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Coronavirus’s second wave: BD apparel industry begins to feel brunt

With the second wave of the highly contagious Coronavirus hitting Europe and the US, the readymade garment (RMG) industry here has started bearing the brunt of the global pandemic again.

“Due to the second wave of the Covid-19 in the Western countries, the (export) volume (of the apparel) might decline as well. Buyers might postpone placing new orders, said Rubana Huq, President of Bangladesh Garment Manufacturers and Exporters Association (BGMEA).

Coronavirus-second-wave-BD-apparel-industry-feel-brunt
Figure 1: With the second wave of the highly contagious Coronavirus hitting Europe and the US, the Readymade (RMG) industry here has started bearing the brunt of the global pandemic again.

She went on to say that “We must observe the situation with caution.”

Apparel export fell steeply and recorded negative growth in just-concluded October even though the export volume of the clothing items saw a rise in both August and September of the running year. Besides, buyers placed fewer work orders for November and December compared to the corresponding period of 2019.

It is worth mentioning that with the inception of the second wave of the virus considered worse than the first wave, many European countries have already enforced safety measures again.

Economists advised the authorities to design a fresh plan to overcome the challenges arising out of the deadly virus. Being let-down due to a fall in garment export, some garment makers said that though significant, woven clothing items could not be exported during the first quarter of 2020–21.

“Due to the second wave of the Covid-19 in the Western countries, the (export) volume (of the apparel) might decline as well. Buyers might postpone placing new orders.”

Rubana Huq, President, BGMEA

Since March 2020 the apparel sector which accounts for over 80 percent of the country’s export earnings had incurred losses during the March-June period as garment export nosedived due to widespread shutdown enforced to slow the spread of the Coronavirus.

The sector began overcoming the situation as the factories reopened following an improvement in the pandemic situation in many European countries. Apparel exporters had expressed hope that buying orders would increase before Christmas.

To soften the blow of the pandemic and mitigate the effects of economic slow-down, the government came up with a stimulus package for export-oriented industries. Consequently, the apparel sector has been benefitted from the govt’s initiative.

COVID-19-impact-Bangladesh-garment-manufacturing
Figure 2: COVID-19 impact Bangladesh garment manufacturing industry.

Factories’ owners said despite rising production costs, the price of the product has now fallen. “Volume-wise, the sector was recovering in the last 2/3 months – but at a compromised price level. We have witnessed a sharp decline in prices,” said BGMEA President Rubana.

She said that the prices of apparel exported fell by 2.17 percent year on year during the January-September period of 2020, adding that the reduced price is making the suppliers extremely vulnerable.

Earlier, the government provided Tk 75 billion to the owners in loans at a 4 percent interest rate enabling them to pay the workers’ wages. Later, the govt gave another Tk 30 billion in response to owners’ demand. The factories’ owners drew almost half the offered funds.

About the govt-offered loan, Prof Selim Raihan, Executive Director of SANEM acknowledged that the loan left a positive impact during the crisis. “Now it is necessary that we review to see the real impact of it. He suggested that an independent authority evaluate the govt’s initiative to help them make decisions (distribution of loan) in the future.

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