This is one of the most tragic turns in our industry.
In the absence of proper restructuring or even an exit policy, shrouded by western bankruptcies, hounded by buyers' unforgiving contracts and force majeure clauses, factories are facing turbulent times. Perception of the industry doing well and getting all the favours from the government must kindly be re assessed today. Otherwise jobs of 4.1 million workers will be at stake.
The commercial banks have been instructed by Bangladesh Bank to arrange repayment of the stimulus package by 3rd week January, 2021. The letters were issued day before yesterday. The industry, amidst the second wave of Covid-19 is taking a deep plunge into uncertainty. Without the moratorium of the salary stimulus package being extended by six more months or the tenure of the loan being extended by at least one more year (currently 24 months) the industry will collapse.
The Export Promotion Bureau (EPB) of Bangladesh has just published the export performance data for the month of December 2020 which continues to portray the worrisome scenario of our exports.
RMG has had consecutive downturn in export in December by 9.64%, which wrapped up the annual export performance for 2020 with an unprecedented fall of 16.94%.
In December, woven garment export posted the worst performance since June 2020, as it declined by 18.07%. Knitwear export managed to have a relatively stable position with -0.45% growth in December, thanks to the demand for apparel for home use.
While looking at 2 years' trend, it shows that growth between October 2018 and 2020 was -26.03%, and November 2018 and 2020 was -14.32%. The two years change in export for the month of December is -8.55%, meaning that we exported 8.55% less in December this year compared to what we exported in December 2018!
So, given the effect of lockdowns in Europe and USA and their impact on retail and demand, the worst ever Christmas sales the world has seen, and most of all the effect of price decline (which is around 5% since September 2020), it was a dark year for the Industry that we have seen. As the uncertainties and stresses caused by the second wave still persists coupled with the unavailability of vaccine, and the impact on global economy it would leave, this downtrend in export will probably continue till April of this year.
I seek all your help to look at the industry perspective and help us frame our narrative for policy makers to pay heed to the real situation and not the perceived one.
Dr Rubana Huq is the president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA).