Help industries access financial support, continue health safety momentum

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It has been six months since the pandemic hit the country, throwing Bangladesh's economy, life and livelihoods right into a crisis. The Daily Star interviewed business leaders, executives and analysts by emailing them questions in order to utilize the feedbacks in highlighting the true situation and realisations on the floor.

Garments take into account over 85 per cent of the country's export earnings. Below are a few thoughts of Rubana Huq, president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA).

From a standard perspective of the economy, what have we gained and lost?

There is nothing to get out of this disastrous situation that is bought on by Covid-19. It is total mayhem and an apocalypse. Trade and business are going through a depressing time that was last seen during World War I.

However, we are able to only say that has taught us how to cope with this sort of pandemic and awaken our conscience. Covid-19 isn't over yet and according to scientists, there could be another or third wave of contractions more powerful and calamitous than this.

We are able to only use our experience gained from the problem and put it to use to strengthen our healing process.

What did we do right?

After detecting the first Covid-19 patient on March 8, the federal government of Bangladesh announced a nationwide general leave from March 26 onwards, and the garment industry aligned itself with it. That immediate shutdown might have saved us from a disastrous situation that lots of developed countries had to handle in conditions of deaths and affected ratio.

When Covid-19 put lives and livelihoods in a war-like situation, it had been absolutely crucial for all of us to brave it out and go for reopening. There have been criticisms, but we achieved it and we achieved it by following strict health protocols and following other precautions like adopting gradual reopening.

The other thing that really was very timely may be the announcement of the earnings support loan package by the honourable prime minister at the end of March. Had we not received this support, it would have been a totally different and chaotic scenario today.

The other steps which have really paid off is our die hard engagements with the buyers who cancelled orders, and have them back on the negotiation table, which is why today 80 % to 90 % of the $3.18 billion cancelled work orders have already been reinstated.

What went wrong?

Covid-19 has bought a war-like situation in many countries and in a war, there is nothing called right or wrong. We were trying every avenue to survive and learning from mistakes. Before judging whether we did right or wrong, it should be remembered that none folks had any prior experience to confront this sort of situation.

Obviously, we could did things better and there is room for improvements. Undoubtedly the policy support we got from the federal government of Bangladesh supported us at that time. However, issues regarding usage of working capital and access to credit might have been extended at simpler terms so that the industry could have benefitted from it.

We've also learnt of several drawbacks like a insufficient proper contractual protocols between buyers and suppliers, and we didn't have even any backup to respond to an emergency crisis situation. This pandemic in addition has displayed us our overdependence on the garment sector and the need for immediate diversification.

What was the effect on businesses and jobs?

The pandemic of the century, Covid-19 has been taking its toll on lives and livelihoods since last December. In the event of Bangladesh, by far the sector hardest hit by the coronavirus may be the garment industry. As a way to curb the spread of the virus the factories were turn off for almost a month.

According to conservative data, excluding the products that are scheduled to visit multiple buyers, 1,149 factories have reported export cancellations or suspensions worth of $3.17 billion, almost all of which have been reinstated later.

Similarly, the supply chain of recycleables from China has been heavily disrupted; alternatively, as a result of lockdown in Europe and the US, garment export has witnessed a sharp decline.

Some 4.1 million personnel who will be the fuel of this industry are in a vulnerable position because of the order cancellations and deferred payments. If a factory is forced to turn off as a result of order losses, it puts the personnel on the risk to be furloughed/laid off.

However, at this point I think it is safe to say that people have passed most likely the toughest time and we've been able to survive with no massive layoffs.

What were the responses of businesses and your organisation?

After being closed for nearly one month, which is often connected with a million dollars' worth of export losses and overdue payments, the garment sector of Bangladesh started checking on a restricted extent from April 26.

In order to protect the health and safety of our workers, the BGMEA has adopted a safety protocol prepared in consultation with International Labour Organization and the director general of health of the Bangladesh government.

This guideline has been circulated among all the member factories and factories are only allowed to resume their operation upon ensuring each of the measurements. Any worker showing symptoms of the coronavirus may take leave from the factories without worrying about their livelihood.

The safety protocol supplied by the BGMEA has clear instructions regarding operational phases, social distancing, entrance protocol, sanitation and disinfecting, training and good practices. With an aim to maintain social distancing at the workplace, factories started production with only 30 per cent to 55 % of the total workforce.

What have you done to utilise consumers' new habit of shopping for from digital marketplaces?

From the BGMEA, we are constantly discussing and highlighting the importance of virtual marketplaces. We have already held discussions with the central bank and other authorities.

What is interesting to notice is that there are particular policy incompatibilities to choose virtual marketplaces on a mass scale, so we are conducting a fitness on the policy predicaments and measures to be studied to address them.

What is your undertake government responses to greatly help businesses overcome the problem?

The honourable prime minister of Bangladesh announced a stimulus package worth Tk 5,000 crore for the export oriented industries, including the garment sector, which injected a breath of expect the devastated exporters and businesspeople.

Because of that earnings support, factory owners have already been able to pay salaries of their workers despite the fact that production was fully turn off. It is still soon and uncertainties remain over predicting whether you will see a second wave or not and how dire the problem will grow to be.

There have been unprecedented moves by all the ministries and departments of the federal government to stand by the industry and help us survive. Policies like stays on loan classification regulations related to export proceed realisation and making export development fund simpler were time befitting and lifesaving.

And finally what exactly are the lessons learned?

Our financial resilience, supply chain being especially and overwhelmingly concentrated on China, insufficient a proper exit policy, insolvency issues, exhausted credit lines, lack of a crisis response mechanism, and absence of an effective contractual protocol between buyers and suppliers, working with bankrupted buyers and raw material suppliers, have already been exposed by the Covid crisis.

The Covid-19 has unleashed many truths that have been never uncovered, some of these are about our internal deficiencies which should be overcome, and some of these are about how we manage our stakeholders with proper policy measures.

And what the federal government and businesses must do for taking the economy back again to normalcy?

We have to take into account that without cooperation and the help of all stakeholders, it really is impossible for all of us to overcome this coronavirus crisis. According to the forecast released by World Economic Outlook, the global economy is likely to contract by 4.9 per cent in 2020.

So that you can combat Covid-19, the stimulus package announced by the honourable prime minister worked as a stopgap measure. So as to fix the damaging effect of Covid-19, we must help the industry access financial support including freezing the outstanding liabilities for several tenures and providing credit access to factories so that they can restart and survive.

And of course we need to continue the momentum of health safety and hygiene practices and the awareness of social distancing. We must find new opportunities that Covid has exposed just like the market of personal protective equipment and also how more investments could be used Bangladesh, and how exactly we can diversify our products.   
Source: https://www.thedailystar.net

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