• Thursday, Feb 25, 2021
  • Last Update : 03:57 pm

'It is time to look inwards'

  • Published at 01:40 am January 3rd, 2021
Rubana Huq
Rubana Huq Courtesy

Says BGMEA President Rubana Huq in an interview with Dhaka Tribune

Uncertainty over the placement of orders by the global apparel retailers, obtaining working capital for the SMEs, dip in consumer’s demands and bankruptcies of brands would threaten the recovery of Bangladesh’s clothing industry from the pandemic fallout, said a top industry leader.  

Besides, lack of protection against unsecured contracts, deferred payments and discounts on goods on progress are the challenging issues for the industry in 2021, Rubana Huq, president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), told Dhaka Tribune in an interview.    

“The pandemic has taught us the vulnerability of the sector. We have woken up with reality and realised that our contracts are not secured. Having cancellation of $3.18 billion and waking up to daily nightmares of discounts, deferment of shipment, payments and endless discussions had become a part of our routine.” 

Overdependency on two markets have made the industry very vulnerable. 

“It is time to look inwards and not only to concentrate on the West but also explore ASEAN-plus-one or regional collaboration so that we can export within the region and beyond.”

The sector was turning around from the fallout with the recovery but the second wave posed a new threat. 

“Eventually if and when the brands had considered reinstating orders and when 90 per cent of the orders were reinstated, we still had to face the back-to-back liabilities of $1.96 billion that remain unpaid because of either the buyers not paying or for their bankruptcies.”

In the given context, the second wave of the pandemic came up with new challenges as the sector people are witnessing further hold in work orders already placed after the reopening.

Despite the growth in August and September, the second wave has pushed the sector back by multiple folds now. 

The export growth has remained negative in November and it was 2.7 per cent. 

Besides, the fall in demand is another concern for the exporters. In the European market, consumption had dropped by 13 per cent in November; in the US it was 16 per cent. 

With the present status, the sector is suffering from a liquidity shortage of working capital.  Though the government offered a package, it is not enough to cope with the second wave.  

“Had the government not announced the stimulus packages in March, the majority of the factories would have faced closure. We would have been in dire straits.”

Now, a fresh wage support package is needed for four months starting from January 2021 at 2 per cent service charge with 60 months’ payback period with a moratorium of 12 months. 

Huq also demanded an extension of the current package tenure to five years and moratorium of up to 12 months. 

“So, a temporary support will revive the industry and take it to a far superior platform, which would help us with the thrust of product diversification, recycling, value addition, for preparing for the Fourth Industrial Revolution (4IR) and preparing our workforce with better skills.”

Replying to a question on vaccination for workers, the business 

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