Recouping losses by RMG sector

Now that the country is experiencing a sense of respite, thanks to the relatively peaceful political environment, it is only likely that the manufacturing and exporting sectors will try to regain the lost momentum in production and marketing. The country's readymade garment (RMG) industry, believed to have suffered the most in the political mayhem, should be the one to put all it can in trying to recoup losses of the past months. Given its production scale, millions of workforce and indeed exports, the country's RMG industry was more vulnerable to shocks from the lingering blockades and hartals. There are frightening estimates of losses caused by late shipments and cancellation of export orders. Industry insiders reported of 20-25 per cent production loss during the last three months' non-stop blockade and political impasse. Around 40 factories suffered losses amounting to nearly Tk 2.0 billion due to cancellation of orders, discount on account of late shipments, air shipment charges and additional transportation costs during mid January to the third week of February. This has been reflected in the export figures of the July-March period with both woven and knit products failing to reach their respective growth targets of 3.18 per cent and 5.58 per cent respectively.

Largely reliant on buyers' choice, the RMG sector's performance mainly rests on how the buyers evaluate it from time to time against its counterparts in other countries. It is here that the situation prevailing in the country is considered crucial to smooth execution of orders by the exporting firms. Already in a state of uncertainty due to wage and labour standard-related matters, the RMG sector had to pay heavily in the past several months. With the withdrawal of blockades followed by normalcy returning to almost all walks of life, it is high time that the manufacturers/ exporters made the best of it in terms of rebuilding business tie-ups with their overseas buyers. Assuring the buyers with timely execution of exports, prompt disposal of backlogs should be the key to restoring buyers' trust. It has been reported in this newspaper that the two associations of woven and knit garments in a meeting with the representatives of 40 global apparel retailers apprised them of the country's latest political development and also assured them of smooth supply of products in the coming days. There are initiatives too, reportedly, of sending marketing delegations to both the traditional markets as well as new ones to explore prospects. This, no doubt, is the time to regain business confidence of the local manufacturers/exporters as well as their overseas counterparts.

Building business confidence at this stage depends not just on the efforts of the entrepreneurs but also on how the situation prevails in the country in the days ahead. Equally, if not more, important is the role of the government in easing some of the prevailing difficulties. Along with the initiatives of the garment associations, the government may consider some of the incentives proposed by the sector. These, among others, include the government's policy support including incentives, reduction of port cost, reduction of oil prices, lowering of bank interest rate etc.