Exports may face setback

Country’s export earnings, especially from the RMG sector, are likely to suffer a setback as buyers have cut orders apprehending political violence ahead of the next general election amid rigid stance of both Awami League and BNP over the caretaker government issue.

The exporters have expressed concern that if there is any polls-centric political violence, it may hurt industrial production and disrupt the supply chain.

As a precautionary measure, some foreign buyers have already lowered RMG orders from Bangladesh while some brands are trying to decrease price, they said.

Bangladesh Garment Manufacturers and Exporters Association (BGMEA), the apex trade body of apparel exporters, is trying to reassure the buyers that there is no possibility of political unrest over the polls as of now.

However, it is uncertain what will happen in the coming days as both ruling Awami League and opposition BNP are hell-bent on their respective stances of holding the polls under a neutral caretaker government.

“There’re concerns among some branded buyers, but we from BGMEA are trying to allay their concerns saying there’s still no evidence of political instability in the country over the general election,” BGMEA President Faruque Hassan said. In discussions with diplomats and other forums, the BGMEA leaders are trying to convince them that politics and RMG sector are separate, he added.

The picture of export orders may be available through the use of raw materials. The approval for duty-free import of fabrics or raw materials by a factory after getting export order is called utilisation declaration (UD), which is given by BGMEA.
BGMEA data show that the number of UD declined by 311 to 2,029 in June from 2,340 in May. In June last year, it was 2,169. Apart from the fall in UD number, the volume of apparels has also declined.

“The volume of apparels is also declining now against the number of UD. In normal time, there had been 5,000 pieces under every UD on average, which has now slumped to 500 pieces,” said BGMEA Vice-President Shahidullah Azim.

Representatives of some big apparel brands have recently sat with the BGMEA leaders when they expressed concern about whether they will get delivery of their orders in time in case of any political conflict over the parliamentary elections.

In reply, the apparel exporters assured them that they will deliver the orders on time by any means.

They also informed the buyers that the RMG sector remains out of any strike or blockade. As a result, it will not be a problem for production and export of ordered apparels, they added.

Over the 10th parliamentary elections held on January 5, 2014, some 123 people died and many others injured in 41 days of political violence since the announcement of polls schedule.

In the last national election held on January 29, 2018, seventeen people died from political violence.

The 12th parliamentary elections are likely to be held in January next and the country’s political situation has already started deteriorating following the rigid stance of the ruling and opposition camps over the method of holding the polls.

Policy Research Institute (PRI) Executive Director Dr Ahsan H Mansur said: “The export orders are falling when the country is in a dire need of a rise in exports given the dollar crisis.”

“It can be said from experience that the situation will continue until any peaceful solution to the crisis. Political and economic consequences of the unrest will be very devastating,” he added.

General workers will lose job and the RMG factories cannot survive as a result of a fall in exports, Dr Ahsan H Mansur said, adding that the backward linkage industry and people linked to those will be also affected.

Exporters said export orders have fallen more for small and medium factories, while some buyers are trying to get the prices lowered cashing in on the situation.

They fear that some factories may eventually be shut because of the situation.

The exporters said the volume of work in RMG units has been on the decline for the last few months and sometimes they have to work on “no loss, no profit basis,” while some have to suffer loss.

BGMEA leader Shahidullah said the buyers have kept a close eye on the overall political situation and are aware of every small political development in Bangladesh.

Executive President of Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) Mohammad Hatem admitted that the export orders slipped.

He, however, said the situation has not reached a concerning level and the buyers are trying to get informed of the political situation.