Flashback in Outgoing 2020Corona hits hard RMG sector

The ready-made garment (RMG) sector, the lifeline of the country’s exports, has faced its toughest year in 2020 as the entire apparel supply chain collapsed due to the economic fallout caused by coronavirus pandemic.

The pandemic that erupted at the beginning of the outgoing year pushed the RMG sector into a great uncertainty with widespread order cancellation, fall in export prices, factory closure, lay offs and job losses.

During the February-April period, apparel makers faced cancellation of export orders worth about $3.18 billion that slightly started rebounding from July.

Though the export orders came back, the global buyers shockingly reduced their price which put the exporters into double trouble.

Corona hits hard RMG sectorAccording to the National Board of Revenue (NBR) and Bangladesh Garment Manufacturers and Exporters Association (BGMEA) data, prices of Bangladeshi garment products dipped by 2.42 percent in February.

Prices fell by 5.26 percent and 4.15 percent in September and October respectively compared to last year.

But from 2014 to 2019, Bangladeshi garment products on an average lost around 1.79 percent in value.

“It was a topsy-turvy year for RMG sector,” BGMEA President Dr Rubana Huq said, adding that they had to go through huge challenges to keep the industry afloat.

The BGMEA president also said the government’s support is needed at least until June for the apparel sector to come out of the present state.

Economic slowdown caused by Covid-19 has intensely brought the RMG workers’ hardship into fore--- job and salary cut, job uncertainty, sudden layoff, shut down of factories have put workers into uncertainty.

Around 26,000 garment workers of 87 factories have lost their jobs since the start of the pandemic, according to Bangladesh Institute of Labour Studies (BILS).

BILS also revealed that 1,915 factories declared lay off and a total of 324,684 workers have become unemployed during the Covid-19 crisis.

At the end of the year, several owners and worker leaders said a portion of workers have got back their jobs following the return of work orders.

Fazlee Shamim Ehsan, director of BKMEA, termed 2020 as the worst year ever for the RMG sector since the beginning of this sector.

Expressing hope for a good time ahead, Fazlee Shamim Ehsan said, “Tripartite cooperation between government, owners and workers has helped the sector overcome the crisis”.

Fall in RMG exports

Apparel makers saw the deepest fall in export earnings during the peak of the pandemic in March-July due to a complete collapse in the supply chain.

In March-July, export earnings fell by 34.72 percent. Country's RMG exports plunged by 18.84 percent to $27.70 billion in the just concluded 2019-20 fiscal.

After July, earnings bounced back with fresh orders coming in August and September. However, the earnings once again declined in October and November.

According to Export Promotion Bureau (EPB) data, RMG exports fell by 2.66 percent year-on-year in a single month in November. In the previous month, the year-on-year growth in apparel exports was reported at negative 7.8 percent.

Till November 2020, RMG exports to Bangladesh's major markets – the United States, Germany, Spain, France, Italy and Japan – have declined by 8 percent, 10 percent, 6 percent, 15 percent, 30 percent and 28 percent respectively.

Timely stimulus package prevented a disaster in RMG sector

The government had announced a Tk 50 billion stimulus package for export-oriented industries as loans with a two per cent service charge to pay workers' wages during the pandemic.

The fund was extended twice with addition of Tk 25 billion and Tk 30 billion. The size of the fund stands at Tk 105 billion.

Fazlee Shamim Ehsan, who is also the owner of Fatullah Apparels, said the impact of the pandemic on RMG sector would have been more severe if the government did not roll out those timely stimulus packages.

“Timely stimulus package, reopening factories amid the losses of owners and joining of workers at works in the face of corona threat helped the sector to survive the jolt,” said Shamim Ehsan.

Other export sectors also faced the hit

The RMG sector alone contributes around 86 percent of the total export earnings of the country. The export sectors contributing the rest 14 percent also faced tough times during the pandemic.

The challenges were almost the same as the RMG sector excluding some thriving sectors like jute and jute and pharmaceuticals sector.

Potential sectors including leathers and leather goods, frozen foods, shrimp, crab, perishable products, light engineering footwear and others had faced their worst year during the pandemic.