During the data collection process of a survey with factory management, the most common word our Field Officers (FOs) heard was ‘Order’. This survey is a part of a study titled “A Study on Assessment of Enterprise Level Vulnerability, Resilience and Recovery in the RMG Sector in view of COVID Pandemic”. The survey, collaboratively carried out by Centre for Entrepreneurship Development (CED), Brac University and the Center for Policy Dialogue (CPD), is being conducted to assess the level of vulnerability of RMG enterprises as well as their resilience and recovery in the coming months of Covid-19 pandemic.

During data collection, a couple of respondents willingly opened themselves up to our FOs on the following issues:

  • The factories started to lose new orders during February-March 2020 when the lockdown measure was taken by the European countries in order to stop the spreading of Covid-19;
  • When factories in Bangladesh reopened at the end of April 2020, after the government announced countrywide lockdown since the end of March 2020, most of the RMG factories lost orders which were in the pipeline while many factories failed to get new orders;
  • As the orders from global buyers have shrunk, RMG factories are now ought to take orders at a much cheaper rate;
  • The brands and buyers are generally reluctant to take any responsibility for the additional costings of the factories which came up for Covid-19 precautions;
  • Compared to knit and woven factories, sweater factories have felt the harder hit of order cancellations from the buyers, as these factories have lost the peak time of the season to take new orders due to the global lockdown;
  • New orders from buyers are being also delayed due to the ongoing second wave of Covid-19;
  • Some factories are now looking for new buyers to sell their products from the cancelled orders and some are considering to sell the products from cancelled orders to domestic markets.

Considering the Covid-19 crisis, the total loan amount of BDT 10,500 crore has been allocated by Bangladesh government for garment industries to pay the workers’ salaries and allowances[1]. One of our FOs found a factory which lost 50% of its business due to cancellations of orders but still managed to pay the workers using the loan from the stimulus package. The business of this factory is slowly recovering since June 2020.

Unfortunately, another factory which had to close down during the lockdown, due to its order cancellation, failed to pay the wages and salaries of its workers and staff after the lockdown was lifted. The factory could not receive new orders or got back the previously canceled orders from the buyers. It applied for loan under the stimulus package but failed to receive loan due to administrative difficulties. It also failed to receive regular bank loans. Though most of the workers and staff took jobs elsewhere, they are still demanding their dues from the factory authority. The factory authority is requesting them to join back but the workers are not convinced seeing the uncertain future of the factory. With as low as 30 staff and 75 workers, the factory is still struggling to survive. Being understaffed and out of orders from the global brands, it is currently pursuing several subcontracting orders. However, our FOs also heard that subcontractors are now struggling to survive as the mother factories also lack orders from buyers. Generally, subcontracting RMG factories are those factories which do not directly receive orders from global brands and buyers rather receive orders from other factories or mother factories where the actual orders have been placed.

It was found that there are factories who are struggling to get both direct and subcontract orders. Furthermore, some factories have also said that since their factories reopened in April 2020, they have not been able to get adequate workers since many workers have not re-joined or come back from their homes/villages after the lockdown was lifted or that they have joined other factories.

Although these experiences of FOs do not represent the whole RMG industry, it can be said that we can get the actual industry story after the ongoing study will be completed. It needs to be pointed out that the surveying factories of this study have been sampled from the list of export-oriented RMG factories of CED’s current project – Mapped in Bangladesh (MiB). MiB has generated the list through countrywide factory census as the project aims to enable transparency in the sector by providing industry stakeholders authentic and updated factory data through an interactive digital map (https://www.mappedinbangladesh.org).

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* Fahim S Chowdhury is Senior Research Associate and Sadril Shajahan is Research Associate at Centre for Entrepreneurship Development (CED), Brac University

[1] https://tbsnews.net/economy/rmg/rmg-owners-now-seek-6-years-repay-stimulus-loans-141673