Bangladesh’s Apparel Exporter Suffers a Big Loss Due to Cancellation of Orders

After China, Bangladesh is the world’s second-largest haven for apparel production and is expected to lose nearly $6 billion in export revenue this financial year due to the orders cancellations from many major brands and retailers. Two major industry bodies of Bangladesh shared their views on Tuesday, March 31, 2020, that the cancellation of orders would hit hard on the garment exporters and affect millions of workers of the country.

Cancellation of Orders

The two industrial groups explained that the cancellation of orders from the Bangladesh apparel industry was increasing daily due to the lockdown of global markets prompted by the coronavirus outbreak. With the abundant source of labor and low wage, Bangladesh provides a shelter of nearly 4,000 garment factories that generated the employment of 4 million workers.

According to a source, “Bangladesh garment exports accounted for $34.12 billion, or 84% of the country’s overall exports of $40.53 billion, in the fiscal year ended June 30, 2019.” However, the suspension of previous orders by major brands would have a disturbing impact on the garment industry. Another source claimed that Gap, Zara, and Primark were among the brands that had canceled orders. Gap and Zara were not available for comment while Primark confirmed the move.

Mohammad Hatem, the Vice President of Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), projected, “We’ve lost more than $3 billion due to the crisis. All our orders until July have been canceled or suspended.”

Citing the rapid decline in new orders, Hatem remarked, “Suspended orders will eventually get canceled. All these orders were placed for summer and it takes three months to get these delivered. If they are not taking supplies now they will not take it when the summer is over.” He further added, “Many factories will be closed if this persists.”

Impact on Readymade Garment

Readymade garment segment in Bangladesh, which has a workforce of nearly 2 million, is facing a similar experience of export revenue due to the massive cancellation of the previous orders from retailers. Rubana Huq, the President of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), described that about 1,048 factories associated with BGMEA had reported that orders for over 900 million garments worth $2.9 billion had already been canceled or were being held up.

Primark commented in a statement, all of the company’s stores across the globe have been shut which resulted in a net loss of $807.82 million a month in sales. Describing the reason for its move, the statement mentioned, “We have large quantities of existing stock in our stores, our depots and in transit that is paid for… If we had not taken this action, we would be taking delivery of stock that we simply could not sell”.

Bangladeshi Prime Minister, Sheikh Hasina recently introduced an economic package of $588 million to support the country’s export sector and urged companies to save workers and pay their wages. However, Rezwan Selim, a director of BGMEA, reacted, “This is not enough. The government should come up with more stimulus to save the country’s biggest export sector.”

In a similar note, Siddiqur Rahman, a top exporter who supplies H&M, and Walmart among others, referred to the situation was “dire” and added, “We’re facing an unprecedented time… No one knows how long this is going to take. We’re trying hard not to shut down our factories. But how long can we hold out?”

I’m Roshan, a journalist, blogger and music lover. I like covering global news related to finance, business, and technology. Focusing on the collection of true and reliable information, I rely on working by conducting interviews with business leaders and talking to the inside sources of companies.

You can reach out to me at: [email protected]

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