Grim times ahead for Bangladesh garment trade

AFP
1 day ago
DHAKA (AFP) — Mohammad Soharwardi cannot remember the last time his clothing factory lost so many orders over such a short space of time.
Bangladesh’s garment sector is usually working full steam at this time of year to meet Christmas orders, but he says buyers have become conservative in the past few months and business has dropped right off.

“This is usually the busiest time of the year, but orders are down by 40 percent on last year,” said Soharwardi, whose company Rupashi Group owns nine factories making apparel for American and European retailers.
The financial turmoil gripping global markets has left Bangladesh’s main bourses and banks largely unscathed, but the meltdown has weighed on consumer spending in the world’s top economies, dragging down retail sales.
This, according to Soharwardi, is in turn weighing heavily on the Bangladeshi garment industry, the world’s second biggest after China, as hundreds of manufacturers in the impoverished country face a squeeze on orders.
“Early this month, one of our biggest American buyers cancelled an order to supply half a million pieces of apparel each month until the end of the year,” Soharwardi said.
“They say there is a huge slump in their sales because of problems in the US economy.”
Soharwardi was speaking on the sidelines of a garment exhibition in the capital Dhaka, where 56 manufacturers this week hoped to tap the Japanese market for more business to make up for falling sales to the US and Europe.
The garment sector pumps 11 billion dollars a year into Bangladesh’s economy, accounting for about 80 percent of exports and employing more than 40 percent of its industrial workforce.
Bangladesh saw 6.2 percent economic growth last year, bolstered a 17 percent increase in garment sales. Orders to the US and Europe make up 90 percent of all shipments.
Finance minister Mirza Azizul Islam has ruled out any major slump, but the country’s leading garment-makers say the meltdown is biting.
“Regardless of what is being said, we are already feeling the heat,” said Fazlul Hoque, a leading manufacturer and president of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA).
“One of my Canadian buyers has just delayed a big order by three weeks because he wants to see what unfolds in the world markets before making any fresh commitment, and whether consumers tighten their belts,” Hoque said, adding that he was not hopeful of a quick recovery.
“Orders in September fell by 10 percent, and the indications are that the industry will experience a sharp decline like the one we experienced immediately after 9/11 in 2001,” he said, referring to the terrorist attacks on New York and Washington.
Dhaka University economics professor Wahiduddin Mahmud, a former finance minister, said the knock-on effect of the problems in the US and the European Union spelled big trouble for Bangladesh.
“Nine out of 10 garments made here go to the US and Europe. We are not prepared enough to face the challenges. High food prices have already affected wages. There is an acute crisis of gas and power and labour relations are not good in the industry,” Mahmud said.
Mohammad Abdul Momen, whose Pride Group makes ladies tops for big Spanish label Zara, said companies desperate to keep orders were taking drastic measures.
“There’s panic in the industry so manufacturers have started undercutting each other to keep orders,” he said.
“We’re already offering the cheapest price in the world to manufacture clothing so going any lower is unhealthy. It’s a game of death. We are sacrificing profits at the cost of our future.”