take time to recover from the down trend. But Bangladesh can take the advantage of health related items such as Personal Protective Equipment (PPE), face mask, doctor’s gown, he added.
As per export data, it’s clear that the total export of Bangladesh during July-May of FY20 has plummeted by 18%, which is -19% for RMG. It’s been a tough time for the industry as the export figure reveals for the last three consecutive months registering 20%, 85% and 62% negative growth respectively, said BGMEA senior vice president Faisal Samad.
As all the global forecasts suggest a 30% to 50% decline in apparel imports in 2020, our observation is that the slowdown may persist till the end of the year in varying magnitude, depending on the post pandemic global situation, said the business leader.
Important to note that a longer hangover of the export disruption may have a severe implication on the industry’s financial ability to withstand and bounce back, so it deserves more attention from policy makers to frame the immediate course of actions, he added.