News / Bangladesh's key garments sector hits a wall with shortage of raw material

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Bangladesh’s apparel sector, the country’s top foreign currency earner, is being hit by coronavirus-related supply chain disorder, with prices for raw materials soaring.

As materials from China fail to arrive in time, prices of local stocks of items have gone up by nearly 50% in some cases.

Some factory owners have been forced to bring raw materials in by air to meet manufacturing deadlines.

And the sector is gearing up for a prolonged crisis as the virus continues to spread worldwide, with fears that destination markets in the US and Europe will be affected.

Bangladesh imports some 60% of its woven fabrics from China, according to an assessment report of the Bangladesh Trade and Tariff Commission (BTTC).

The report says some 15-20% of raw materials and 80-85% of dyeing chemicals and accessories of the knitwear sector comes from China. And some 40% of raw materials for garment accessories and the packaging manufacturing industry also comes from China every year.

“In general, we are possibly going to take a hit for three to four months,” the president of Bangladesh Garment Manufacturers and Exporters Association (BGMEA), Dr Rubana Huq, said.

She added that the price of all accessories, including yarn and sewing thread, are going up “almost 50%. This is totally killing us”, she told The Loadstar.

“If regular shipments from China do not resume within the next two weeks, we will not be able to procure any trim, as much of the raw material is from China,” Dr Huq said.

The senior vice president of the Bangladesh Knitwear Manufacturers and Exporters Association, Mohammed Hatem, told The Loadstar the sector was facing a tremendous challenge.

“I am forced to airship fabrics and raw materials to meet deadlines,” he said.

Mr Hatem, whose factory supplies apparel brands worldwide, said production in many factories was hampered by the lack of raw materials.

“Due to the short supply, prices of different raw materials have increased by between 30% and 40%” he said.

Former BGMEA president Siddiqur Rahman said that as offices and factories in China were gradually reopening, raw materials would start arriving.

“But the spread of coronavirus in Europe and America is a new concern for us. Our garment export is mainly dependent on these two markets,” he said. “Our sustainability will face a serious threat if the virus spreads severely in Europe and America,” he added.

In fiscal year 2018-19, Bangladesh exported apparel worth $34.13bn, registering 11.49% growth, year on year. However, the sector is facing a negative trend this year, raising concerns that annual targets may not be achieved.