Apparel exports again feels the pandemic pinch

Apparel exports have again begun to fall with Covid-19's second wave taking a serious turn, particularly in Europe and the United States – Bangladesh's top two export destinations.

The second wave of infections in the country's largest export market – Europe – is far worse than the first. So, measures to rein in the second wave of Covid-19 are in place across the continent.

Dr Rubana Huq, president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), said, "Our exports rose in August and September but fell again by 5.85% in October as the second wave hit Europe and the United States. France has gone into lockdown."

In 27 days of October this year, Bangladesh raked in $1.92 billion in export earnings, in contrast to $2.04 billion over the same period of the last fiscal year, according to the BGMEA.

Faisal Samad, senior vice-president of the BGMEA, said, "Buyers and retailers have asked apparel owners to delay shipments of ready goods for a month. So, we have sent a letter to the finance ministry through the commerce ministry, seeking a deferment on repayments of stimulus loans for six more months."

From November this year, the RMG entrepreneurs are supposed to begin paying instalments on loans taken out under the Tk10,500 crore stimulus package.

The country's exports witnessed a positive growth in the first quarter of the current fiscal year, riding on the reinstatement of the orders previously cancelled or held-up due to the pandemic.

Ready-made garment entrepreneurs fear that their exports might see a further fall with the second wave of Covid-19 turning more serious.

Many global clothing buyers and brands have not yet been able to bounce back from the pandemic slump in their sales. That is why they are now placing orders in small quantities with Bangladeshi suppliers, resulting in a fall in overall orders to some extent, said SM Khaled, managing director at Snowtex Outwear Ltd which annually exports apparel items worth around $200 million.

Seeking anonymity, a Gazipur-based garment factory owner who exports products worth $200 million annually, told The Business Standard that a European buyer last week said they would issue the purchase order after observing the pandemic situation two more weeks.

Another European brand held up work-in-process or ready-to-be-shipped orders for two weeks, said an Ashulia-based factory owner.

There are still some nuggets of hope in continuing apparel exports with Covid-19 vaccines hitting the market in time.

If the destination countries can avail Covid-19 vaccines by January next year, they will be able to control the situation, which will help the country's exports to those countries remain at a good position, Kutubuddin, chairman of Envoy Textiles with an annual turnover of $120 million, told The Business Standard.

The country's RMG factories can run up to December or January with the number of work orders they have at present. But the number is lower than what it was in the same period last year.

However, Kutubuddin Ahmed, said, "If these orders are held up or cancelled with the pandemic situation turning very serious, our business will plunge into a deep trouble."

"This year, Christmas sales might get affected as our destination countries are going to observe this festival in a very subdued way," he added.

Status of Covid second wave 

Many countries reintroduced restrictions with new Covid-19 cases continuing to surge.

The United Kingdom has announced a second national lockdown, which will come into force from Thursday. Pubs, restaurants, gyms, and non-essential shops will have to close till 2 December.

A night-time curfew has been imposed in France, while Spain, the Netherlands and the Republic of Ireland have gone for partial local lockdowns, which will last from two to six weeks.

Additionally, Germany, Italy, Denmark, Belgium, Portugal, and Greece have imposed new measures to tackle the second wave.

In the current wave, the number of daily new cases in the US has already reached over 86,000.