RMGs upbeat, recovering from $400m loss, $2b order shift amid unrest

Despite a production loss of around $400 million and orders worth $2 billion moving to competitor countries due to the recent labour unrest, apparel exporters are now optimistic about rebounding as the law and order situation improves and international fashion retailers return with fresh orders.

Industry leaders say factories are now operating normally after the unrest, thanks to collective efforts from the government, law enforcement agencies, labour leaders, and the Bangladesh Garments Manufacturers and Exporters Association (BGMEA), which has helped restore confidence of foreign buyers.

Additionally, apparel exporters say they are now receiving more orders than their installed capacity can handle, thanks to the economic recovery in major markets such as the USA, the UK, and Germany.

5%-6% orders shifted to regional countries

BGMEA President Khandoker Rafiqul Islam said some work orders have shifted to India, Pakistan, Sri Lanka, and Vietnam due to labour unrest in major industrial zones, including Savar, Ashulia, and Gazipur.

"Some international fashion retailers and brands are returning now that normalcy has been restored in the sector," he said during a press conference at the BGMEA office in Uttara, where he provided details about the recent losses incurred by the sector.

He noted that the shifted orders represent around 5%-6% of the country's exports, highlighting that law and order are the major challenges facing the RMG industry at the moment.

According to the EPB, Bangladesh's apparel exports reached $36.15 billion in FY24.

The BGMEA President told TBS that around 400 factories experienced about 15 days of production loss due to the unrest, with annual exports from these factories valued at around $7.5 billion.

Of these factories, 39 also lost their ability to pay monthly salaries to workers. The BGMEA has requested the finance advisor to provide a soft loan to help these factories meet their wage obligations, he added.

The BGMEA president requested the government not to disconnect utility lines like gas and electricity in any industry for three months, as many were affected by the labour unrest.

Rafiqul Islam also requested the government to allow apparel makers to bring compressed natural gas (CNG) from the filling stations to run their production during the gas shortage in the national grid.

The BGMEA President said that in a joint meeting last month, the manufacturers accepted all 18-point demands of the workers, where 16 were implemented instantly by almost 99% factories and the procedures of accepting the rest are ongoing.

He also mentioned that this week, the BGMEA will meet with representatives of buyers to update them on the developments in the country's RMG sector.

In response to a question, he stated that they would take initiatives to keep the business of jhut and other recyclable wastes free from external influences. They plan to develop a long-term strategy for this and will seek policy support from the government.

He also noted that, together with the government, they have initiated efforts to provide TCB goods for more than 40 lakh workers in the RMG sector.

Kutubuddin Ahmed, founder and chairman of Envoy Textiles Mills, told TBS that apparel exporters will generally not be able to make a profit if they do not operate with above 80% of their capacity.

To recover from a month of production loss, a factory needs at least three months of operation for textiles and four to six months for garments at full capacity.

Other concerns of the sector

At today's press conference, RMG leaders urged the government to simplify customs and port procedures and to eliminate unnecessary delays in loading and unloading at ports in order to retain their competitive edge.

They also called for ensuring the safety of business establishments if any actions are taken against entrepreneurs for any allegations.

During the press conference, the BGMEA President urged the government to address the provisions of an exit policy for garment industry entrepreneurs.

He also called on the government to hold anarchists accountable.

Additionally, he urged the government to reduce bank interest rates to single digits.

Exporters getting more orders than capacity

Sparrow Group Managing Director Shovon Islam told TBS that they have already booked orders for the next year.

He mentioned predictions for the US market, stating that US apparel imports are expected to see a 7%-10% growth by the end of this year. As one of the major exporters, Bangladesh has the opportunity to capture a significant share of those additional orders.

Echoing Shovon's sentiments, Giant Group Managing Director Faruque Hassan said his company is also receiving more orders from US buyers, with a US retailer becoming the largest business partner for his company.

Similarly, Shams Mahmud, Managing Director of Shasha Denims, stated that his company exports approximately $25 million annually. This year, they have experienced good growth in orders despite the workers' unrest.

Shovon Islam expressed hope that Bangladesh's apparel exports will show positive growth by the end of this year, provided the government ensures a stable supply of utilities and maintains a stable law and order situation in the country.

He added that buyers are now cautiously optimistic about Bangladesh's apparel growth.

BGMEA Senior Vice President Abdullah-Hil Rakib said apparel export growth could see a significant increase by the end of the year if the government successfully negotiates with the USA to secure duty benefits for man made garments.

He further said Chief Adviser Professor Muhammad Yunus could leverage his image to persuade the USA to provide duty benefits, which would help seize the opportunity to attract US apparel orders shifting from China.

Economies of major export destinations bouncing back

Bangladesh's export earnings from major markets, including the United States, Germany, and the United Kingdom, showed positive growth in the July-September period of FY25, thanks to the recovery of their economies.

However, Bangladesh's exports to Italy recorded negative growth due to the struggling economy.

Exports to Spain declined by 11% because the major Spanish retailer Inditex has shifted some orders as they produce fast-fashion apparel. Spain's economy is expected to grow by 2.1% in 2024 and 1.9% in 2025, according to the European Commission.

According to the Export Promotion Bureau, Bangladesh's export earnings from the US increased by 11.73% in the July-September period of FY25, reaching $2.05 billion, up from $1.84 billion in the same period the previous year.

Apparel accounted for $1.81 billion of Bangladesh's total export earnings from the US, the country's largest export market.

Exports to Germany grew by 1.96% to $1.22 billion, up from $1.19 billion in the same period of the previous financial year, while apparel exports amounted to $1.14 billion.

Exports to the UK increased by 1.89% to $1.18 billion in the July-September period of FY25, compared to $1.16 billion in the same period of FY24, with apparel contributing $1.12 billion.

Industry situation close to normal

According to BGMEA sources, nearly 100% of factories in the major RMG industrial hubs of Savar, Ashulia, DMP, and Gazipur were operational today.

Only two factories were closed in Savar and Ashulia. Anjuman Designs Ltd was closed under the "no work, no pay" clause of the labour law, while Generation Next Fashion had been on general holiday for the last several weeks due to a financial crisis, including delays in the payment of wages for August and September.

Overall, 99.91% of factories nationwide operated normally, totaling 2,117 out of 2,119 factories.