Why our RMG sector needs global support

Bangladesh's apparel industry is in gridlock, with millions of jobs at risk as orders are frozen or cancelled amid the coronavirus pandemic. Brands do not want to lose their supply chains, and factories do not want to lay off workers – but without short-term financial support, that is likely to be the next step.

In more than two decades in business. I have never experienced a situation like the one we are currently facing in the apparel and textile industry. Let us be quite clear on this: We are in completely uncharted waters. You will not find situations like Covid-19 in any economics textbook. 

In a typical economic downturn, one or two sectors might face difficulties. But this is different, far different. All sectors are suffering. This frightening virus does not discriminate, and in the readymade garment industry, it is reverberating right through the supply chain. Not one area of industry has been left untouched. 

There is a narrative which has been allowed to develop in our industry, and that is one of brands versus suppliers are in this together. This is a joint battle which we will only win if we work hand in hand, side by side. 

We need to work together to create resilient supply chains that will withstand this crisis. And we need to consider how we can protect the most vulnerable people ─ the workers. 

Bangladesh has been fortunate to have had the support of a number of global development agencies in recent years, addressing issues such as poverty alleviation, economic growth and adherence to the Sustainable Development Goal. 

This support comes from governments and international agencies around the world, including the World Bank and the International Monetary Fund (IMF). International Finance Corporation (IFC). Asian Development Bank (ADB) and other government and multilateral agencies. 

Brands are victims of the current pandemic just as much as we are. Brands have had no choice but to close stores in their key markets under the orders of government lockdowns. With stores closing, they face massive reduction in footfall, and have little choice but to reduce orders or put orders on hold. Inventory levels are rocketing and brands will face a huge financial hit from all of this. Expect double digit losses for most leading brands during 2020 ─ that is the stark reality they are facing. 

My message to all organisations involved in this space is simple: now is our hour of need. 

Our industry is staring down the barrel of a financial and humanitarian catastrophe. Millions of workers face losing their jobs across the world's apparel industry. This problem will be magnified dramatically in Bangladesh because our economy is so massively dependent on the global apparel industry. Almost 90% of our exports are readymade garments, which leaves the country tremendously exposed to external shocks. 

The conversations I have had with brands during the present situation have been positive. They have the same fears and concerns as a factory owner does. 

International support

So, what am I asking for from international support agencies? It's simple really. Short-term financial support to keep our industry alive and well until this pandemic passes over – which it surely will do. This problem is about cash flow and liquidity. Most of the businesses facing problems in supply chains are otherwise healthy. But they need financial support to get through the next few months to continue to operate and to be able to pay their workers and suppliers.

In Europe, governments are already talking about huge bailout packages for key strategic industries. To this end, I would propose a multi-billion dollar zero-interest loan with a five-year payback period from one or a combination of the World Bank, IMF and IFC.

I would also like to see a Special Trade Support Programme by the European Commission, and other major economies such as the UK, USA, Canada and Japan for countries that have suffered major demand disruption. This could be in the form of a special tax rebate/ incentive for companies who import from vulnerable least developed countries (LDCs) Like Bangladesh.

Finally, we need healthcare support for Bangladesh from organisations such as the ILO, UNICEF, SNV Netherlands Development Organisation, and the GIZ German Development agency for testing, sanitisation, treatment and so on.

Support agencies can think of this as a temporary bandage. We will not need it forever, but we will need it to ensure our industry survives the current crisis.

I need to emphasise here that this is a short-term problem, Covid-19 will not be here forever, Already, many vaccines are in development. More importantly for the short-term, a number of effective treatments have shown successful results in those suffering symptoms of Covid-19. The medical world has responded rapidly to this issue and I have no doubt that this is a battle they will win – much sooner than some people expect.

The problem is that our industry is in gridlock right now. Orders are not coming in; orders that have come in have been frozen; and nobody quite knows where their next dollar is coming from. When our customers – brands – suffer, we suffer with them.

Our readymade garment industry has taken decades to build, and has lifted millions of people out of poverty. We cannot allow one virus to decimate this industry overnight.

I urge international aid agencies to stand by us right now at this difficult time.

Mostafiz Uddin is the managing director of Denim Export Ltd.