Bangladesh had witnessed a steep fall in exports in April this year as the ongoing coronavirus pandemic has had an unprecedented effect on both the local and global economy.
During that month, the country’s overall export earnings reached a record low of $0.52 billion, of which the apparel sector contributed $0.37 billion.
The job market was subsequently jolted and a few thousand employees were terminated when the factories where they worked at either halted production or shuttered their businesses altogether due to the Covid-19 fallouts.
In a bid to curb the spread of Covid-19 within Bangladesh, the government enforced a two-month ‘general holiday’, beginning on March 26, during which all economic activities were shut down while public movement was limited as well.
However, in April, May and the first two weeks of June earlier this year, thousands of workers brought out processions and put up barricades on roads and highways to demand security for their jobs.
A big relief came for the garment sector, which typically contributes more than 84 per cent of the national exports in a year, when international retailers and brands started to gradually accept their cancelled work orders.
In April and May alone, international retailers and brands solely in the garment sector cancelled work orders worth $3.18 billion, putting local suppliers in a tight spot.
The government’s generous spoon-feeding programme for exporters, especially those in the garment sector, also helped a lot during this crisis time.
The government provided a Tk 10,500 crore stimulus package for export-oriented sectors, particularly the apparel industry, so that they could pay their workers’ wages from April to July under the scheme with only 2 per cent service charge.
So after a perilous journey, the country’s exports started recovering and like previous times, the garment sector is again leading the recovery.
Ahsan H Mansur, executive director of the Policy Research Institute (PRI), said exports have recovered to some degree but it is not exactly what it was during the pre-pandemic era.
This is because the virus is making a comeback in many countries, such as Germany, Italy and Spain, which are in the EU, one of Bangladesh’s main export destinations.
About 58 per cent of Bangladesh’s total exports are destined for the EU while a walloping 64 per cent of the country’s garment shipments head for the same area.
Therefore, the EU’s economic recovery is a major factor for the recovery of Bangladesh’s economy, employment and export receipts, Mansur said.
Since the EU and US markets are slowly returning to normal, so is Bangladesh’s export, he added.
But although the garment sector is rebounding well, the rest of the economy is trying to do the same. Imports have also increased, albeit gradually.
Bangladesh now imports $6 billion worth of goods each month but is currently struggling to bring it back down to $3.5 billion.
MA Jabbar, managing director of DBL Group, a leading garment exporter, said that usually August-September is a lean period for the garment sector.
It was not the same this year for DBL though as buyers asked the factory management to continue production in order to cover the losses that were incurred in April and May because of the pandemic.
“We have definitely recovered, although not fully. Price is very low. But we are not thinking about prices now. It is our priority to run our business now,” Jabbar told The Daily Star over the phone.
“Full recovery in business will not take place this year. Our strategy is to stay alive. Buyers are also struggling,” Jabbar said. At the end of the current fiscal year, DBL’s total export might be only 15 per cent less than their target, which Jabbar declined to reveal.
Currently, his factories are running at 75 per cent capacity but it is expected that this capacity will reach 90 to 95 per cent by November or December this year.
Jabbar also began recruiting new workers for a new unit which will be inaugurated soon.
“So, I am hopeful that exports will return to its previous position soon as the vaccine is also expected to arrive shortly,” he said.
Mahmud Hasan Khan Babu, managing director of Rising Group and former vice-president of the Bangladesh Garment Manufacturers and Exporters Association, said a gradual recovery is taking place in the garment sector since mid-June this year.
For a full recovery, we will have to wait until January or February next year. Most buyers are reissuing cancelled work orders, which is good for the sector.
“It may even take one year to fulfil all the cancelled work orders, which is better than if they remained cancelled. We appreciate the buyers who are taking back their cancelled work orders,” Babu said.
“To sustain our recovery in garment exports, we will have to wait for Christmas sales in the western world and US election in November,” Babu added.
Leather goods exports are not recovering as fast as the garment sector because leather goods are not basic items, these are luxury items, said Saiful Islam, president of the Leather and Leather goods Manufacturers and Exporters Association of Bangladesh.
Globally, the consumption of leather goods has decreased by 35 per cent due to the pandemic, Islam also said.
Moreover, the production of tanned hides in non-compliant tanneries at Savar is another perennial problem for leather goods. The manufacturers of leather goods cannot procure tanned leather from local tanneries as those are processed in non-compliant factories.
Moreover, the consumption of imported raw materials by the local leather goods manufacturers has gone down because of a restriction imposed by the National Board of Revenue (NBR), he said.
As a result, local leather goods exporters have been facing challenges in availing raw materials.
“We have not terminated any workers until now from the leather goods manufacturing units. The inquiries are coming from the buyers gradually in this sector,” Islam told The Daily Star over the phone.
“Work orders are coming back now. My factory’s recovery began back in June, when my UK, German, Canadian and French buyers started placing orders for winter clothing items,” said Mostafa Sobhan Rubel, managing director Dragon Sweaters.
Usually, shipments of winter clothes stop in September but this year, the factories are running at full swing even now as the buyers extended the timeframe in consideration of the Covid-19 situation, he said.
So, the shipments of winter clothes will continue up to October this year, according to the managing director, who exported sweaters and other garment items worth $30 million last year.
Rubel expects to earn about $29 million from exports by the end of this year as well.
“But I am not unhappy to export less than $1 million by the end of this year as this is a crisis time when people do not have work or jobs and are undergoing financial hardship,” said Rubel.
Kazi Belayet Hossain, president of the Bangladesh Frozen Foods Exporters Association, said frozen foods shipments is increasing gradually as buyers are returning with a lot of work orders.
Buyer response is better now than what it was in April-May as they are offering lower prices for frozen foods, he said.
Frozen shrimp is a luxury food item and so the buyers are offering just $1 less per kilogramme because incomes of most of western customers was also reduced due to the Covid-19 fallout, Hossain added.
Mohammed Monsur, general secretary of the Bangladesh Fruits, Vegetables and Allied Products Exporters Association, said the situation is nearly normal in his sector as more than 500 tonnes of perishable goods are shipped from the Hazrat Shahjalal International Airport in Dhaka on a daily basis.
Before Covid-19 emerged, more than 700 tonnes of perishable items were shipped by different airlines, he said.
In the April-May period, shipment were almost zero and the local vegetable exporters were just passing time idly. However, shipments gained pace from mid-June, when the western world started reopening their economies.
Monsur, however, said that the quality of goods deteriorates because of scanning delays at airports. Sometimes, vegetables cannot be shipped on time and miss the flights because of this, he added.