Bangladesh in Turmoil. What Comes Next for Apparel Production?
“Keep your faith in us.”
That’s the message that Md. Fazlul Hoque, managing director of Plummy Fashions and former president of the Bangladesh Knitwear Manufacturers and Exporters Association, wants to relay to international brands and retailers after initially peaceful student protests over government job quotas escalated into deadly anti-government clashes that forced Prime Minister Sheikh Hasina to resign and flee the country on Monday, putting a sudden end to 15 years of what her critics have described as her increasingly autocratic rule.
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“We are sure we can deliver much better than before,” Hoque said. “This is a national movement that is in no way related to the garment sector and everything is over now, so we are looking forward to a brighter future and better export performance.”
But the turmoil isn’t quite finished as protestors looted Hasina’s residence and torched government offices following army chief General Waker-Uz-Zaman’s televised announcement that an interim government would coalesce in the coming days. Thrust into unprecedented upheaval, most of Bangladesh’s 3,500 garment factories, which contribute nearly 85 percent of the country’s exports, were closed on Monday amid concerns of arson and vandalism. Manufacturers whose owners had ties with Hasina’s regime are seen as likely targets.
“We do foresee a few known groups’ factories to be targeted, so it’s selective arson,” said Munir Mashooqullah, founder of apparel supply chain firm M5 Group.
The Bangladesh Garment Manufacturers and Exporters Association has asked its member factories to stay shuttered on Tuesday, said Miran Ali, vice president of the trade group and managing director of the Bitopi Group and Tarasima Apparels. “We will give further advice tomorrow,” he said.
At the same time, Hasina’s unceremonious ouster was the “best development one can expect,” said one Bangladeshi supply chain expert, who asked to remain anonymous for safety reasons. The economy has been struggling with mismanagement riddled with allegations of corruption, including against some of Hasina’s former lieutenants. Bangladesh’s buyers “were worried and always knew it was a time bomb.”
“This will provide Bangladesh an opportunity to bounce back,” the insider said. “New leaders can help build both democracy and the economy. Let’s wait for the new caretaker setup to finalize.”
Even so, the sector faces tough times ahead, said Asif Dowla, a professor of economics at St. Mary’s College of Maryland. Bangladesh’s currency, the taka, has depreciated significantly, increasing the cost of imported fabrics. Production will also likely need to ratchet up to fulfill orders still in the pipeline for the busy Christmas season.
“This process will take time, and I hope the buyers will grant a grace period,” he said.
Indeed, the prime minister’s resignation only marks the beginning of a long rebuilding process, said Md. Rafiqul Islam Rana, an assistant professor of retailing at the University of South Carolina.
“After Covid-19, foreign buyers are emphasizing stabilizing the supply chain as much as possible, and the current uncertain political climate in Bangladesh could have a significant negative impact,” he said. “The EU, one of the largest markets for Bangladeshi [garments], recently delayed their talks regarding trade, economic and development relations to monitor the ongoing situation first.”
It’s now up to the nation’s new political and industry leaders to hold meaningful dialogues with international buyers and investors, assuring them that Bangladesh is still a sure bet for garment production with a relatively uninterrupted supply chain, Rana said.
A ‘tough in-tray’
Western brands and retailers appear to be taking a wait-and-see approach to the current upheaval, which led to at least 300 deaths—nearly 100 on Sunday alone—and the arrests of 11,000 people in a matter of weeks.
Steve Lamar, president and CEO of the American Apparel & Footwear Association, said that the trade group has “urged all parties to approach this dispute peacefully,” and Julia Hughes, president of the U.S. Fashion Industry Association, said that the organization “encourages everyone to follow the State Department’s advice to remain vigilant and hope that the situation will stabilize soon.”
A spokesperson for H&M Group, Bangladesh’s biggest garment buyer, said that its teams on the ground are monitoring the developments, adding that it has no further comment to share “at this point.” Adidas said that it has only one Bangladeshi supplier, with which it’s “fully engaged” to ensure that workers’ rights are upheld. C&A is also watching developments closely, and its Bangladeshi office remains closed for the time being, with all employees there working from home. Other large buyers, including Gap Inc., Zara owner Inditex and Walmart, did not respond to requests for comment.
It’s safe to say, however, that the world’s second-largest exporter of garments after China, is at an inflection point. Garment buyers want “stability and certainty when doing business with Bangladesh, and that has been absent for a while,” said Neil Saunders, managing director of GlobalData Retail, a market analytics firm. Any interim government, he said, will need to quickly come to grips with a slumping economy.
“The departure of Prime Minister Hasina leaves something of a vacuum in Bangladesh,” Saunders said. “It is important that stability and order are quickly restored if the country wants to maintain the confidence of the garment sector and foreign companies that rely on the country for production. If violence continues, then buyers may start to avoid Bangladesh because of the risk.”
Joseph Parkes, senior Asia analyst at global risk intelligence firm Verisk Maplecroft, agreed that Bangladesh has entered “uncharted territory” and both the country and its investors face a period of acute uncertainty. While the military does not appear to be looking to hold onto its newfound power, the country’s pathway back to a civilian government is still hazy at this point, he said, adding that investors will be watching for signals of a power struggle that could result in a further deterioration of the business environment.
“The upheaval and uncertainty will no doubt spook investors, compounding the impact of weeks of disruptive protests on the country’s garment sector,” Parkes said. “Whatever the nature and composition of the next government, it will face a tough in-tray. The unrest has added further strain to an economy already facing structural challenges, and the far-reaching demands of the protest movement will require careful management.”
The European Union has called for an “orderly and peaceful transition” toward a democratically elected government” that’s in “full respect of human rights.” A White House spokesperson said that the United States has “long called” for respecting democratic rights in Bangladesh and urged for an interim government formation that is “democratic and inclusive.”
Mostafiz Uddin, managing director of Denim Expert, said that his customers have been understanding about production delays that began piling up during a five-day curfew that was enacted last month by Hasina’s government in a bid to quell spiraling protests. An 11-day communications blackout that made it impossible to engage with the outside world did not help matters, either.
“Our buyers are so cooperative and they are supporting us in this difficult situation,” he said.“ They are our long-term partners. They came forward. Together with their help, we will cover up all the delays that happened.”
Uddin said he has faith that the formation of a democratic government will usher in a “new birth” for Bangladesh.
This was a sentiment shared by Nazma Akter, founder and executive director of the Awaj Foundation, a labor rights group, and president of the Sommilito Garments Sramik Federation, a garment workers’ union. She wants a democratic government, one that respects freedom of association, collective bargaining and living wages. Last year’s demonstrations over a minimum wage that could square up with runaway inflation resulted in brutal standoffs with security forces that ended with the deaths of four garment workers and the arrests of hundreds more. Thousands of workers still face the threat of false arrest due to blanket criminal charges that have yet to be dropped, according to campaigners.
“The system has collapsed in my country,” Akter said. “The men and women who are contributing a lot to this country are hungry, depressed and frustrated.”
Meanwhile, brands and retailers cannot be passive observers, said Christie Miedema, campaigns coordinator for the Clean Clothes Campaign, the garment sector’s largest consortium of trade unions and labor organizations.
“For all those around the world who have a stake in the Bangladeshi garment industry, it is paramount to ensure workers are not paying the price for this crisis and to put people’s welfare above the speedy arrival of next season’s design,” she said. “That means ensuring that workers should be paid for workdays lost…and allowing factories [to extend] deadlines to make sure that workers are not pressured into unsustainably long work days.”
Fazlul from Plummy Fashions, for one, is optimistic. He said he hopes that international buyers will bear with what he thinks is a temporary obstruction.
“By the day after tomorrow, everything will be normal as far as the production shipment and all these things are concerned,” he said.
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