Recovery of apparel exports top priority

Faruque Hassan, the president-elect of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), has vowed to beef up international marketing to recover the apparel export losses that stemmed from the fallout of the coronavirus pandemic.

Earnings from apparel shipment, which contributes about 85 per cent to national shipment, declined to $27.94 billion in the last fiscal year from $34.13 billion a year ago as the crisis battered global economies and caused demand to collapse.

"My first job would be to revive our export earnings so that factories operate well, nobody loses jobs, and the economy runs well," said Hassan, also the managing director of Giant Group, one of the leading garment exporters.

Hassan is set to take charge of the association on April 20 for a two-year term after leading his Sammilita Parishad to a convincing win in the biennial polls on Sunday.

His panel bagged 24 posts, and another panel Forum got 11 out of a total of 35 posts of directors. Some 1,604 out of 1,852 voters voted in the Dhaka zone, and 392 voters in the Chattogram zone cast their votes.

The entrepreneur said he would involve foreign missions of Bangladesh, the foreign and commerce ministries, and international retailers and brands in the marketing drive of the BGMEA, both in major traditional markets and non-traditional markets.

"We will continue our efforts to brighten the image of the sector. We will negotiate with international buyers and communities to increase the prices of the garment items exported from Bangladesh."

He heaped praises on the outgoing BGMEA board for some commendable jobs, including improvement of working conditions and compliance, raising the number of green garment factories, technology upgradation, setting up of modern machinery, improving capability, facilitating the production of more value-added items, and making artificial fibre available in the domestic industry.

"I will continue the good works of the outgoing board and implement our pledges so that we can do better together in the coming days as we are facing a lot of challenges due to the current volatile global business situation."

According to the entrepreneur, Bangladesh can export more garment items made from artificial fibre, known as manmade fibre, and local suppliers can immediately get at least 10 per cent higher prices since the demand for such products is higher compared to those made from cotton.

He said the government's cash incentives on export receipts should be given with purposes as the effective rate of purposeful incentive was higher than the flat incentive.

The government now gives 1 per cent cash incentive in all markets, 4 per cent on exports to new destinations and 5 per cent cash incentives on the use of local yarn for garment manufacturing and exports.

The export to the non-traditional markets grew after the government announced 4 per cent cash incentives for new destinations in fiscal 2008-09. Bangladesh's apparel shipment to emerging markets stands at about $6 billion, which was nearly $600 million a decade ago.

Except for the EU, the UK, the US, and Canada, Bangladesh considers all other export destinations as non-traditional markets.

The country's primary textile sector has turned into a strong backward linkage industry for the garment sector because of the incentive.

Hailing from Thakurgaon, Hassan studied at Dhaka Residential Model College, Dhaka College and at the University of Dhaka. He started his journey as a garment entrepreneur in 1985 after finishing his post-graduation in management from the DU.

Giant Group exported $30 million worth of garment items last year and currently employs 6,000 workers.

His election victory came on the eve of the new restriction on the movement of people and transport as the government looks to curb the rising cases of coronavirus infections.

The move came at a time when factories were reviving from the losses they had incurred during the countrywide lockdown enforced in April and May last year.

"It would be very difficult for them to run business and make a profit if the lockdown prolongs," he said.

Hassan did not think that factories would face any difficulties in running operations as they were prepared to tackle the challenges of Covid-19 infections. "Almost all of the factories have isolation beds and medical facilities for the workers in case of infections."

Hassan said the next three months would be very crucial for the apparel sector because of the volatile market situation as most of the major export destinations were still in lockdown, which kept the demand for apparel items at a lower level.

He urged the government to defer the repayment period for the loans going to the apparel businesses.

"The central bank should give deferral payment facility to manufacturers so that they can run the business smoothly during the crisis."

If manufacturers can't run business, the back-to-back letters of credit will be paused, and the whole cycle of business will come to a standstill, he said.

Manufacturers will face stockpiling of goods and incur losses again. In such cases, they might not stay afloat longer, he added.

Last year, local suppliers faced either order cancellation or suspension worth $3.18 billion, and buyers demanded unusual deferral payment, which severely affected the local garment business.

Hassan felt the urgency in changing the traditional business system, where there are so many risks in the supply chain, both for exporters and importers. It happened mainly because of the bankruptcy of major western retailers and brands, he said.

"We should be very careful in businesses so that such incidents do not take place again," he said.

Hassan plans to sit with buyers, diplomats and local and international communities soon to settle the payment issues amicably.

The International Apparel Federation (IAF) can play a vital role in resolving the payment issues as most of the retailers and brands are members of the platform. So, Hassan wants to organise the next IAF Summit in Dhaka in November this year.

The former vice-president of the BGMEA urged the garment industry to continue business taking into account the current Covid-19 situation so that both lives and livelihoods were protected.

Founded in 1983, the BGMEA has turned into an influential trade body over the years as its contribution to the economy grew.

So far, the Sammilita Parishad has got its candidate elected to the post of president 12 times and the Forum panel five times.

Members of both panels are linked with national political parties. And since its inception four decades ago, many members of the BGMEA have gone on to become members of the parliament and ministers.