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Coronavirus Spins Yarn of Trouble for Bangladeshi Garments

Kamran Reza Chowdhury
Dhaka
2020-03-05
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Bangladeshi women work at a garments factory in Savar on the outskirts of Dhaka, Oct. 30, 2019.
Bangladeshi women work at a garments factory in Savar on the outskirts of Dhaka, Oct. 30, 2019.
BenarNews

Bangladesh’s garment industry, the engine of the South Asian nation’s economy, has suffered huge losses with disruptions in the supply chain of fabrics imported from China as a result of the novel coronavirus outbreak, factory owners and economists said Thursday.

The epidemic has claimed more than 3,000 lives worldwide in less than three months, although no cases have been confirmed yet on Bangladeshi soil. The virus was first detected in Wuhan, a city in central China, the main supplier of yarn, cotton and other raw materials for Bangladesh’s ready-made garment (RMG) industry, which employs about 4 million, mostly women.

“The coronavirus epidemic in China has hugely impacted the supply line of raw materials for Bangladesh’s RMG sector,” Siddiqur Rahman, former president of the Bangladesh Garment Manufacturers and Exporters Association, told BenarNews. The BGMEA, the industry’s most powerful trade group, represents factory owners across Bangladesh.

“Our ready-made garment industry has been hit by the coronavirus,” he said. “But we cannot provide any figures at this stage.”

Procuring raw materials from other countries has proven difficult, Rahman said, after the viral outbreak hammered the capacity of China to supply goods as swathes of factories remain shuttered.

“We can find a market for raw material supplies as an alternative to China,” he said, “but what is the benefit of producing when there is no customer and demand?”

The sector generated $34.1 billion in 2019, according to the BGMEA. Since 2014, the garment sector has also registered more than 80 percent annually of the gross domestic product (GDP) for Bangladesh, the world’s second-largest apparel exporter of fashion brands after China, according to the World Bank.

Britain – which gives preferential access to Bangladeshi garments and is one of the main destinations of clothing made in Dhaka – on Thursday moved into the second of four phases in its battle plans to tackle the spread of the virus after registering 90 confirmed cases, officials in London said.

At high risk

But Bangladesh has not yet reported a case of the COVID-19 illness, which currently has no approved vaccines and has infected more than 93,000 people in 77 countries, according to the latest information from the World Health Organization (WHO).

Bangladesh, however, remains at high risk of experiencing the virus because of the nation’s connectivity with nations where cases of the epidemic have been confirmed, authorities said.

In 2015, the United States, Britain, Germany and France were Bangladesh’s top textiles trading partners, according to the World Bank, which has repeatedly pushed Dhaka to diversify its economy beyond garment exports and remittances to sustain growth.

“We are at high risk of the coronavirus spread, which has compelled us to urgently act to take preventive measures,” Meerjady Sabrina Flora, director for disease control and research at the nation’s Institute of Epidemiology, told reporters Wednesday.

Bangladeshi Commerce Minister Tipu Munshi told BenarNews that the virus would be expected to deliver an “adverse impact” to the garments industry, but authorities could only decipher its economic impact in May this year.

“We do not know how long coronavirus situation in China will continue,” he said, as he expressed hope that the supply chain could be restored soon.

It would be difficult for Bangladesh to immediately gauge the economic loss inflicted by the viral outbreak, Ahsan Mansur, executive director of the Dhaka-based nonprofit Policy Research Institute, told BenarNews.

“Actually, the RMG factories have been preparing the orders placed for the summer season in the Western countries. But they will see orders crunch for the next fall,” he said. “Then we can understand the loss.”

Bangladesh factories order about $5 billion of raw materials, mainly from China each year, Mansur said. “So, it is very difficult to import those items from other countries,” he said.

‘We can seize the opportunity’

But the virus might also have opened up a silver lining for Bangladesh.

“The whole world suffers from the lockdown in China. So, a majority of the investors will now try to relocate their factories from China,” he said. “We can seize the opportunity.”

Abdul Wadud, owner of Knitvalley Ltd. in Dhaka, told BenarNews that production of knitted clothing at his factory went down by 20 percent, while production of other garments has so far suffered a 40-percent loss.

The factory imports at least 50 percent of yarn, cotton, chemicals and other raw materials from China, Wadud said.

“First of all, some buyers would not buy apparel made of yarn and cotton from China,” he said. “At the same time, Bangladesh government has imposed some restriction on imports from China.”

But, he said, the epidemic would unlikely be so severe in Europe and in the United States, the main markets of Bangladesh’s ready-made garments,

“This is because the U.S. and European countries have better capacity than the Chinese to deal with the coronavirus epidemic,” he said.

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