Bangladesh RMG to loss on export target if political unrest continues

YarnsandFibers News Bureau 2015-02-13 14:00:00 – Dhaka

The Bangladeshi readymade garment sector has incurred huge vandalism caused by the non-stop political unrest beginning from January 6. In the last 35 days the RMG sector has incurred a loss of Tk21,711 crore due to cancellation of orders, extra-burden of air freights and delays in shipments.

According to the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) estimate, the apparel sector faced the order cancellations worth Tk10,000 crore while it had to spend additional money of over Tk918 crore for air shipments.

It also said the RMG sector had to pay Tk5,000 crore extra as it failed to ship the products on time. During the blockades, vandalism costs the exporters Tk4,395 crore while Tk750 crore for planning disruption. The sector also had to pay Tk84 crore extra as transport fees.

The sector also has lost 25% to 30% orders due to the ongoing political unrest, which would cast negative impact on the sector to achieve the export target.

Atiqul Islam, president of the BGMEA addressing an Extraordinary General Meeting (EGM) jointly organised by the BGMEA, Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) and Bangladesh Textile Mills Association (BTMA) to figure ways to tackle the current political situation, which took heavy toll on the country's business expressed fear that the RMG sector people would be forced to cut jobs in their factories due to order shortage in the upcoming days.

The prevailing political disturbance made the global buyers worried about the supply of raw materials, and safety of their staffs in liaison offices and that is why, the buyers cannot travel to Bangladesh for business meeting and placing orders, said Islam.

On the other hand, the buyers are taking a cautious step and not confirming more than 30%-50% of the regular orders and in some cases, buyers are calculating risk premium at the time of order negotiation and reducing cutting and making (CM) price.

The supply chain of the clothing industry at risk with an investment of Tk1,27,000 crore, already invested in the RMG sector including spinning, knitting, weaving, dying, finishing, accessories, packaging and washing.

The remediation process of the inspected factories by National Action Plan (NAP), Accord and Alliance is also being hampered due to political unrest as they are not being able to go to factories for inspection, said Islam.

Bangladesh has to export products worth Tk18,000 crore per month to reach $27bn export target set for the current fiscal, which would not be possible if the political unrest continue further.

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