Coronavirus pandemic has dealt a severe blow to manufacturing destinations world over and Bangladesh, which is only behind China in terms of apparel manufacturing and export, has not been spared either.
Despite the uncertainty caused by the pandemic, global brands are but still confident that Bangladesh will remain a major destination for sourcing in the months to come, and this is as per a new study, carried out by the Institute of Policy Studies (IPS) of Sri Lanka and Dhaka-based think tank, the Centre for Policy Dialogue (CPD), even as the study maintained that medium-term challenges will closely correlate with the extent to which the Coronavirus is contained while adding that the second wave has significantly reduced demand in prominent markets such as the US, the UK, and the EU.
However, more than anything else, the study’s focus that ‘value-chain-based solutions’ are required to help all the market players cope with the crisis, ensures rebound and smooth recovery and ultimately makes the value chain resilient where rebuilding the partnership between brands, suppliers, Governments and international organisations is key to recovery has been the major takeaway.
This emerged during the course of a global webinar (titled Recovery of the Apparels Sector of Bangladesh and Sri Lanka: Is a Value-chain-based Solution Possible?) organised recently (last month) by the CPD and the IPS in partnership with Southern Voice.
The joint study by the CPD and IPS found that major sourcing countries have either reshored or overconcentrated to a limited number of sourcing countries during the pandemic period even as it maintained that there was a limited level of initiatives of major market players while also adding that the medium-term recovery of the global apparel value chain from the disruptions of the COVID-19 pandemic has been set back by the prolonged demand slump.
It further added that addressing medium-term challenges through national-level interventions alone will be difficult and initiatives of major brands/buyers were limited to inventory smoothening, reshoring and overconcentration of orders to a limited number of sources.
Director-Strategic Transformation, MAS Holdings (Sri Lanka) Husni Salieh, maintained that the value of a value chain was truly optimised when its stakeholders worked collaboratively particularly during the crisis and added that building resilience within a relatively diversified but existing value chain has the capability to face the current and future crisis successfully even as the Founder & CEO, Bangladesh Apparel Exchange Mostafiz Uddin underlined that there was a lack of responsible business practices among the brands during the ongoing crisis even as he stated that brands should consider their suppliers as business partners and act responsibly.
The study further underlined that the fiscal constraints of Bangladesh and Sri Lanka had squeezed domestic capacity to support the apparels sector during the crisis even as in Bangladesh, US $ 1.2 billion subsidised credit to garment enterprises was disbursed in the form of workers’ wages, an extension of letters of credit usance, waiver interest of loans, increase in the export development fund, and temporarily deferment of loan payment, while adding that subsidised credit support has not been received by all factories even if as of October 2020, more than 360,000 workers have lost jobs while only 14 per cent of the laid-off or retrenched workers received dues while 58 per cent of workers were in financial difficulties and 82 per cent saw a deterioration in their food intake in Bangladesh.
Dan Rees, Director of Better Work, International Labour Organization (ILO), opined that only sector-specific measures might not address the existing challenges even as he added that to build strong resilience and protect the workers, trust and cooperation among the stakeholders and a long-term plan was required.
Meanwhile, Distinguished Fellow of CPD, Mustafizur Rahman, underlined that the study’s findings were crucial as all the stakeholders of the apparel value chain had been affected by the pandemic even as he maintained that all the stakeholders have to play certain roles to find a solution that ensures the sustainability of the industry.
CPD’s Chairman, Rehman Sobhan, on his part said that ILO could consider playing an entrepreneurial role in bringing together international buying countries with supplying countries to restructure the global demand management while adding that the tripartite exercise should be carried out, including Government, employers and workers to produce a mutually accommodating system of unemployment insurance to address not just the immediate impact of the Covid crisis but a longer-term crisis.
Both Bangladesh and Sri Lanka have the capacity to supply products that are supplied by China, the joint study further underlined even as it proposed that in case of a major global crisis, a redistributive approach should be maintained to ensure export orders at least at the pre-crisis level, particularly for countries that have financial constraints and weak social support programmes to support their suppliers and workers.
According to the study, 76 per cent of suppliers had to reduce export orders even as the highest proportion of order reductions was seen in case of Bangladesh at 93 per cent, followed by Vietnam at 80 per cent, China at 74 per cent and India at 61 per cent.
Brands and retailers should consider us as their business partners meaningfully, stated Mostafiz Uddin even as Pierre Börjesson, head of sustainability for global production of H&M Group (the Swedish retail giant, which purchases more than US $ 3.5 billion worth of garment items from Bangladesh every year) added that the company did not cancel any work order during the pandemic even as he called for social protection for the garment workers, underlining once again that value- chain-based solutions are required now to cope with the crisis where rebuilding the partnership between the stakeholders (brands, suppliers, Governments and international organisations) would be the key to ensure the recovery of the apparel value chain, to wind up on a positive note.