Uncertainty again looms large over RMG export for 2nd wave: BB

Uncertainty once again has loomed large over readymade garment export as the second wave of coronavirus started crashing against the shore of Bangladesh in last November.

Earnings from this sector depend on the situation prevailing in Europe and America due to the second wave as the United Kingdom has already been going through another lockdown till February 15.

This information has been obtained from the special report titled 'Garment Export Quarterly Review' published last week by the Bangladesh Bank.

According to the report, garment exports have been hampered due to the spread of deadly coronavirus. With the withdrawal of the local lockdown, garment productions and exports began to accelerate.

As a result, a limited number of lockdowns have been imposed in Western countries, including Europe and America. The communication system along with business activities have also started to be disrupted. Meanwhile, the second wave of the Coronavirus has brought business to a standstill in the United States and Europe. As a result, most of the shops are closed causing a reduction in the purchase of clothing thereby hampering the export of clothing.

In this context, the first Co-President of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) Mohammad Hatem said that the garment industry fell off at the first wave of the coronavirus. Later, the industry started to turn around but now it is hit by the second wave again.

He said the bulk of garment exports take place during the winter. But this time the winter market did not come up. As a result, demand has declined. The adverse effects are likely to intensify in the future.

According to the report, about 20 percent of garments are exported to the United States and 54 percent to the European countries. The remaining 28 percent go to other countries. Of the total exports, 74 per cent of garment exports to the European and American countries are now under threat.

Meanwhile, sources in the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) said that the production capacity of garment exports is not going to be utilized more than 80 percent now. Earlier, 100% capacity could have been utilized at this time. As a result, production cost is increasing.

The report further said that the main source of foreign exchange earnings in Bangladesh is the garment export. Majority of the total export income i.e. 73 percent, comes from this sector. Between July-September of last year, about 86 percent of the total export income came from the readymade garments sector.

Moreover, merchandise shipment declined 0.36 per cent year-on-year to $19.23 billion between July-December 2020 as Bangladesh's major export destinations continued to struggle to tame the rising coronavirus infections, official data showed.

Earnings from the apparel shipment, which typically contributes 84 per cent to the national exports, dropped 2.99 per cent to $15.54 billion, according to data from the Export Promotion Bureau (EPB).

Of the export receipts, $8.52 billion came from knitwear shipment which is up to 3.9 per cent of the total export a year ago. Woven exports declined 10.22 per cent to $7.01 billion.

The report said that the government has announced various incentive packages to help the sector to cope with the negative effects of coronavirus. Apart from implementing these, other assistances are also being provided by the government.

The central bank hopes that the garment sector will gradually be able to fully utilise its production capacity. However, it depends on the business situation in the western countries due to the impact of the second wave of coronavirus pandemic.