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Bangladesh’s RMG to collapse if fashion brands do not support during COVID-19 pandemic

Deadly COVID-19 has spread around the globe, affected 180 countries sending billions of people into lockdown as health services struggle to cope. Bangladesh also did not escape from its outbreak. Due to its massive expansion, the country’s garment sector known as the spine of the economy has been paused.

Bangladesh-RMG-collapse-fashion-brands-support-COVID-19
Figure: Brands are denying to accept completed 920 million pcs garment orders worth at USD 2.90 billion of 1059 Bangladeshi suppliers.

The novel coronavirus pandemic has driven worldwide stores into closure and now many prevalent brands are denying to accept completed 920 million pcs garment orders worth at USD 2.90 billion of 1059 Bangladeshi suppliers, says Bangladesh Garment Manufacturers and Exporters Association (BGMEA).

The BGMEA said the impact of the cancellations has already been ‘catastrophic’ for Bangladesh. More than one-quarter of the country’s 4 million garment workers have already lost their jobs and have been furloughed without pay because of order cancelations or the refusal of brands to pay for revoked shipments.

Calls for support

Factory owners in Bangladesh told the press that brands and retailers are postponing the delivery of orders that have already been manufactured by garment factories. They are also canceling all upcoming orders and refusing to pay the cost of raw materials already purchased by suppliers.

“Your stores are closed. Our factories are about to close and we will have no business. 4.1 million workers will go hungry if we do not fulfill our commitment to their welfare. We want brands to take goods that is ready, what is been promised and ensure the salary payment for our workers”, says Rubana Huq, President of BGMEA.

Huq noted that business will go on once we get up from this pandemic. “People will not stop buying clothes. Businesses will turn around in 3 to 6 months and in these 3 months we need basic support.”

She has requested fashion brands to honor their agreement with garment factories. Still, now 6 brands like H&M, Marks and Spencer, Kiabi, Inditex, PVH, Target has given positive response and assured not canceling export orders.

“Your stores are closed. Our factories are about to close and we will have no business. 4.1 million workers will go hungry if we do not fulfill our commitment to their welfare. We want brands to take goods that is ready, what is been promised and ensure the salary payment for our workers”

Rubana Huq, President of BGMEA.

Factory owners have improved a better working environment by expending millions of dollars as per compliance guidelines after getting heavy pressure and request from big western brands. Manufactures told brands should extend their hands of friendship towards us during this critical situation. Leaders appealed to the brand saying it is not a huge amount of money for you to pay what is owed. This crisis is temporary and urged all the brands to be a little more responsible.

Ready-made garments comprised 84 percent of Bangladesh’s total exports, worth $34 billion, in its 2019 fiscal year. These workers are leading to boost the country’s economy. More than two million Bangladeshi RMG workers will be affected if fashion brands do not support immediately.

Workers are the responsibility of brands as well. Bangladeshi garments owners said, we know, it is a very difficult time for buyers, but they should understand those garment manufacturers are currently the weakest link.

What fashion companies are doing:

Due to low purchasing and low presence of customers, many fashion giants have temporarily closed outlets and suspended online operations. Few brands are doing the right thing, in contrast to the long list of brands refusing to pay for goods that workers have already made for them.

“We will of course pay for these goods and we will do it under agreed payment terms,” said H&M spokesperson in a statement.

According to Guardian, Dublin-based Primark, the company with the largest estimated total of canceled or suspended order. “Every store in every country in which we operate is now closed and we lost £650 million worth of sales a month,” said Primark authority in an email. C&A had to close all its 1,400 stores across Europe.

VF Corporation, Bestseller, Walmart and others did not respond yet about this issue and declined to comment.

According to Forbes, a survey report by Penn State and the Workers Resource Centre (WRC) found 58% of Bangladeshi clothing suppliers said they had to stop most or all of their operations because of order cancellations or lack of payment.

It was based on responses from 319 garment suppliers who completed an online survey between March 21 and March 25. They reported that when buyers did cancel orders about 72% refused to pay the costs of raw materials the supplier had purchased and 91% declined to pay the production costs.

Bangladesh government has announced a stimulus rescue package worth about $588 million for RMG industries aimed at helping companies cover their workers’ wages and allowances, though the BGMEA said it is not enough. With the RMG sector salaries amounting to TK 4000Cr ($471 million) per month, this package falls far short.

Rubana Huq said, “The government has announced support scheme, but that should not deter brands from fulfilling their liability. This is a bilateral agreement (between brands and manufacturers) without government involvement.”

She asks brands to pledge to uphold their agreements with factories. Without the brands giving these pledge factory owners cannot survive.

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