Bangladesh garment sector struggles as pandemic empties order books

[DHAKA] Bangladesh's huge export-oriented readymade garment industry is fighting for its survival after fresh coronavirus curbs in Europe and North America shrivelled already-weakened order books, industry leaders said.

The government told Reuters it was considering a new support package for the industry that contributes almost 16 per cent of GDP to the economy. Companies in the world's largest garment exporting nation after China supply to big Western brands such as Walmart, Gap and H&M.

"The first wave of the pandemic rattled the supply chain and the financial base of the industry through order cancellations, payment deferments and discount demands," said Rubana Huq, president of the Bangladesh Garment Manufacturers and Exporters Association.

"The second wave has decapitated the already dead." Ms Huq said readymade garment exports fell 9.69 per cent in December from a year earlier, led by an 18 per cent drop in sales of woven garments. Knitwear products such as t-shirts and sweaters inched down 0.45 per cent.

Most factories are struggling to stay afloat and able to use only half of their capacity due to a lack of orders, said Mohammad Hatem, vice president of Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA).

"Buyers are hardly placing any orders," he said. "Even if they place order, they demand steep price cuts of as much as 20 per cent along with deferred payments of up to 200 days. That makes the situation so difficult for us to survive."

Prime Minister Sheikh Hasina's government had offered a US$1.25 billion package for the sector to survive the shock of the first wave as cancellations reached about US$6 billion in March 2020. Most of the orders came back later but at a sharp discount.

More relief was on the way, said KM Abdus Salam, secretary of the Ministry of Labour and Employment, without revealing any financial details.

"This is an unprecedented crisis," he said. "The government can't help alone. Major market players, including brands, buyers and governments of sourcing countries, manufacturers, everyone has a role to play to ensure faster recovery of the sector." Low wages have helped Bangladesh rapidly scale up its garment industry that now has some 4,000 factories employing 4 million workers.

About a third of the 1 million workers who were either furloughed or laid off early in the pandemic have been rehired since July, according to union leaders, but many are fearful of being made jobless again.

"We are told we could lose our jobs again if the work orders don't rise soon," said Banesa Begum, a worker on the outskirts of the capital city Dhaka and the only breadwinner in her five-member family.

"I can't sleep at night when I think of it. I'm already struggling to survive as I have not been able to clear all the debt I took when I was without a job for four months."

REUTERS