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Bangladesh Textile Industry

Covid-19: Learning for Bangladesh Textile Industry

Pandemic COVID-19 has shaken the global economy completely. Starting from Wuhan city, Chine on 31st December 2019, it has reached more than 90% countries of the world within only 6 months.

Along with affecting every sector of human life, pandemic COVID-19 has also effected the textile industry extremely. According to the reports of BGMEA (Bangladesh Garment Manufacturers and Exporters Association), textile sector of Bangladesh has lost more than US $ 3.18 Billion due to order cancellation, till half of the month of June.

It cannot be said how long it is going to take to recover loses and get back to the regular economic track.

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This Pandemic COVID-19 situation has brought the deficiencies of Bangladesh textile industry next to us. This article outlines the potential steps need to be taken to improve this industry and how to react in case of facing such distressful situations in future.

Appropriate Planning

It is said that effective planning itself completes half of any difficult task. Bangladesh textile industry needs to come up with befitting planning including various back up plans, providing a solution for every problem.

The planning should include — how to cope with various natural calamities, pandemic situations or unexpected economic fall mentioning how the industrialists need to divert the supply chain, how to regulate the supply of raw materials, how to ensure the health-salary-security of workers during such kind of situations etc. Another important learning from the pandemic situation is that a strong emergency fund is needed for every industry to maintain existence in difficult situations.

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Securing the Supply Chain

Bangladesh textile and garments industry is a vital player in the global consumer apparel supply chain. It is evident that the proliferation of RMG business was possible in this country mostly due to the back to back facility provided for importing raw materials. According to the report of BGMEA, Bangladesh has earned around US $ 35 Billion in 2018-2019, by exporting ready-made garments around the world, where more than US $ 6 billion is spent only to import raw materials.

During this Pandemic COVID-19, airports & seaports of most of the countries were shut down for an uncertain period. As a result, raw materials & necessary accessories could not be imported on time. Due to lack of raw materials & necessary accessories, many factories faced difficulties. It would be more get-at-able for those factories if Bangladesh were a self-dependent country in case of textile raw materials. Besides, it will make textile industry of the country more durable.

Gradually, other organizations in the supply chain i.e. buying and trading offices, logistics companies, 3rd party testing companies etc. made their way in the country. Out communication throughout the global supply chain is getting better day by day with the diffusion of effective information technologies. However, due to the covid-19 pandemic, worldwide supply chain has been disrupted severely.

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Especially, issues like cancellation of orders, holding/ cancelling of payment were completely unexpected. As a result, the security and transparency of the supply chain gets a question mark which probably didn’t get importance before. So, organizations must learn to ensure appropriate policies, terms and conditions before setting a business relation with another party to secure the supply chain in adverse conditions.

 

Workers’ Wage and Security

Bangladesh textile sector plays the most important role in country’s economy having huge growth opportunity, at present earning more than 80% foreign currency and consisting of 5,000 textile factories. And it became possible only due to the 4.1 million workers of this industry, as one of main reasons behind the high demand of Bangladeshi RMG products in global market is cheap labor cost.

During this pandemic COVID-19 Many, BD textile sector has not received any new order rather the confirmed procurement orders are being cancelled or postponed. According to BGMEA, international buyers have either cancelled or suspended shipments worth of US $3.18 Billion involving 1,150 factories & 2.28 Million workers, till 15 June 2020. As a result, the factories are facing difficult situation about paying bank debts, worker’s salary & other costs, and so several factories have laid off workers, according to provisions 12 and 16 of the Labor Law.

Sustainable Textile Solutions (STS)
Sustainable Textile Solutions (STS)

During layoff period, workers only gets half of their basic payment & house rent (53% of gross salary). President of National Garment Workers Federation, Amirul Haque Amin mentioned “Laying off a worker during such a critical moment is unjust.” Beside thousands of workers got fired or furloughed and many more are staring at joblessness. To fight with this pandemic situation, the Government has announced a Stimulus Package allocating Tk50 billion for RMG & other export-oriented industries, only to pay salaries & allowances of workers & employee. Besides, to provide short-term facilities for importing raw materials the Export Development Fund has been increased from US $3.5 billion to US $5.0 billion.

Out of this package, the central bank will institute a Pre-Shipment Credit Refinance Scheme worth of US $600 million. This package was a need of the hour for the industry. But only a fraction of the massive requirements of the sector can be fulfilled through this package as to pay wages every month at least $470 million is needed. This situation, deeply indicates the importance of having an Emergency Fund to tackle industry costs at difficult moments. The industry owners need to plan about this Emergency Fund from the very beginning of their business.

From 26th April 2020, most of the factories reopened with 30%-50% workers. Government strictly advised the factory owners to ensure the security of the workers, through a Health-Guideline. Some factories took measures according to the Guidelines, but many of them are unable due to budget or infrastructure insufficiency. Keeping that in mind, BGMEA signed agreement with Maya & Common Health to provide free physical and mental health services to RMG workers through Telemedicine. Besides, BGMEA prepared multiple audit teams, headed by 6 board of directors of BGMEA, for surprise factory visits and monitoring health & safety system.

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Contingency Planning

Future events or circumstances which are possible but cannot be predicted with certainty are becoming more frequent day by day, be it natural or be it human induced. No business is out of the effect of such situations. A key learning from this covid-19 pandemic is to consider contingency planning and fund management for such events.

Not many organizations in our country have such provisions perhaps. In modern world not having a contingency plan is considered as a disaster of its own. So, companies must become proactive in making strategy that describes the course of actions or steps the management and staff of an organization need to take in response to an event that could happen in the future. It plays a significant role in business continuity, risk management and disaster recovery.

The impact of COVID-19 has just started to unfold but the full impact will be more visible within the next few months or beyond. Undoubtedly it is a challenging situation for all of us, recognized as the most crucial global moment after World War II. But negative experiences often lead us to the most potential learnings. As soon as the pandemic COVID-19 situation gets back to normal, industrialist should come forward to taking measures about the above mentioned facts, to ensure a better future for Bangladesh textile Industry.

Farzana Alam Piya – http://textilefocus.com

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