After the unprecedented export debacle of 18.12 per cent in FY ’20 and a trail of declining growth in seven consecutive months, the performance of the Bangladesh apparel sector edged to the positive territory in August and September.
But it seems it was not destined to last long as October exports dropped by 4.08 per cent year-on-year to a little over US $ 2.94 billion, missing the target by more than 6 per cent. After the pandemic began in China in late 2019, Bangladesh’s export earnings dipped to as low as US $ 520 million in April 2020. However, export earnings turned around in May, growing almost three times over the April receipts, but with a 61.56 per cent year-on-year drop, when the factories began reopening with relaxed restrictions.
Exports bounced back to grow in July and continued the trend steadily in the following two months, beating the targets.
According to the EPB data, shipment of readymade garments, which typically contributes more than 84 per cent to the national exports, recorded a negative growth of 7.78 per cent in October even as in the four-month period ( July-Oct), exports declined 1.2 per cent to US $ 10.45 billion in FY ’21 from what was US $ 10.58 billion in the same period of FY ’20.
Export of woven items in October fell by 14.43 per cent while knitwear marked a decline of 2.19 per cent.
This has come as a big setback to the otherwise spirited and resourceful garment makers of the country who apprehend the second wave of the Coronavirus pandemic, in the export strongholds of USA and EU, could dampen their efforts to make a turnaround anytime soon.
Their worries are not without reasons as brands and retailers in West have reportedly started asking suppliers in Bangladesh to delay shipments of ready orders even as factories are made to deal with the impacts of cancelled work orders and faltering price points.
Keeping the implications in consideration, manufacturers have now requested the Government to allow them extended time period to pay back the loans that they had taken from stimulus packages to pay workers’ wages, to five years from the current two, responding to which the Commerce Ministry has called upon the Finance Ministry and the Bangladesh Bank to consider the garment makers’ plea and allow them to pay back the loans in 60 instalments over an extended period of five years.
The pro-industry Government as it is, which came up with the stimulus package even before the businesses could ask for it, a positive outcome to this issue is very much on the cards.
Recently, the Bangladesh Bank, considering the implications of the pandemic, had even decided to slash interest rate on loans from the export development fund (EDF) from 2 per cent to 1.75 per cent. The central bank took this important decision allowing eligible borrowers to take loans from EDF at reduced interest rate, which would help the industry retain its competitiveness even as retailers keep reducing prices of apparel items.
What’s more, the Prime Minister has also reportedly intervened to help regain around 40 per cent of the cancelled orders at a time when the industry has been fighting hard to keep afloat. This speaks volumes about the PM’s concern for the apparel sector, considered the lifeline of Bangladesh’s economy and its well-being.
Given such a proactive Government and the relentless efforts of the garment makers, it won’t however take long to make a turnaround. Hoping the second wave of the pandemic in the West is a moderate one, at least this time around!