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Blockade’s Trail of Damage

April 12, 2015

BNP-led alliance’s three-month- long violent blockade, claiming more than 120 lives and featuring unprecedented scale of petrol bomb attack, made a heavy dent in the economy including the RMG sector, though it affected little RMG export.

Industry insiders and experts,however, cautioned that it would be too early to see the violent campaign’s impact on country’s key forex earning sector. They told that the holistic impact of the campaign on RMG industry would be visible two or three quarters later. It has already slowed down the pace of projected export growth of the sector.

According to local policy advocacy group Centre for Policy Dialogue (CPD), political turmoil cost the economy Tk 49 billion, 0.55 percent of GDP. Bangladesh Garment Manufacturers and Exporters Association (BGMEA) and other professional bodies disputed the figure claiming that it would be much higher and said such complicated estimation could only be done by a national commission.Earlier in February, apex body of businessmen Federation of Bangladesh Chambers of Commerce and Industries (FBCCI) had estimated that economy incurs a loss of Tk 27 billion every day due to strike.

The moment I am uploading the post, World Bank has officially come up with its own damage estimate. According to WB, economy suffered a loss of $2.2 billion due to blockade.

As per the provisional data released by Export Promotion Bureau for the period of July-March in 2014-2015, the exports of woven items fetched $9.55 billion while the knit garments exports stood at $9.05 billion. The export earnings of woven and knit items registered respectively 3.69% and 2.7% growth. The growth figures are much lower than what the exporters anticipated . Overall, the total exports in the given period became $22.9 billion, 2.98% higher than that of the same period in previous year.

The main obstacle this kind of blockade creates for RMG sector is the delay in shipment. Moreover, the industry also runs the risk of cancellation of orders and losing buyers to rival countries. Often, exporters are forced to deliver their goods by air, which is far more expensive than sea transshipment, in order to keep their clients. The cancellation of orders hurt pretty badly the smaller ones. In Saidpur, blockade resulted in cancellation of orders worth $200,000 and closure of 80 small factories, leaving many workers jobless.

Following the Rana Plaza debacle and Tajrin Fashions fire, the RMG industry faces a crisis in its reputation abroad and it has still been battling to improve its poor image in labor standards and factory safety since then. Ongoing political impasse further worsens that image instead of improving it, hurting hugely business confidence and losing investors’ trust.


From → Analysis

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