No much worries if supply chain disruptions can be minimised

We are hopeful for the upcoming year, even though we were initially concerned that buyer confidence in Bangladesh would erode. There are still some technical issues. Brands are likely to observe the situation throughout the year before deciding on the future of their relationship with Bangladesh. We feared that the three months of uncertainty would trigger a negative reaction, which did come true initially, but it was mostly due to supply chain disruptions. Once investors saw that it was specific to a certain area, they began placing their orders elsewhere (away from Ashulia) as a precaution. As a result, we no longer need to worry about not receiving orders.

As I mentioned earlier, we are hopeful for next year, but Bangladesh Bank has a major role to play in this. The IMF is forecasting inflation to be in single digits by next year. Ahsan H. Mansur, the governor of Bangladesh Bank, has assured us that when the inflation rate settles, interest rates will be adjusted accordingly. He is urging us to be patient, as he is confident things will sort out in 6 months.

One thing we requested was to postpone the loan classification rules as per IMF conditions. The current business landscape still depends on if we can keep everything stable for the first four months. If we are able to do that, the RMG and textiles industries, which help maintain macroeconomic stability, should also stabilize and become positive. With two Eids approaching, we are already in a financial crisis, with many of us barely getting by. If the festival salaries can be disbursed on time, and if no further problems arise in financial working capital or long-term social or political disruptions (such as violence or blockades) force us to close our industry zones, I don't see any more problems affecting us. However, if these disruptions persist, our biggest challenge will be to comply with the loan classification rule by Bangladesh Bank as per IMF conditions. So, the next 6 months will be crucial for Bangladesh, as the future of the country's business landscape will rely heavily on how we tackle these challenges. But, even amid all this, the positive news is that buyers have not lost confidence in us till now.

Exporting from India requires a 10% duty which is why many Chinese companies are already preparing in advance to relocate to Bangladesh since Trump being back as US president could impose high tariffs on Chinese goods. It is a huge opportunity for Bangladesh but energy security might come as a concern there.

To sum up, financial stability, law and order, and energy security will be essential factors to maintain in order to ensure our industry runs properly. At present, with the current energy prices and interest rates, it will be difficult to sustain the industry. If these three factors are kept in order, supply chain disruptions should be minimized, eventually bringing down inflation as well.

Shams Mahmud, managing director, Shasha Denims Ltd

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