RMG accessories, packaging sector: Tk1,500cr losses feared if coronavirus persists

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Garments Accesories

Slump in production, along with workers’ wages and charges for utility services as well as business losses, will cause the losses

Bangladeshi garment accessories and packaging manufacturers fear losses worth Tk1,500 crore if coronavirus impact prolongs for six months as in that case it will create shortage of raw materials for the sector hindering production. 

Slump in production, along with workers’ wages and charges for utility services as well as business losses, will cause the losses, they say.   

Bangladesh Garments Accessories and Packaging Manufacturers and Exporters Association (BGAPMEA) President Abdul Kader Khan came up with the remarks at a press conference on the probable losses due to the outbreak of deadly coronavirus in China.  

Meanwhile, businesspeople have called for finding alternative sources of raw materials to avert supply crunch and sought policy support with easy trading facilities to buy from the new destinations.   

“China is our largest trading partner and the outbreak of coronavirus will have negative impact on global economic growth. Bangladesh is not out of it,” said Abdul Kader Khan.

 

Currently, there were 1,744 garment accessories and packaging manufacturing units, producing 35 items and meeting 95% demands of the $34 billion RMG sector, he told the program. 

The sector was highly dependent on import of raw materials from China from where it imported about 40%-50% raw materials, he added.

“In the given context, if the deadly coronavirus impacts prolongs for six months, it will cause losses to the tune of Tk1,500 crore for the sector because of slump in production, and having to pay workers’ wages and utility charges as well as business losses,” said Khan. 

However, the platform of accessory makers has yet to calculate the real losses or get the data from their members. It asked its members to report their problems and financial losses incurred due to the virus outbreak. 

Call for finding alternative sources 

As per the BGAPMEA data, about 50% raw materials are sourced from China, so the sector people urge the government to search alternative sources.     

“The capacity of storage depends on the size of factories as well as the financial solvency and the capacity to deliver the work orders. On an average, a factory has stock of raw materials for two months,” said Rafez Alam Chowdhury, advisor to GAPMEA.    

To avert production closure and ensure supply of raw materials, alternative sourcing destination and favourable policy support  should be ensured, Alam suggested.   

“As an alternative, Bangladesh can think of neighbouring countries such as India, Pakistan or any other country. But do they have capacity or is it business-viable?” asked Kader. 

Moreover, other countries, which also manufactured accessories were also dependent on China for raw materials, he mentioned.   

Besides, there was the issue of prices of goods, which might erode Bangladesh’s competitiveness in the global markets, he said. 

Called for quicker release of goods   

The platform also called for taking steps to expedite the delivery of imported goods when import-export with China would resume after the Chinese New Year holidays extended to February 21.  

“Since, we are highly dependent on China, the government has to have measures to ensure quicker delivery, when the extended holidays will be over and import-exports will resume,” said Kader. 

Otherwise, the delay in delivery would create shortage of raw materials and hinder the production process, which would ultimately delay the shipment, he warned. 

Bilateral trade with China 

According to Bangladesh Bank data, in FY2018-19, Bangladesh imported goods worth $13.64 billion from China and exported products worth $831.2 million to the country.

Over 40% textile and textile-related goods and 30% capital machinery come from China. Other things that Bangladesh imports from China include fabrics, agricultural machinery, mobile phones, electrical and electronics goods, fruits, and essential spices etc.

At present, China sends 26.1% of the total $56 billion worth of goods Bangladesh imports from around the world.