Covid restrictions in Europe increase woes of garment suppliers
Lockdowns and tightening of coronavirus constraints before Christmas in several Europe to tackle the next wave of infections have started increasing the woes of garment exporters found in Bangladesh.
Europe is the greatest trading bloc for Bangladesh and makes up about more than 60 per cent of the country's exports.
Of the full total shipment to the EU, a lot more than 90 per cent are apparel items.
Last fiscal year, apparel shipment stood at $27.95 billion, that was $12.49 billion in FY10.
The apparel shipment has been facing a crisis from the onset of the unprecedented pandemic. Recently, it has started dealing with the first period of the pandemic-induced shock. However the second wave, which began from September, may nip the first restoration in the bud.
Most of the key export locations such as for example Germany, France, Spain, holland, and Italy have either announced lockdowns or are considering to announce strict procedures to restrict the activity of people carrying out a surge of infections in recent weeks.
HOLLAND has entered a five-week lockdown, with non-essential shops, theatres and gyms all closing. Germany enforced a difficult lockdown from yesterday after the number of infections strike record levels.
Within the restriction measures, non-necessary shops would remain shut, and garment items fall in this category. The revenue in the retail retailers in Europe dropped 21 % this Christmas in comparison to that a yr ago, according to mass media reports.
"As Germany, the solo largest importing country in the EU, is going into lockdown until January 10, it'll only aggravate the negative effect on the exports," stated Rubana Huq, president of the Bangladesh Garment Suppliers and Exporters Association (BGMEA).
"Apparel is a good non-essential item, and it'll have a nosedive."
With hook pause, the recurrence of Covid-19 has appeared as "decapitating the already dead", Huq said.
Injured by the first wave, the industry was already bleeding and kept to these kinds of a disrupted and weakest standing that a repetition of a fraction of the magnitude of the 1st wave could be more intense, she explained.
MA Jabbar, managing director of DBL Group, a garment exporter, said the next wave, in addition to the lockdowns ahead of Christmas in Europe, had already impacted the shipment from his organization.
Although the entrepreneur could manage job orders to an excellent extent, the prices provided by the retailers and brands are too low.
"We are just running our organization and keeping the jobs of thousands of employees," explained Jabbar, who mainly exports apparel what to Europe, especially to Germany.
"We will experience the impact, but I am hopeful that by April, the problem will improve a whole lot as the vaccinations in Europe will hopefully be accomplished by this time around," he said. Currently, he is catering to spring and summer orders.
After the first wave, he recovered well, although there was uncertainty. "I am very optimistic that people can overcome the next wave also," Jabbar said.
The factories with composite production facilities, that may perform all tasks from producing yarn in spinning mills to producing shipment of finished garments under one platform, were comparatively much less affected, according to the entrepreneur.
"That is why the backward linkage ought to be concentrated in the united states to reduce long lead period with varieties of fabrics. We have done expenditure in the backward linkage."
Huq said the impression of the first wave was undoubtedly incomparable.
The sector accepted high deals and delayed payments to clear the cancelled goods, which had its effect on the financial stability of the industry.
Garment price went down by 4.85 % year-on-year since September.
The factories had to pay wages and all of the regular payments, and forced loans have already been created against factories mostly doing work for bankrupted buyers.
Relating to a BGMEA examine, the garment industry shed $6 billion in export in FY20, and therefore the capacity was seriously underutilised.
The BGMEA didn't have an inclusive picture of the real-time cancellation scenario and non-payments. However, a survey of 50 factories demonstrates instead of cancellation, buyers are following a go-slow way in placing latest orders and factories reported 30 % fewer orders.
"This is the photo of the industry, and the problem is worsening day by day," Huq said.
The uncertainty puts the industry in an unpredictable scenario and impacts in the area of uncertainty over confirmed organization, shipment, allocation of capacity, plus they all have an effect on business viability, she said.
The BGMEA chief is looking at tough days ahead.
The repayment of wage-assist loans is scheduled to start out from January 2021, and the suspension of loan classification will expire by the end of 2020, if not further extended. Other short-term policy supports may also come to a finish.
"We are looking for policy support to debate this temporary bump," she said.
She actually is also hopeful about making a turnaround by the center of 2021.
