Industry News

Garment exporters are expecting a strong recovery in exports and business as normalcy is being gradually restored with the changing political scenario.

The business environment was facing an impasse because of the latest spells of violence and frequent shutdown of factories, for which they were unable to manufacture goods for export.

Exporters also said, though July, August and September comprise the peak season for shipping goods meant for Christmas and for booking work orders for the coming summer and spring seasons, they were facing challenges in sending goods to retailers through Chattogram port amid violence.

They were also unable to communicate with their business partners both at home and abroad because of the recent internet blackout across the country and for the violence.

The apparel manufacturers are now planning to reopen their production units and to restart with a new vigour as they have been facing shutdowns, difficulties in transportation and shipment of goods over more than one month because of the political crisis.

The Bangladesh Garment Manufacturers and Exporters Association (BGMEA) called a meeting yesterday at 7:30pm to discuss the next course of action as the prime minister resigned, said a director.

They decided that the garment factories and textile mills will stay shut for now considering the current situation. The owners may take a decision on factory reopening today.

They had earlier shut down their units two weeks ago for four days amidst violence and curfew. During the first round of shutdown, they could not even communicate with their international clothing retailers and brands because of an internet blackout across the country.

Because of the latest spell of student movement and political impasse, the BGMEA has already said they have lost Tk 6,400 crore while the textile millers said the amount of their loss is more than $58.8 million.

The garment and textile millers have shut down their production units across the country fearing labour unrest and vandalism, which will cause a massive loss for the sector.

During the first round of violence and curfew, the international clothing retailers and brands expressed concern over the situation as they were facing difficulties in placing work orders with factories and receiving shipments of goods from Chattogram port.

“We mainly discussed the issue of reopening the factories. However, we may take more time to reopen the factories considering the change in the political situation,” said BGMEA Vice-President Arshad Jamal Dipu over the phone.

“We want to restart production in the factories very soon. But we need help from the administration for the smooth running of the units as their instructions are important for us,” Dipu added.

Also, it recently became difficult to do business and international trade because this is the time to renew bond licences but many, especially the Chattogram-based exporters, are complaining that the customs department is not renewing the bond licences.

Many have been forced to adopt expensive air shipments because of delays in production and transportation of goods to the factories.

Also, many have been forced to provide discounts and accept cancellation of work orders from international retailers and brands because of the latest spells of violence and curfew.

Banks are charging a higher interest rate on loans, he said, adding that all these things are affecting business and all those issues need to be broadly discussed with the trade bodies and administration soon for resolving the issues.

“We have to work seriously now,” Dipu also said.

“I hope everything will change now and business will soon be restored,” said a garment exporter asking not to be named.

The work orders from international retailers and brands will also be restored soon as normalcy has also started to return, the exporter added.

“We are getting ready to reopen our factories as soon as possible,” said a director of the BGMEA asking not to be named.

garments bangladesh bd

Bangladesh is lagging far behind others in seizing US garment work orders shifting from China, which industry insiders attributed to a number of factors like inefficiency, long lead time and energy crisis.

Data available with the Office of Textiles and Apparel (OTEXA), a body under the American Commerce Department, also indicated the same trend that showed Vietnam has surpassed China in garment shipments to the US during the first four months of 2024.

On the other hand, Bangladesh sustained double-digit negative growth, 14.44 per cent to US market, to fetch $2.30 billion during the period in question. The country’s slump is evident in both the value and volume of exports.

During the January-April period of 2024, Bangladesh shipped 8.26 per cent fewer garments, which is 763.35 million square metres, compared to the previous year’s 832.06 million square metres.

US import figures show Bangladesh’s key ready-made garment competitors China and Vietnam outperformed Bangladesh while exporters list a number of domestic issues like long lead times, inconsistent energy supplies and an overall high cost of doing business for their loss of export share in the US market.

These same factors, they say, give Vietnam an advantage in the American market.

US apparel imports from Vietnam totalled $4.38 billion in the January-April period this year, marking a slight 0.31 per cent growth, show OTEXA figures released on May 06.

In contrast, China’s apparel exports to the US saw a decline of 4.43 per cent to $4.32 billion.

However, overall US apparel imports fell by 6.0 per cent to $23.68 billion in the first four months of 2024, down from $25.20 billion in the same period of 2023.

Talking to the FE, a number of exporters have opined that buyers are now expressing concern over energy security of the country, saying that labour and energy are one of major two strengths that helped the sector grow.

Asif Ashraf, managing director of Urmi Garments Ltd, said, “We can’t grab the work orders of US buyers shifting from China mainly because of inefficiency, absence of aggressive marketing there and also energy crisis.”

Buyers are now expressing concern over energy security as there is gas and electricity problems and factories can’t use full of their production capacity, he noted.

Mr Ashraf, also a director of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), said the government should give strong attention to the issue.

Many Chinese people are investing in Vietnam and Vietnam has been taking most advantage from China shifting with rising exports to the US market, he observed.

When asked, Mohammad Hatem, executive president of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), said buyers are now placing orders with shorter lead times due to various factors. This situation puts China and Vietnam, with their shorter lead times and more consistent energy supplies, in a more advantageous position.

Exporters are struggling to meet lead times for current work orders due to a severe gas crisis, he told The FE on Saturday.

He also said that meeting production timelines is difficult as they require 15-20 days to obtain fabric due to gas and electricity shortages.

Bangladesh also cannot receive all materials efficiently due to the lack of a deep-sea port, further delaying import and export activities.

The BKMEA leader said high production costs due to rising gas prices, recent wage hikes and anticipated electricity rate increases are eroding their competitiveness.

“In many cases, we can’t receive the work orders as buyers offer prices below the production costs,” he noted.

He alleged that they also face difficulties due to non-cooperation from banks. “In such a situation, how Bangladesh could be competitive?” he posed a question.

Mr Hatem also opines that Bangladesh also lags behind Vietnam in grabbing shifted work orders from China due to their advantageous position of short lead time, lower duty to US market, good connectivity with China while many Chinese people invested in Vietnam.

OTEXA data shows that the US RMG imports from Cambodia rose by 7.92 per cent to $1.02 billion in the January-April period compared to the same period in 2023.

India’s RMG exports to the US market declined by 5.02 per cent to $1.66 billion and Indonesia recorded an 8.46-percent fall to $1.38 billion during the period.