When the sky isn't looking clear anymore, to say you are watching the clouds go by with the hope of a better day is being cautiously optimistic. If there's rain in the process, one gathers that it is what it is and a sense of ease settles in, looking at the freshly cleaned landscape. With Covid-19, it's been neither clouds nor rain. It's been a clear sense of a lingering thunder which has frightened humanity and shooed us to our cubbyholes. There's no bravery that's been able to confront this monster, no shield that's been enough. The world, at the most, has just watched it unfold and handled it to its limited capacity.
Throughout the world, Covid-19 is indeed being approached with caution and advisories at all levels. Governments all over the world have reacted and rescued; businesses all over have wailed and suffered. Yet, through all the losses and tears, trepidations and predicaments, many lives and enterprises have learnt to cope with the oscillations of the pandemic.
At our end, the single largest industry of readymade garments had to deal with the crisis of such magnitude. The impact of the pandemic on the lives, livelihoods and the overall economy cannot be overstated. The USD 3.15 billion worth of cancellations put a dent on the essence of trust between the suppliers and the brands, and the inevitability of repatriation of funds had become a reality overnight. At a time like that, the impact could have been more severe in the absence of the incentive packages and policy interventions announced and implemented by the government. Quite often, we hear about bureaucratic hurdles ("amlatantrik jotilota") but, during this pandemic, the promptness and efficiency of the bureaucratic response had given the industries in Bangladesh a fresh air to breathe in.
We are grateful to the prime minister for providing the critical direction to the industry and for having saved industry-related livelihoods. We also salute our workers who have literally saved the industry from being doomed. And we must also applaud the finance ministry, commerce ministry, Bangladesh Bank and all other ministries and departments of the government for their fast response and painstakingly implementing the incentive packages. These were absolutely crucial for re-coursing the industry from obvious destruction.
At the very outset of the calamity, the concern that grappled us immediately was saving the livelihoods of four-million workers and their dependents from any possible financial crunch. As the industry embraced the tsunami of cancellation resulting in export slashed by 85 percent in April, the severity was foreseen by the government, and the BDT 50 billion loan stimulus meant for paying workers' wages in April, May, June and July marked the first turning point for the industry to stay afloat during the peak of the storm, i.e. April-July 2020.
As far as the salary packages are concerned, the integrity of the disbursement of incentives could not be questioned. The farsightedness and pragmatism of the government had made the digital wage payment possible, and this itself ensured transparency. Needless to say, at a time when the West came to a dead halt by lockdowns and emergencies, the "financial flow" came as the lifeline of the industry. Thanks to the Ministry of Finance for efficiently stitching up the much-needed rescue package for the industry, and thanks to Bangladesh Bank for particularly having eased off and enhanced the export development fund. Apart from this, the retention of foreign currency in single pool for back-to-back import payments, extension of the tenure of realisation of export proceeds, and suspension of loan classification till December 31, 2020, served as saviours.
It's true that our expectations from the working capital loan assistance packages was higher, particularly for the SMEs since the working capital loan was meant for supporting the affected factories. In reality, it was difficult for the RMG SMEs, who are the most-affected groups, to access this support to a large proportion due to the nature of business and conditions set out to access the incentive.
However, while enthralled by the revival in exports since July (by 0.82 percent during July-September), albeit short-lived, the emergence of the second wave of Covid-19 is extremely worrying for the industry. The dwindling retail sales in the West and further slowdown in export since October could be early signs of a resurgence of the situation we have passed through earlier this year. The approval of vaccines is a great source of hope, but as far as trade is concerned, the worries may still persist as the global economy may take time to generate momentum in employment, consumption, spending and trade. The double-edged sword of the pandemic is slicing the price. Data suggests that our RMG has been consistently losing unit value by around 5 percent since September.
The industry has contributed so much to our nation, and we only have a nominal share in the global market, thus we have a great potential to grow further. We have painstakingly prepared ourselves for the renewed opportunities over the past few years in the area of industrial safety, sustainability and eco-efficiency. Therefore, the needs of the industry are clear: 1) The industry needs continuity of the supports received to stay afloat in the upcoming days, along with additional supports to withstand any adverse impact; 2) The industry would expect the empathy of the authorities in ensuring legal protection for our exporters who dealt with bankrupted buyers to deal with the losses and outstanding liabilities, because without resolving these issues, the affected factories (supposedly employing hundreds of thousands of workers) cannot fight back. And essential alignment between the policy makers and the industry must continue.
While exports dip and concerns are heightened, this should not be taken as a cry-wolf syndrome. With the cry and the ask also comes the promise of turning around by 2021. With the vaccines, a better time and a better consumption trend will surely set in. Besides, we are better-placed than most of our competitors. Ethiopia is politically troubled, Vietnam's export basket isn't prioritising RMG and won't grow capacity overnight, Myanmar is questionable in terms of capacity and ethical sourcing, and Cambodia has just lost its GSP. Therefore, it's important to stay on course and be hopeful.
There's no alternative to depicting the real picture. Reality cannot be exaggerated. Projections cannot be amplified. The only answer is to handle the situation as it comes and hope that the policy makers stand by our side and help us swim through the troubled waters, as they have in March 2020. It's an industry where 4.1 million workers are engaged. The numbers cannot be ignored, the impact cannot be underestimated, and the potential cannot be insulted by scepticism.
Dr Rubana Huq is President of BGMEA and Managing Director of Mohammadi Group.