After almost more than 40 days of ‘unprecedented’ unrest, hundreds of deaths across the country, an internet blackout, a curfew for several of those days, the resignation of Prime Minister Sheikh Hasina with her leaving the country and uncertainty about the future, Bangladesh is now on the way to a new beginning. It is being termed as achieving a second liberation. And hopefully learning from all past failures and the mounting challenges ahead, this new journey will make Bangladesh a successful and more peaceful country along with its strong RMG industry. Irrespective of all setbacks and difficulties, the country’s RMG factories are back on track, working in full swing and quite hopeful that the current situation will not impact long-term growth opportunities.
| Khandoker Rafiqul Islam, MD, Designtex Group has been elected President BGMEA. Rafiqul was elected President of BGMEA by the board to serve the remaining term after SM Mannan Kochi, elected as President on 14th March, resigned on 24th August. Mohammad Hatem, MD, MB Knit Fashion Ltd., has taken over as President of the BKMEA, having previously served as Executive President since the last AGM. |
The intensity of the negative developments shook the confidence of the industry since chaos reigned and the flow of information was restricted. In countries that were having competition with Bangladesh, voices for ‘Bangladesh+1’ began to be heard. Apparel brands, worried about Bangladesh for a while, were expected to look at alternative destinations to de-risk their sourcing from the country, except that it did not happen nor is it expected to happen.
Looking at the developments, especially after the interim Government took charge, stakeholders of the apparel industry across the globe are strongly of the opinion that Bangladesh is emerging quickly from this disruption and so is the apparel industry.
| Muhammad Yunus assures full support
In the first meeting with the BGMEA representatives, Muhammad Yunus underlined that interim Government ‘won’t tolerate’ disruptions to its vital garment export industry. He said, “We won’t tolerate any attempt to disrupt the global clothing supply chain, in which we are a key player.” The Interim Government’s vision is to tackle corruption and reform key institutions such as the bureaucracy and judiciary, which industry executives believe will make Bangladesh’s export sectors more competitive in the long run. The Chief Adviser assured the delegation that he would leverage his contacts and the international media to enhance the brand image of Bangladesh, with a particular focus on promoting the apparel industry. Top apparel exporters are of the view that Muhammad Yunus is a globally respected leader, particularly in the Western community and Western buyers believe Yunus will be able to ensure stability in Bangladesh, allowing them to do business without fear. |
Now, Nobel laureate and microcredit pioneer, Muhammad Yunus has taken charge of the interim Government and made some strong decisions. Across the globe it is also believed that his leadership approach has been focused on restoring calm, addressing systemic instability and regaining investor confidence.
Bangladeshi Exporters are optimistic that the new interim Government will enhance buyers’ confidence and increase orders due to the Nobel laureate’s positive reputation in the West, a key market for Bangladesh’s exports. They believe they may recoup from the losses generated by the disturbances of the large-scale student movement that eventually resulted in Sheikh Hasina’s removal after over 16 years in office if the Government can re-establish law and order and provide safety and the support needed to run businesses smoothly.
Shovon Islam, MD, Sparrow Group believes that Professor Yunus possesses remarkable potential to significantly elevate the brand image of Bangladesh, particularly within its readymade garment sector. As per him, leveraging Prof. Yunus’s extensive network of global partners, investors and advocates can offer invaluable support in promoting Bangladesh as a socially responsible and ethical producer of garments.
Adilur Rahman Khan, the Interim administration’s Advisor to the Ministry of Industries has assured that to maintain regular industry output, the administration would prioritise securing gas supply.
Quickly moving toward normalcy
The best thing in this series of negative developments was that apparel factories reopened quickly and most reached 90 per cent of their productive capacity levels.
On 5th August, Prime Minister Sheikh Hasina resigned and the unrest was almost at its peak, however, just 3 days later, by the 8th of August, most of the factories were operational. Interestingly absenteeism was minimal as it used to be during routine working days. To ensure safety, especially for the garment industries, the army has come forward and is conducting patrols. Such steps were very much required to restore the confidence of all stakeholders, especially overseas buyers since without their regular visits, neither the sentiments nor business activities would have been as strong as they used to be.
Coming to the highly significant Christmas season, since the top priority of the exporters and buyers is to complete and ensure the delivery of existing orders, the congestion of import and export containers at the Chattogram port has also started clearing, with port activities ramping up since 8th August. Its authorities have decided to open the port for extended hours and increase manpower in various assessment sections.
Similarly, trade via Benapole Land Port has resumed after being blocked for almost four days since numerous organisations and port authorities were on their toes to overcome the standoff. Benapole is South Asia’s largest land port and an important economic hub between India and Bangladesh.
| The Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) President Mahbubul Alam, emphasised the incredible change that has occurred in recent days, fuelled by Bangladesh’s youth and student population. This revolution has instilled a fresh sense of hope in the youth. |
Not only have RMG stakeholders shown resilience but many others across society have come forward and shown support. It was also heartening to see how on 6th August, students from classes 9 and 10 were seen controlling traffic and clearing debris from the streets – facilitating the resumption of regular vehicle movement. Various reports say that on 7th August, the Bangladesh Ansar and Village Defence Force were deployed for traffic control, although students continued to play a significant role alongside them.
Leading trade bodies have also played a positive role in this critical scenario as expected. The Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) President Mahbubul Alam, emphasised the incredible change that has occurred in recent days, fuelled by Bangladesh’s youth and student population. This revolution has instilled a fresh sense of hope in the youth. He expressed optimism that Bangladesh’s heroic students are working hard to put an end to the mayhem.
The International Chamber of Commerce in Bangladesh (ICCB) President Mahbubur Rahman also stated that Bangladesh’s corporate sector will work alongside the interim administration to rebuild the country’s economy. As per him, a strong role must be played in strengthening Bangladesh’s economy, including its banking sector. He underlined the importance of continuing and intensifying all efforts to acquire foreign exchange.
Significant support from buyers
Another positive aspect of this scenario is that none of the major brands and retailers have cancelled any order. Even at the time of writing this piece, various apparel exporters confirmed to Apparel Resources that none of the medium or small buyers cancelled any order. Although there certainly are delays and apprehension on discount, negotiations with buyers can always be done.
In this scenario, the biggest sourcing ‘partner’ of Bangladesh, H&M stands with the country and has announced that it will not seek any delay-related discounts from suppliers based in the country. The world’s second-largest global brand works with almost 1,000 RMG factories in the country. Bracken Darrell, CEO of VF Corp, also expressed confidence that the situation would improve.
Cascale (earlier known as Sustainable Apparel Coalition) also said that at this time, the industry must use its extended influence to bond together and promote decent work conditions for all. In these uncertain times, Cascale stands with the people of Bangladesh including valued partners and affiliates. “We urge all brands sourcing or engaging in Bangladesh to engage proactively and collectively prioritise human rights and responsible business conduct as Bangladesh navigates these challenges,” it said in a statement and further added, “Now more than ever, our commitment to ethical practices must guide our actions. Amidst factory closures, unrest and exceptional circumstances, leaders must demonstrate integrity and engage responsibly despite communication challenges.”
Ethical Trading Initiative (ETI), UK and The Fair Wear Foundation, Netherlands also insisted that brands sourcing from Bangladesh should engage with their suppliers in the country as best as possible to jointly discuss how to navigate these extraordinary circumstances. It was also said that buyers should adjust their expectations and purchasing practices to adapt to the challenging circumstances in Bangladesh.
| As per reports, majority of exporters are operating all of their factories at full capacity as they lost nearly 10 to 13 per cent of work orders and there was a significant backlog. Despite financial pressure, some of them are shipping goods by air shipment to ensure timely delivery. |
In fact, almost the entire international community has given its support to Bangladesh. For example, in New York, the United Nations (UN) also has expressed its readiness to support the interim Government as well as the people in any way that they seem necessary.
India positive as usual
In India, a large chunk of industry stakeholders have stated that India has no intention to exploit this unfortunate situation and the Indian apparel export industry is making serious efforts to grow RMG exports on its own, based on its merit.
There are almost 20+ Indian factories in Bangladesh and apart from minor incidents, most of them are completely safe and haven’t had any negative impacts. On the matter of India’s textile garment investments in Bangladesh, Indian Finance Minister Nirmala Sitharaman said that investments have gone there in good faith and they did well after this move. She hopes that the investments are all safe.
There were some concerns from yarn exporters regarding pending payments but they have also been assured that with things becoming normal, there shall be no major issue.
Nearly every major part of the administration is in the process of change since institutions like the Bangladesh Bank and Bangladesh Securities and Exchange Commission (BSEC) have had their Governor and Chairman respectively resigning. The Chittagong Port Authority (CPA) has appointed Rear Admiral SM Moniruzzaman as its new Chairman.
Since there are enough signals of institutional reforms across the administration, it’s high time to work positively for the rebuilding of Bangladesh again and for this, a powerful economy will be built on the base of a strong RMG export industry.
