October 1, 2020, 3:21 am


Abu Taher Bappa

Published:
2020-03-23 01:33:33 BdST

1,089 garment factories face $1.5bn order cancellation, withdrawal


FT ONLINE 

The coronavirus pandemic is dealing a heavy blow to the country's top export-earning sector – the readymade garment (RMG) industry.

Global buyers have thus far cancelled or suspended orders of readymade garment products worth $1.5 billion from Bangladesh amid the coronavirus outbreak.

Bangladeshi exporters said the value of cancellation or orders held up would go up further as they are getting notices to cancel orders or delay shipments every hour.

According to Bangladesh Garment Manufacturers and Exporters Association (BGMEA) president Rubana Huq, 1,089 RMG factories informed the trade body till Sunday about order cancellation or withdrawal notices they had received from the buyers for export orders worth $1.5 billion.

Over 7.22 lakh workers are employed in those factories, she said in her latest update Sunday night.

Against this backdrop, the country's apparel exports which witnessed a 5.71 percent negative growth in the first eight months of the current fiscal year are poised to decline further.

Of the $34 billion worth of garments Bangladesh exported in the 2018-19 fiscal, over 60 percent were shipped to European nations which are hardly hit by the coronavirus pandemic. The next biggest buyer – the USA – is also facing the menace, which has prompted the government to declare emergency in some states.

"This will have serious consequences as we see an imminent liquidity crisis that will cause financial disruption for the manufacturing units," said Rubana Huq, president of Bangladesh Garment Manufacturers and Exporters Association (BGMEA).

In a state of obvious dismay, she said the brands are cutting down their orders and asking manufacturers not to make apparels until further orders.

Italy, Spain and France and some other European countries declared nationwide lockdowns as the countries took sweeping measures to reduce the spread of the coronavirus.

Following the lockdowns, major brands in Europe, including Primark and Inditex, have shut their stores in the countries.

Later, major retailers in North America like Nike, Under Armour, Lululemon Athletica, Lands End, Columbia Sportswear and Gap announced closure or reduction in store hours of all outlets in the United States and Canada amid the rise in the number of coronavirus cases in the countries.

The pandemic broke out in China in December last year and has now spread in 186 countries across the globe.

A total of 27 people have tested positive for the virus in Bangladesh while three others have died till Sunday.

Primark cancel orders

Primark, the Irish retail fashion brand, has cancelled all supplier orders that have yet to reach its destination centres, British Sunday Times newspaper reports.

The company is using a 'force majeure clause' (that allows a company to change contract obligations under extraordinary situation) in its contracts to cancel the orders, the report says.

"We are deeply saddened that this will clearly have an effect throughout our entire supply chain," the newspaper quoted the company's chief executive officer Paul Marchant as saying.

Primark operates 376 stores in 12 countries.

It annually procures apparels worth about $900 million from Bangladesh's over 100 apparel factories.

Worker leaders demand compensation from brands

Meanwhile, labour leaders on Sunday urged the government to call a meeting with the representatives of the global brands and buyers and demand compensation for workers from them.

They made the request at a meeting with State Minister for Labour Mmunnujan Sufian at Sromo Bhaban in the city.

At the meeting, Amirul Haque Amin, general secretary of the National Garment Workers' Federation said it is the time to call a meeting involving four parties which include government representatives, factory owners, worker leaders, and brand and buyers' representatives.

The government may call upon the brands and buyers to compensate the apparel industry workers, he said, adding such demand has already arisen across the globe, he added.

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