Stimuli help boost RMG earnings

The government incentive package has facilitated the country’s RMG sector to raise export earnings amid the Covid-19 pandemic, showing a positive growth after seven months.

The stimuli package has given such a fillip to this sector that export earnings have increased by almost 46 percent to $2.37 billion for the first 22 days in August in the current year over that in the same period of the previous year.

Market analysts said the RMG sector is regaining export orders as the international buyers are renewing the cancelled deals and placing new orders.

Besides, the buyers from the EU and US have started negotiating with the manufacturers and most of them have renewed their previous orders while some buyers placed new purchase orders, which have helped the sector almost to be near in the pink.

Fazlul Haque, former president of Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) told Bangladesh Post, “The garment exports are getting better than expected.”

Although the products of the old purchase orders are ongoing, even then, garment exports are promising, he added.

The European market that was disturbed by Coronavirus pandemic is going to be normal, he mentioned. 

As a result, purchase orders are also coming well in the European market, he said.

 “However, the US market is lagging behind. Their progress is slow,” he informed.

Mostafiz Uddin, managing director of Denim Export Limited said, "Usually, we have less orders for August, September and October. Besides, the Coronavirus pandemic is ongoing.”  

As a result, the factories are running at 70-80 percent capacity at present, he added. 

However, if the second wave of corona infection does not come, purchase orders will increase from November, he expected. 

“As such, the next two months will be challenging for us,” he mentioned. 

Mostafiz further said, “Purchase orders will come. That is why, if we, the entrepreneurs, do not engage in unhealthy competition for the price of our products, exports will increase soon on a large scale.”

Anjan Shekhar Das, director of Bangladesh Garment Manufacturers and Exporters Association (BGMEA) told Bangladesh Post, “The export earnings have increased as we are getting back postponed work orders.”

He said, the new earnings are increasing during the crisis, which is good news for us. 

Rubana Huq, president of BGMEA said, “We were able to come out of the cancellation of the purchase orders from different countries across the world.

Foreign buyers including those in Europe and the US had started cancelling their orders from Bangladesh from the end of February due to the growing coronavirus impact, she informed.

However, as the coronavirus spread to the United States and Europe, one by one purchase orders were cancelled and suspended from March. 

More than three hundred buyers suspended export orders worth about $3.15 billion.

Meanwhile, garment factories remained closed for a month after the general holiday had been declared in the country to contain the spread of the virus. 

As a result, the export earnings from this sector had collapsed and stood at only $37 crore in April, the lowest in two decades. 

The next month in May, it was $123 crore. 

In June, it increased to $225 crore. 

However, the country's RMG exports declined by 18.84 percent to $ 27.70 billion in the just concluded fiscal year (FY 2019-20).

The sector had fetched $ 34.13 billion in the FY 2018-19.

In July of the current fiscal, the export earnings in this sector also witnessed a negative growth to stand at $3.24 billion.

In March, the government announced an incentive package of Tk 5,000 crore to pay wages to export-oriented workers after the owners panicked over the cancellation and suspension of garment orders. 

From that fund, the owners of about 1,800 factories took loans at 2 percent service charge and paid three months' wages to the workers. 

The owners also got help in paying the July wages. 

However, the very low rates of COVID-19 among the RMG workers and employees have also helped the sector to turn around quickly.