Bangladesh garment sector struggles as pandemic empties order books

Most factories are struggling to stay afloat

  
FILE PHOTO: Women work in a garment factory, as factories reopened after the government has eased the restrictions amid concerns over the coronavirus disease (COVID-19) outbreak in Dhaka, Bangladesh, May 3, 2020.

FILE PHOTO: Women work in a garment factory, as factories reopened after the government has eased the restrictions amid concerns over the coronavirus disease (COVID-19) outbreak in Dhaka, Bangladesh, May 3, 2020.

REUTERS/Mohammad Ponir Hossain/File Photo

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% of GDP to the economy. Companies in the world's largest garment exporting nation after China supply to big Western brands such as Walmart Inc WMT.N , Gap Inc GPS.N and H&M HMb.ST .

"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."

Huq said readymade garment exports fell 9.69% in December from a year earlier, led by an 18% drop in sales of woven garments. Knitwear products such as t-shirts and sweaters inched down 0.45%.

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% along with deferred payments of up to 200 days. That makes the situation so difficult for us to survive."

'UNPRECEDENTED CRISIS'

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

More relief was on the way, said K.M. 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."

(Reporting by Ruma Paul; Editing by Krishna N. Das and Alex Richardson) ((Ruma.Paul@thomsonreuters.com; +880 2 58315303; Reuters Messaging: ruma.paul.thomsonreuters.com@reuters.net))

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