The readymade garment (RMG) sector has been facing new challenges in the world market as the global demand for clothing has been decreasing day by day. On the other hand, the RMG production has also decreased due to the intensifying electricity crisis. In this situation, export orders from different countries especially the US and European Union markets have decreased drastically due to the global economic recession and the ongoing Russia-Ukraine War.
According to sources, after the Covid-19 pandemic, the impact of the Russia-Ukraine war halted global economic progress. The recovery of the economy from the negative impact of Covid-19 is uncertain. Almost all major economic countries of the world are suffering.
As a result, the economic recession has also occurred in low and middle-income countries. The big economic countries of Europe including the United States and the United Kingdom are suffering from the shock of high inflation. Along with Bangladesh, India, Pakistan also suffered a big shock of inflation.
Sources said that 20 per cent of apparel orders have already fallen in the European market. 56 percent of Bangladesh’s total garment exports go to Europe. Not only this, apparel export orders from the single largest market USA to other parts of the world are also declining. The entrepreneurs of the ready-made clothing sector have become extremely worried.
Entrepreneurs in this sector said that due to the increase in global inflation due to the impact of the Russia-Ukraine war, the garment traders have to go towards an overall uncertain situation. Meanwhile, Western consumers have
also become more mindful of their personal spending. Due to which it is estimated that the number of work orders in Bangladesh’s garment sector has decreased by 20 per cent.
Bangladesh Garment Manufacturers and Exporters Association (BGMEA) President Faruque Hassan said in July this year, the international retail clothing vendors and brands ordered 20 per cent less than they ordered from March to June this year and from September to November of last year. Retailers are not able to sell products to the customers there as before.
He also mentioned that consumers are forced to buy fuel and food at higher prices than before. For this reason they have reduced the budget on clothings.
He said that the price of gas in the United States and the European Union has increased almost three times. Garment supplying countries such as Bangladesh have been hit by rising fuel and food costs.
The BGMEA President mentioned that utilization declaration (UD) has decreased by 20 per cent in the upcoming spring and summer season.
BKMEA Executive President Mohammad Hatem said that there is a decrease in work orders and added that the utilization declaration for the coming spring and summer is 30 per cent. Inquiries are down 30 per cent compared to four months ago. Even after a month the same situation can be seen.
Meanwhile, recently such a report was published by the American news media Bloomberg and the Indian news media Economic Times.
In the report, Fazlul Haque, Managing Director of Tanmoy Hilfiger and Inditex SA’s Zara Company, claims that new orders have not increased in July in a gap of one year, on the contrary, they have decreased by 20 per cent.
He blames two factors for export products not reaching desired destinations amid high inflation. Retailers in the US and European markets have either suspended the release of goods from ships for certain periods. There is no chance of entering any major order in the upcoming days. It may have a severe impact on the country’s economy.
He also said that the non-arrival of orders means that the country’s economy is in danger. The garment industry contributes more than 10 per cent of the gross domestic product, employing 4.4 million people. In this difficult time, in the situation of war between Ukraine and Russia, the government cannot reduce the electricity supply in the country while saving energy.
Fazlul Haque mentioned that the garment sector is facing multifaceted challenges in the country and abroad at the moment and said that in order to export garments on time, it is necessary to maintain uninterrupted power supply in the country.
Atiqur Rahman, Chairman of Standard Group Ltd, claimed production cost has increased due to the energy crisis. The dyeing and washing units rely on generators for three hours a day. The cost of generators has tripled that of electricity. Production activities of dyeing and washing units cannot be stopped in any way due to power supply shortage. If this were to be done, all the fabrics would be ruined. It should be noted that the cancellation of export orders in the post Covid-19 period reminds South Asia of the pre-corona pandemic period.
In the fiscal year June-2020, Bangladesh’s garment exports were about US$ 28 billion. This is the lowest in the last five fiscal years. However, exports increased to $42.6 billion in June this year (2022). It is 82 per cent of the country’s total exports. And this is the export record this year.
Meanwhile, Bangladesh has applied for financial assistance from the International Monetary Fund. Currently, the country’s reserves are down to $39.79 billion (July 13, 2022). It was $45.33 billion during the same period last year. The amount of reserves now maintained can cover only four months of import expenditure. On the other hand, the country’s trade deficit has come down to $33.3 billion (June-2022).
Meanwhile, the statistics said, Bangladesh exported more than usual from September to April last year. But this trend did not continue last May due to the war in Ukraine. Garment shipments fell to $3.16 billion in May from $3.93 billion in April.
In this context, BGMEA director Mohiuddin Rubel said that global inflation is worrying the garment traders of Bangladesh. In the meantime, production costs have increased. Ship fares have increased. The price of raw materials has also increased.
He also mentioned that Europe has seen the highest inflation in 25 years while it high in the US in last 40-year. Besides, the price of everything starting from fuel oil is on the rise. Production cost is increasing every day. Bangladesh’s garment sector is facing danger from two sides. First, the cost of making garments for garment traders has increased. Second, demand has decreased.
