Unrest puts garment export target at risk
The ongoing political unrest continues to upset the garment sector as buyers now call apparel makers to go and meet them in India or China, to avoid the turbulences in Dhaka.
Many buyers have already suspended trips to Bangladesh although, in usual situation, they come to Dhaka, visit factories and place orders.
Some buyers are even thinking to purchase garments from other countries at higher prices due to the uncertainties in Bangladesh.
If the situation worsens further, it will be difficult to achieve the export target at $21.53 billion at the end of the current fiscal year, exporters said.
The sector earned $13.83 billion in the first eight months of the current fiscal year, which is around 3 percent higher than the target set for the period.
“Buyers are very cautious now,” said a European buyer having operation in Dhaka.
They cancelled three such trips in the last one month due to shutdowns, he said.
Failing to arrive in Dhaka, the senior officials of the company called the garment makers to meet in India or China, he added.
However, the meeting was later held in Dhaka when normalcy returned, the official said, asking not to be named.
The buyer has also decided to slash 50 percent of its orders and shift those to other countries, even at higher prices, to cope with the lead time.
“The European buyers are now waiting and watching the situation, but some US buyers like the retail giant Walmart have already hinted to reduce purchase from Bangladesh,” said a German buyer having office in Bangladesh.
In January, Walmart warned its suppliers worldwide of a new “zero-tolerance” policy against unauthorised subcontracting and announced factory health and safety initiatives, Bloomberg said in a report.
The company also has a strategy to reduce its reliance on Bangladesh, it added.
If Walmart did move some of its apparel manufacturing out of Bangladesh, there are at least two other places it might go: Cambodia, where the average wage is 29 cents an hour, and Vietnam, where workers make about 55 cents an hour.
Walmart's labour costs would go up, but it could benefit from the better infrastructure available in those countries, the Bloomberg report said.
This is the time for Bangladeshi manufacturers to receive orders from buyers for the next winter season, said Bakhtiar Uddin Ahmed, general manager at Fakir Apparels Ltd, a garment maker.
Buyers may opt for other destinations if the situation in Bangladesh does not improve, he said.
“We may not be able to achieve the export target this year,” said Atiqul Islam, the newly elected president of Bangladesh Garment Manufacturers and Exporters Association. But, if the situation changes, orders will pour in, he said.