The Financial Year 2019-20 has not been a good one for Bangladesh’s apparel manufacturing and export sector.
The devastating COVID-19 pandemic had a tell-tale impact on the industry, which registered 18.45 per cent decline in exports, clocking US $ 27.83 billion in earnings, compared to what was US $ 34.13 billion in FY 2018-19, a massive loss of around US $ 6.30 billion!
Despite showing some improvements irrespective of the negative growth in June – when exports witnessed decline of around 11.43 per cent compared to the same month of 2019 – the enormous setbacks suffered in the months of April and May have just been too much to make up any lost ground, to say the least.
The decline of 85 per cent and 62 per cents in these two months left hardly any scope for garment manufacturers to make much amends in June.
It’s not that the industry was not anticipating the same as the writing on the wall was pretty much evident since the last few months after brands and retailers in the major export destinations of the USA and the Europe were forced to wind up businesses temporarily amidst countrywide lockdowns to prevent further spread of the disease.
Perhaps what the industry could not foresee were mass order cancellations and a significant drop in new work orders. To add to which were demands for sizeable discounts and deferred payment on existing orders, by the buyers.
As per some estimates, global buyers combinedly cancelled work orders, amounting to a massive loss of US $ 3.18 billion. What is interesting to note is that of this US $ 3.18 billion work order cancellations, European buyers (European Union accounts for lion’s share of the country’s total apparel exports) accounted for more than 50 per cent of the cancelled orders.
Worsening the situation further, there was a 62 per cent decline in new work orders in the March-May period. Data collated by BGMEA on the same maintains that compared to 454 orders received in the March-May period of last year, this time around, in the corresponding period, it was a mere 172.
As expected, not only exports took a major hit but many small- and medium-sized units had to bow out of business leaving thousands of workers jobless and staring at an uncertain future. According to estimates, around 21,331 workers, most of who were employed in the RMG sector, have lost their jobs since Eid.
Even though the Government had announced a coronavirus bailout package to help apparel makers pay the workers’ wages, insiders claim, stringent riders attached to the same prevented many from availing the facility, who had to bid adieu unable to withstand the financial stress.
However, on the positive side, businesses are now opening up across the globe and all big brands and retailers are also getting back to work. As per a WTO report, there is a rise in demand lately, consequent to which supply chains are slowly showing signs of returning to normalcy. The WTO economists believe that even though global trade volumes would register a steep fall this year, the situation may not be as worse as has been projected earlier.
This definitely is good news for the industry which started the Financial Year 2020-21 on a cautious note, and I am more than sure that as things improve globally, Bangladesh would make a strong rebound once again.