Apparel makers looking for new buyers to tackle crisis

Now that there has been a growing economic debacle across the world driven by the COVID pandemic, the country’s readymade garments (RMG) manufacturers are at bay.    

Added to the crisis was the recent dramatic upsurge in the dollar prices at the kerb market – but much to the relief of the stakeholders, the dollar finally started to be cheaper in the last few days.

Also, this month’s fuel price hike is adding to the woes. 

The unwanted situation has forced the export orders to drop to almost one-third of the regular amount, industry insiders say. This drastic fall is resulted from the fact that there has been no new orders from major US giant Walmart and many European buyers, among others.    

Hence, RMG-makers are focusing more on engaging new buyers than on manufacturing.

They have already visited a number of countries in this regard, but in vain.   

Walmart blow

Walmart, one of the major buyers of Bangladesh's RMG products, has declared that it would cut 30% of orders in the country, making it the worst blow the South Asian country to deal with. 

Immensely concerned over the move, Bangladeshi industrialists fear another spell of disaster is brewing for them.  

This is adding to the already struggling RMG sector, which hardly saw any hike in the product prices since the pandemic started in early 2020. 

Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) Vice-President Fazlee Shamim Ehsan said that many renowned global brands including Walmart have cancelled their orders. 

“Even the buyer that I’m working for has declined 35% orders in a year. The country’s apparel industry is facing a similar situation. If this goes on, the country’s main export sector will incur massive losses,” Ehsan added.  

Buyer crisis

Industrialists and entrepreneurs had already started the mission to pick new buyers amid the potential crisis in June, thus, visiting Iran, Uzbekistan and Kazakhstan among other Middle Eastern countries.

They held talks with buyers there – but ended up failing to engage any.  

They also tried doing so in several African nations including Morocco and Chad. Interestingly, African businessmen expressed more interest in setting up factories in Bangladesh than placing orders.  

Another crucial point is that many countries are manufacturing apparel products on their own – another reason for Bangladeshi businessmen to be concerned about.

Bangladesh Garment Manufacturers and Exporters Association (BGMEA) Director Mohiudin Rubel said they were aware of the matter long ago.

“This is why such a crisis is nothing unfamiliar to us. But this is such a big blow to the industry. Production costs have already gone up following the hike in fuel prices and transportation costs,” he added.

The production costs have already seen a minimum of 20% rise following the recent fuel price hikes, businessmen say.

Energy crisis, inflation new hurdles

Other than suffering financial losses, they are also in fear of maintaining the quality of their ordered products as there have been frequent power and gas outages.

BKMEA Executive President Mohammad Hatem the growing gas-power crisis has emerged as massive trouble for the sector. 

Apparel makers say most of the orders being processed now were sealed two months earlier.

But in the meantime, fuel got costlier. 

This means inflation surged over the period too.  

“And at this stage, we can’t now push for a rise in our payment. We’re doing it despite incurring losses,” one of the industrialists said.

Skyrocketing inflation has also gripped several European nations including the UK, a major buyer of the RMG products, hampering the import orders significantly. 

British consumer price inflation jumped to 10.1% in July, its highest since February 1982, up from an annual rate of 9.4% in June, intensifying the squeeze on households, according to official figures.

Centre for Policy Dialogue (CPD) Research Director Khondaker Golam Moazzem advised the local businessmen to maintain “good terms” with the buyers. 

“In doing so, it is a must to ensure proper supply of power, gas and dollar, “ he said.  

Citing some other issues, BKMEA leader Hatem alleged the National Board of Revenue’s policy towards them is not business-friendly. 

“Banks are not cooperating us as expectedly. We’re now depending more on imports. This also greatly affecting the government,” he concluded.