RMG orders slump
International buyers are following a 'go-slow' policy in positioning orders with apparel suppliers in Bangladesh because of unique lockdowns and stricter restrictions on key markets amid a growth in coronavirus infections and turning up of unsold goods amid depressed sales.
Native garment suppliers say there have been receiving 20 % fewer work orders for another season beginning from June.
The fewer order placements are occurring mainly in small and moderate enterprises as they have much less production capacity and weak financial strength, and some trade partners or buyers abroad.
Moreover, the demand for deferred repayment is still as severe since it was in the original months of Covid-19 found in 2020. In a few circumstances, it offers worsened as the situation in the Western marketplace is dire, sector insiders say.
AK Azad, managing director of Ha-Meem Group, a high garment dealer, faces fewer orders and deferred repayment.
"I be aware of the lockdown will lengthen, and there is an uncertainty, and I am trying to increase the efficiency in order that I can survive during Covid-19."
The third wave of infections is sweeping through Europe, which accounts for 60 % of garment exports from Bangladesh.
Countries such as Italy, Germany, France and UK are actually reinstating stricter lockdowns, and many other countries around the world are following the suit.
Previously, buyers used to give at sight, a kind of payment due on demand. It needs the party receiving the nice or support to pay a certain sum immediately upon being presented with the bill of exchange.
Buyers are actually requesting a deferred repayment for 180 days, sometimes a lot more. So, the situation has not improved in terms of payment deferment, suppliers said.
SMEs will be the worst victims in that situation. Besides, most of them are not receiving sub-contracting orders as the bigger units do not have large volumes of export orders for themselves for another seasons.
"The ancient inventory in the retail stores is probably the major known reasons for the go-slow policy by the buyers," explained Fazlul Hoque, managing director of Plummy Fashions Ltd, a good Narayanganj-based knitwear factory.
"I have received 20 % fewer do the job orders from my potential buyers for another seasons."
Hoque said the orders for a few specific products were higher than the traditional goods.
For instance, suddenly, he received the orders for loungewear and night wears as a result of a higher demand for casual wear as people are staying most of enough time at home as a result of Covid-19 and lockdowns.
Kutubuddin Ahmed, chairman of Envoy Group, among the top manner items exporters, said although the sector had been experiencing 20 % to 30 % fewer orders, it had been recoverable as a result of the shifting of job orders from China.
"Buyers happen to be following now a good go-slow approach and placing orders in small slots instead of bulk amount. Because the Western marketplace can be under strict lockdown, their retail sales contain plummeted. So, the obtain payment deferment is constantly there," stated Rubana Huq, president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA).
During the March-April period this past year, the garments sector faced buy cancellations and delays worth about $3.18 billion.
"We will be negotiating with each of the buyers as best as we are able to. Some 90 % of the past orders have already been reinstated, and we are trying for the rest."
"However, it is complicated since a great number of the dues happen to be caused by the bankrupt buyers, and we don't have any legal cover against such non-payment."
Not absolutely all the retailers and brands have cleared the whole arrears yet, she as well said.
Whenever the BGMEA is reported about non-payment or other purchasing-related issues, the association promptly engages with the respective buyers to facilitate amicable resolution and expedite negotiation, Huq said.
"We've been contacting the buyers one at a time on behalf of our suppliers. We have taken the assistance of our foreign missions, international mass media, and other sociable partners, including labour federations."
