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The fallout from Corona is enormous for apparel sector

The world people have been going through an unprecedented situation of lockdown due to dangerous Coronavirus. The whole world is just in a standstill due to fear of Coronavirus fear. The economy of the world also faces unexpected lockdown as most of the flights globally have been either suspended or canceled. Factories, industries, shopping malls, restaurants, food courts and what not have been closed. People are fearing of losing their jobs and companies are fearing shutdown their operations.

Figure: Stores in the shopping malls in the major export destinations like in Europe and the US have been shut down.

Governments of almost all countries are facing challenges to keep alive in their economies.  The International Labor Organization (ILO) already said 25 million people of the world will lose their jobs due to bad fallouts of corona. Some said the number is very conservative. More people will lose their jobs than the number of estimations by the ILO.

Bangladesh is not insulated from the impacts of Corona

Bangladesh is not an exception from this Coronavirus fallouts. Being the second-largest apparel supplier worldwide after China, Bangladesh’s economy is one of the major sufferers from the bad impact of the Coronavirus because of supply chain disruption. Stores in the shopping malls in the major export destinations like in Europe and the US have been shut down.

So, the apparel export has been facing problems both in production in the factories, shipment and distribution to the major export destinations. The chain impacts have also been felt at the factory level. So far, the international clothing retailers and brands have already canceled work orders worth nearly $2.70billion from more than 1000 factories affecting nearly 2million workers.

More work orders might be canceled in the near future from Bangladesh. If the situation does not improve soon many factories will face further challenges.

Decision by BGMEA, BKMEA and DIFE

With the given situation, Bangladesh Garment Manufacturers and Exporters Association (BGMEA) recommended its members to consider shutting down the production units. However, the factories those which have booking of work orders from international retailers and brands can continue the production with provided adequate health safety measures to protect them from the attack of Coronavirus, BGMEA said in a statement.  In a statement, BGMEA also said the factories those which are engaged in the production of Personal Protective Equipment can also continue production in the factories. The Department of Inspection for Factories and Establishment (DIFE) also echoed with the views of BGMEA. Many factories were run after the announcement. But many could not run as the workers did not join their workplaces.

Bangladesh Knitwear Manufacturers and Exporters Association suggested its members to shut down the factories up to April 4 as per the government’s announcement of a general public holiday with effect from March 26.

Government’s good move to face the fallouts

The factory owners have been planning how to run their business after the Coronavirus although the government has already announced for a stimulus package at Tk5,000crore for all export-oriented sectors to face the fallouts of corona.

The factory owners are in trouble with how to pay the workers as they cannot ship the goods timely. Many owners have already shut down their production units fearing the virus attack or many are planning to close the factories due to lack of work orders and some of the factories are thinking how to minimize their operational costs once the virus fear is over.

Reactions from the exporters

How will the government decision protect their business? In reply, Shahidul Haque Mukul, Managing Director, Adams Apparels Ltd said, “If the government considers the Tk5,000 crore as a loan it will not serve the real purpose.”

“So, we are worried. It will be very difficult to obtain the money from this fiscal package of Tk5,000 crore as the government will impose a lot of conditions with the money,” Mukul also said.

Many factory owners will not feel encouraged to take a loan from the announced Tk5,000 crore due to conditions, he added. The factory owners are in trouble now because of Corona.

Anwar ul Alam Chowdhury (Parvez), former BGMEA President, also said the garment exporters are in trouble because the international retailers and brands have been canceling the work orders.

So, it is difficult for them to survive this critical time, Parvez also said.

Moreover, it will take a long time to get back normalcy in the major export destinations like in Europe and the US.

“So, the government should consider these issues before deciding on a stimulus package for the export-oriented sectors of the country so that we can survive,” Parvez said.

Mostafiz Uddin, Managing Director Denim Expert said recently, “Corona is a pandemic and all the denim producing countries of the world are suffering from the outbreak of the virus. So, whether an individual country will lose competitiveness or not it’s too early to comment. It will depend on how good the countries face the challenge and what measures they take to respond to it.”

“Due to the COVID-19, the 12th edition of Bangladesh Denim Expo, which was scheduled to be held on 6th and 7th April 2020, has already been postponed. The new dates of the expo will be announced when the situation improves,” Uddin said.

“Western unions thought, china is finished, but it was not, china contained it and meanwhile western countries got affected. Chinese are buying shares of western giants whose major manufacturing is in China, India and Bangladesh,” said Anis Ansari, Sr. General Manager, Operations at Ha-Meem Group.

He also said, “The sub continents will not be able to contain soon due to poor infrastructure, high density of populations and hiding actual info. Eventually, India and Bangladesh will get hampered most, the western world will put severe restrictions of NRI, NRB, will withdraw manufacturing here.”

“Only alternate is the fastest invention of medicine to cure Covid-19. Sub-continent may recover Economic Pandemic,” he highlighted the way outs of the crisis.

If anyone has any feedback or input regarding the published news, please contact: info@textiletoday.com.bd

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