A big blow to exports

Farhad Chowdhury: Export earnings are falling. In the fiscal year 2022-23, Bangladesh earned $55.55 billion from the export sector. Of this, only $46.99 billion comes from garment exports, which is 84.58 percent of the total export earnings. And the total export revenue target for the just concluded fiscal year 2023-24 was $62 billion. $51 billion in revenue in 11 months against target. Out of this, the export income from the garment sector has reached $43 billion.
Neither the EPB nor the central bank released data for July, the last month of the fiscal year, due to a discrepancy in export earnings data. However, it is clear from the data of 11 months that the target has not been met and the income has not increased compared to the previous year. And these data are telling that the country’s export trade situation is not satisfactory. At the same time, the country’s export sector suffered a major shock due to last week’s student movement, violence and curfew. Export trade was stopped for almost a whole week. Exporters say, the negative impact of the shock that the export sector has suffered in this one week is multifaceted. It will take a long time to heal the damage. Apart from that, if the situation suddenly becomes complicated again, it will be a big disaster for business and economy.
In this regard, Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) Executive President Mohammad Hatim said in the light of time, “There have been big obstacles on the garment industry before. This sector has been extremely affected during the corona pandemic. We were also affected during the political turmoil of 2014. But the extent of the damage caused by the complications caused by the student agitation, violence and curfew in the past week was quite different. Even though we are sitting at home during Corona, we are not isolated from the outside world, this time we are completely isolated. I could not communicate with the foreign buyer. The buyers were very worried but could not give them any information. In 2014 we were able to export goods under police guard, this time we could not do anything for a week. Therefore, as this shock was a new experience for us, the level of damage has also been multifaceted. It will take us a long time to recover this loss.
Entrepreneurs said that most of the business establishments and factories were closed when the student movement took a severe form on July 18. Broadband internet was stopped from that night. Mobile internet was stopped earlier. When a curfew was imposed from midnight on July 19, troops were deployed across the country. Factory production stopped. Shipments from the factory to the port were stopped due to the suspension of transportation. The export products which reached the port before this situation was created, their shipment was stopped due to the shutdown of internet service. For the same reason, raw materials imported for industry were not cleared from the port. The situation started to normalize from Wednesday after the limited broadband internet was restored on Tuesday night and the movement of import-export goods started under security guard. BGMEA, an association of ready-made garment manufacturers and exporters, says that due to the shutdown of port operations and factories, the daily financial loss in this sector amounts to Tk 1,600 crore. According to them, during the days of deadlock around the movement, the sector has lost around $1 billion.
One of the top leaders of BGMEA, on the condition of anonymity, told the Times, “I export 50 to 60 million pieces of clothing per month to 20 of the biggest buyers in the world.” Every one of my factories is full of work now, because the winter season is coming.
There are enough orders for the winter season. For this, work was going on day and night in the factory, but due to the sudden unstable situation, everything stopped for a week. The factory had to be completely closed for 5-6 days last week. As a result, I will not be able to send the next shipment to the buyer on time. Also, I had a shipment stuck at the port, which I could not send yet. On the other hand, the buyer company is repeatedly asking when the product will be sent – if it is not sent within a couple of days, they have threatened to cancel the order. If the order is canceled for any reason, I will face a big loss. Because they have to be sent by air at double or triple the fare, or they will become stocklots. And if the products cannot be sent, it will be difficult to pay the installments of the bank loan, it will also be a problem to pay the wages of the workers. Because I will not be able to send the next shipments on time. So, all in all, exporters like me have suffered a big loss in this one week.
According to BGMEA data, the apparel sector exports goods worth $4.5 billion per month on an average. According to this, the export amount per day is $15 million dollars or Tk 1,600 million. Due to the violence-curfew, the shipment of goods was not possible on time, now if those goods are sent by air, there will be a loss of one million dollars, said a businessman.
The exporters said that at this time, even opening an LC in the bank has to face extreme complications. Similarly, they don’t think that the calculation of the damage coming in the days of anarchy and curfew will stop there. Entrepreneurs said the real damage could be evident in the third quarter of the current fiscal. At that time, Bangladesh’s export products were sold well due to the mood of vacation and travel in the countries of the western world including the United States, Europe. India, China and Vietnam are now sending samples like Bangladesh to get orders for products of that time. They should arrive before the August holidays. But due to the closure of factories, import-export activities in the last few days, many people are facing problems or are behind in sending samples. Bangladesh will have to bear the cost of the crisis of confidence of foreign buyers due to the shutdown of internet and communication.
Prominent economist and former Chief Economist of World Bank’s Bangladesh Mission Zahid Hossain said in the light of time, the export sector of the country is already going through various crises. Apart from that, the country’s reserve situation is also not good. Reserve growth depends largely on export earnings and remittances. Both these sectors have been severely hampered by the volatility of the past week. The country has to pay the price. There may be many more challenges ahead. So, I would say that whatever the situation, the export sector cannot be allowed to be hampered in any way.
Syed Nazrul Islam, the first vice president of BGMEA, said that the garment industry is the first to suffer in any disaster situation of the country as it is dependent on foreign buyers. In the recent unstable situation, this industrial sector has suffered at the rate of more than Tk 1,600 crore daily. Bangladesh Shipping Agents Association and Chittagong Customs Agents Association along with Chittagong port, customs, related government and private offices should work together with relentless efforts to overcome this loss and sustain the garment industry in the competitive world market.
And Rakibul Alam Chowdhury, Vice-President of BGMEA, said that the ready-made garment industry is a completely ‘time-bound’ industry sector. If the foreign buyer fails to export within the specified lead time, the concerned industry faces serious financial loss. Recent unexpected events are ominous for the garment industry sector. This has caused untold damage to the industry.