RMG industry faces existential threat

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With new coronavirus spreading rapidly all over the world, Bangladesh's apparel industry is counting the price of the outbreak owing to supply chain disruption, weakening global demand and called off shipments, industry leaders said on Sunday.

To contain the coronavirus outbreak, he said, countries introduced aggressive measures including city lockdowns, business and factory shutdowns, transportation cut-offs, and mandatory home quarantines for citizens, and thus hurts consumption and its own impact is spilling over the domestic garments industry.

"The industry has been almost completely crushed due to impact of the COVID-19 that caused serious disruption in supply chain. On the demand side, the impact was already felt as global brands and buyers have called off shipments previously few weeks because of the outbreak of coronavirus," M.A. Rahim (Feroz) Vice President (Finance) of Bangladesh Garment Manufacturers and Exporters Association (BGMEA) told THE BRAND NEW Nation.

He said apparel manufacturers have observed significant disruption within their production caused  by supply chain disruption from China's virus outbreak because the end of January, which we be prepared to last at least into March. But nonetheless there is absolutely no sign of improvement; even the outbreak is spreading rapidly all over the world, including Europe and America.

"Now, we are finding your way through the worst as COVID-19 outbreak sweeps across European nations and America, two major export markets for Bangladeshi apparel products," said M.A. Rahim adding, "The RMG industry, which is already seeing the worst export slump in decades, would face serious consequences from the potential demand fall from these export markets. This may lead to closure of many factories turning thousands to jobless."

The BGMEA leader apprehended that Bangladesh's apparel exports, which have witnessed a 5.71 per cent negative growth in the first eight months till February of the existing fiscal year, are poised to decline further following lockdown in Europe and America.

He also warned that a sustained epidemic would have a more pronounced effect on the Bangladesh's apparel industry and the economy all together unless the federal government announce fiscal and monetary measures to help businesses cope with the coronavirus epidemic.

Earlier, the governments of several countries, including Vietnam ($1.16 billion) and Cambodia ($2.0 billion), two key competitors of Bangladesh in global apparel trade, have previously announced stimulus package to sustain industry production, jobs and address monetary impact of coronavirus.

"THE FEDERAL GOVERNMENT of Bangladesh also needs to arrange a 'contingency fund', which will be used to pay personnel of the damaged factories, and run their production, otherwise, the economy would sustain a great deal larger losses," warned MA Rahim, the Managing Director of Dulal Brothers Limited (DBL Group), which is among the country's leading apparel exporters.
 
Bangladesh exported US$34 billion worth of garments in the fiscal year 2018-19, and most of the shipments went to European nations and the USA.

"Coronavirus clearly presents a significant threat to the industry all together. It could face disastrous situation soon if the pandemic prolongs," warned Mohammad Hatem, former Vice-President of Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA).

He cited Europe is currently the epicenter of the global coronavirus outbreak where 60 % of garments are being shipped. The USA may be the next biggest buyer for Bangladeshi apparel products is also facing the menace of the virus. "Most European cities have previously gone into lockdown, as the USA declared circumstances of emergency restricting movements of people. On the other hand, brands and retailers are closing stores there amid the virus scare preventing losses," he added.

He further noted that the deadly outbreak of coronavirus in Europe has forced consumers to remain home. Shops remain empty of customers despite offering hefty discounts in sales.

Mohammad Hatem, a renewed industry leader and the Managing Director of MB Knit Fashion Ltd, also said that lots of global brands and buyers have asked their Bangladeshi manufacturers to carry shipments off, requested to lessen their existing order quantity rather than to make fabrics until further orders amid a slide in consumption in Europe and America.

"This situation has forced many industries to seize or cut their production. It'll cause huge income losses turning them financially vulnerable," he added.

Referring to closure greater than 50 small and medium factories last year due to insufficient work, Mohammad Hatem, said numerous others may face the same fate if the outbreak prolongs at least next 8 weeks.

"The industry would face existential crisis if the government does not give financial fallout from the coronavirus the same importance as medical impact," he said, adding,  "The government's financial policy makers must pay heed to the crisis and announce energy plan prior to the industry collapse."

He said the industry leaders have previously called on the government for the formulation of a crisis fund and sops to overcome the crisis.
"We've sough for concession on gas and electric bills for just one year and soft term loans from the federal government beneath the emergency fund in order that the industry may survive from the unfolding crisis. The funding support can be necessary to pay back the workers through the upcoming Eid festival," Hatem said.
Source: http://m.thedailynewnation.com

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