Bangladeshi apparel sector faces US $ 6bn hit from COVID-19

(Dhaka) REUTERS: Bangladesh, the second-largest apparel producer after China, is set to lose roughly US $ 6 billion in export revenue this financial year amid cancellations from some of the world’s largest brands and retailers, two major industry bodies said on Tuesday.

The two groups, which represent the vast majority of the readymade garment and knitwear manufacturers in the country, said cancellations were increasing daily amid coronavirus-driven lockdowns globally and these risked jeopardising millions of jobs in the poor South Asian nation.

Low wages have helped Bangladesh build its garment industry, with some 4,000 factories employing four million workers.

Garment exports accounted for US $ 34.12 billion or 84 percent of the country’s overall exports of US $ 40.53 billion, in the fiscal year ended June 30, 2019.

“We’ve lost more than US $ 3 billion due to the crisis. All our orders until July have been cancelled or suspended,” Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) Vice President Mohammad Hatem said.

“Suspended orders will eventually get cancelled. All these orders were placed for summer and it takes three months to get these delivered. If they are not taking supplies now they will not take it when the summer is over,” said Hatem, adding buyers had adopted a wait and watch policy and are refraining from placing new orders.
“Many factories will be closed if this persists,” he added.
 

One industry source, who asked not to be named as the order books are confidential, said Gap, Zara and Primark were among the brands that had cancelled orders.
Gap and Zara did not immediately respond to emails seeking comment. Primark confirmed the step.

All Primark stores across the world are closed and the brand has been losing sales of US $ 807.82 million a month, Primark said in a statement.

“We have large quantities of existing stock in our stores, our depots and in transit, that is paid for,” the statement said.

“If we had not taken this action, we would be taking delivery of stock that we simply could not sell.”

Readymade garment makers face a similar hit, warned Bangladesh Garment Manufacturers and Exporters Association (BGMEA) President Rubana Huq.

Huq said some 1,048 factories that were part of the BGMEA had reported that orders for over 900 million garments worth US $ 2.9 billion had already been cancelled or were being held up.

Huq said the order cancellations could affect some two million workers in the readymade garments segment.

Prime Minister Sheikh Hasina recently unveiled a US $ 588 million package for the country’s crucial export sector, asking companies to put the money towards paying workers.

“This is not enough. The government should come up with more stimulus to save the country’s biggest export sector,” said Rezwan Selim, a Director of the BGMEA.

Siddiqur Rahman, a top exporter who supplies H&M and Walmart among others, said the situation was dire.

“We’re facing an unprecedented time,” he said. 

“No one knows how long this is going to take. We’re trying hard not to shut down our factories. But how long can we hold out?”