If the order distribution pattern can be changed and at least keep the order distribution at pre-pandemic levels, that could help suppliers
If the global brands, buyers and retailers distributed their work orders to Bangladeshi apparel suppliers evenly, then it would help the latter to recover from the pandemic fallout, said the Centre for Policy Dialogue (CPD) yesterday.
The think-tank made the observation during the launch of its research titled ”Recovery of the Apparels Sectors of Bangladesh from the COVID-19 Crisis. Is a Value Chain-based Solution Possible?” during a virtual dialogue.
They also said that the pandemic had adversely affected the global demand for apparel products, and this fall had produced a domino effect on the apparel industry.
Mustafizur Rahman, the distinguished fellow at the CPD, moderated the dialogue.
“From brands working in Bangladesh, we have seen different initiatives such as targeting responsible business practices, the formation of alliances and commitment to ensure fair wages for garment workers in the supplying countries,” said Khondaker Golam Moazzem, research director of CPD, said in his keynote presentation.
These are limited support -- Bangladesh needs prolonged support for this period.
“We need a better distribution of orders and a value chain-based redistribution, which is possible.”
If the order distribution pattern can be changed and at least keep the order distribution at pre-pandemic levels, that could help suppliers.
“Such redistribution would be an effective instrument to keep the factories in operation as well as to ensure workers well being for a longer period,” Moazzem said.
As per the research findings, the global market share of Chinese woven products rose to 45 per cent in the post-pandemic period, which was 39 per cent before the outbreak of Covid-19, while Turkey’s share rose to 4 per cent from 3 per cent.
In China's case, the market share rose to 58 per cent in different products.
If the work orders of China remained at pre-pandemic levels, then orders worth about $2 billion could be given to other countries, according to Moazzem.
If the countries that are facing fiscal constraint like Bangladesh and Sri Lanka, get additional orders from the brands and buyers, they could create employment, help sustain their business and not depend on government support, said the economist.
Hence, the brands and buyers should take a global initiative for cooperation and support, under which fair distribution of orders can be ensured for countries with limited fiscal capacity, but have high potential social impact.
The research unveiled six-point findings where it stated that unprecedented global crisis resulted in multidimensional shocks across the global apparel value chain, while a lack of preparation against vulnerability and limited resilience capacity intensified suppliers’ challenges in the immediate and short terms.
Besides, the dismal state in the world of work could not be lessened through the limited effort of the governments and suppliers, while the medium-term recovery challenges will be extended as the pandemic is experiencing a second wave.
The findings also said that as of September, 4 per cent workers were very concerned about job uncertainty, which was 36 per cent in April. Some 12 per cent were somewhat concerned about their jobs against 52 per cent in April.
About 84 per cent are not concerned about uncertainty, which was 12 per cent in April.
Fiscal constraints in Bangladesh squeezed domestic capacity to support the apparels sector during the crisis; initiatives of sourcing countries were inadequate, it also said.
As per the research findings, limited initiatives undertaken across the value chain would delay the recovery process.
“It is not possible to overcome the present crisis caused by Covid-19 with domestic initiatives. The government, suppliers and importers have to work together, but the buyers have to take the prime responsibility,” said Amirul Haque Amin, president of the National Garment Workers Federation.
Buyers are placing orders but they are also cutting prices, which hurts the lives of workers.
“I hope brands and buyers will stop this malpractice,” he added.
Buyers have cancelled orders without taking responsibility, said Kalpona Akter, executive director, and Bangladesh Center for Workers Solidarity.
“It is time to rewrite due diligence or laws in the buyer’s country so that they cannot pull out from their business commitments illegally.”
There can be no such great tool to help the suppliers and workers if the sourcing country or the buyers take steps to redistribute orders among the suppliers amid the crisis, she added.
“No country was left untouched by the pandemic. The apparel sector was hit heavily. We asked our brands and buyers not to cancel orders and they paid heed to our call,” said Harry Verweij, the ambassador of the Netherlands in Dhaka, who joined the virtual dialogue as a special guest.
Despite the harm caused, the pandemic had opened an opportunity to move towards a people and planet-positive garment industry, he added.
“Efficiency and waste management capacity is much higher in Bangladesh’s competitor countries. Bangladesh’s research and development is weak. It spends much less than its competitors,” said Ziaur Rahman, country manager of H&M for Bangladesh, Pakistan, and Ethiopia.
The prices of products went down as exporters did not make the same products as last year, while the prices of raw materials went up.
“Bangladesh’s focus is on big and bulky amounts of orders of basic products. But fashion items pay more though it is small in quantity.”
The focus should be given on research and human resource development of the manufacturers.
Commenting on the order cancellation, Rahman said H&M did not cancel the order amid the pandemic.
“We should explore unemployment insurance. That is a macro problem of more complexity. What we can certainly explore is an interim micro solution, which is special social insurance including unemployment insurance programme for the RMG sector,” said Rehman Sobhan, founder and chairman of CPD.
It would be a contributory programme, which would bring inputs from the employers, the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) and workers. The government, brands and buyers should also be contributors, Sobhan added.
The government, manufacturers and buyers have to take responsibility for the unemployment insurance programme. If workers are well and their lives improve, the industry will do the same, Akter said.
Replying to the call on contribution to insurance for workers, Rahman said that H&M is ready to participate.
During the order cancellation by the global buyers, suppliers did not get cooperation from its regional peers. So, the sub-regional strategy is crucial for the transition from the crisis, said Arshad Jamal Dipu, vice-president of the BGMEA.
"We have learned lessons from the crisis and if we take steps based on those with regional strategy, it would be easier to overcome the problems," he added.
BGMEA President Rubana Huq urged the government to extend the repayment period of loans taken from the stimulus package.
It is very challenging for the industry to repay as the sector is going through a tough time amid the second wave of the pandemic.
She added that the small and medium enterprises are financially-challenged during this pandemic, and the credit programmes are not reaching those firms.
The government's immediate financial support helped the apparel sector turnaround but the second wave slowed down the speed and deepened the crisis, said Tipu Munshi, commerce minister.
“The government will consider further stimulus packages, but the buyers should play an active role to help the manufacturers. We should remain alert so that workers do not incur further losses.”
China and India are two big markets for Bangladesh.
“If we can penetrate there successfully, it would help us to recover smoothly," he added.