Coronavirus pandemic effect: Home rings alarm bell over possible trouble in RMG

The Ministry of Home Affairs has sounded the alarm over instability that might be triggered in the country's highest foreign exchange-earning apparel sector due to coronavirus pandemic, officials said.

The sector might also face a disastrous situation very soon if the corona pandemic prolongs, it said.

The ministry in a report has suggested both commerce and labor ministries taking coordinated measures to tackle any possible unstable situation, the officials added.

The home ministry in a report referred to the closure of more than 50 small and medium scale garment units last year due to financial and bank loan crises.

What is more, many other RMG units are in the process of being closed for an apparent lack of work orders, it said.

The sector imports some 70 percent of machinery, fabrics, yarn, bottoms and chemicals from China, but imports are stopped now, the report mentioned.

"For this, a good number of workers of small and medium-sized factories will lose jobs. The unemployed workers might create unrest in the sector and get involved in illegal activities."

The report also suggested making necessary coordinated policy efforts to face any possible odd situation.

Commerce and labor ministries, BGMEA and BKMEA have been advised to ensure that small- and medium-scale apparel units receive orders from buyers.

Sources said coronavirus would affect the national economy and the labor force as well if the garment sector is hampered.

Currently, more than 3.0 million men and women are employed in the ready-made garment (RMG) sector.

They recommended finding out an alternative import source. "Otherwise, it'd be difficult to control the prevailing situation."

RMG industry insiders have also expressed fear that they might face challenges in paying salaries and bonuses ahead of the upcoming Eid.

Bangladesh Garment Manufacturers and Exporters Association (BGMEA) president Dr. Rubana Huq said, "We're facing a grave situation following the outbreak of coronavirus epidemic."

"The brands are reducing their orders and are asking us to hold on to uncut fabric," she added.

Ms. Huq has urged the apparel makers to hold their shipments as global consumption is coming to a halt.

She said, "This will have serious consequences as we see an imminent liquidity crisis which will lead to financial disruptions to the manufacturing units."

"Right before Eid when we'll have to pay a bonus," Ms. Huq explained, "falling exports and shipments are the worst possible challenges that the industry may face."

China is the main source of importing yarn, fabric, machinery, and electronics.

Due to this global plague, the stock of raw garment materials that are mainly imported from China has been declining, thus making apparel makers halt production.

Bangladesh's exports to China accounted for more than $830 million in the fiscal year 2018-2019 and imports from China more than $13.85 billion.

An available document shows the import volume was 17 times more than that of export.