‘Highly Abnormal’: How Student Protests Could Further Roil Bangladesh’s Garment Sector
Sitting in his office in Bangladeshi’s Narayanganj district, 10 miles southeast of the capital of Dhaka, Md. Fazlul Hoque, managing director of Plummy Fashions, was feeling apprehensive, if not about the garment industry’s present then certainly about its future.
The South Asian nation has only just emerged from nearly a week of strict curfews, heightened military activity and shuttered factories—not to mention an 11-day communications blackout that the government said it was forced to impose to “save lives and properties of people”—amid deadly student-led protests over employment quotas in highly sought-after state jobs. At least 150 people have died and more than 1,600 were injured following standoffs with security forces. Roughly 3,000 demonstrators have been arrested in connection with vandalism and arson, including of state broadcaster BTV’s building in Dhaka.
More from Sourcing Journal
With the violence largely quelled due to a Supreme Court decision on Sunday to leave the majority of government posts open to merit-based competition, Internet and mobile services have been coming back online and factories slowly reopening amid an easing of curfew restrictions.
Bangladesh’s 3,500 garment factories, which account for 85 percent of the country’s $57 billion in annual exports, now have to play catchup for five days of involuntary downtime that has resulted in significant delays and raised freight costs as containers continue to pile up at Chittagong’s port yards. But a bigger concern is whether the world’s second-largest garment exporter after China can maintain its international buyers’ confidence, or if brands and retailers like H&M Group, Zara owner Inditex and Walmart will be turning to rivals such as Cambodia and Vietnam.
Last November’s garment worker demonstrations over an unsatisfactory increase of the minimum wage, which resulted in the deaths of four people, also caused widespread chaos and disruptions in Bangladesh’s industrial hubs, though not to the same extent. What happened this past week, Hoque said, was “highly abnormal,” with a “total disconnection” that even countrywide lockdowns at the height of Covid-19 didn’t bring. While it’s still too early to say for certain, he worries that buyers will, if not outright displace orders, then “squeeze their orders silently” because Bangladesh has become too risky.
Coupled with shipping holdups due to the continuing Red Sea crisis, brands and retailers could be seeing lags of 21 to 25 days because of what has transpired, said Munir Mashooqullah, founder of apparel supply chain firm M5 Group, adding that large European retailers are “already meeting in their C-suites to assess production allocation to Bangladesh,” causing ramifications that will become more obvious in the months to come.
The Bangladesh Garment and Manufacturer’s Association, the nation’s premier trade group, did not respond to a request for comment, though it previously said that garment makers were losing $150 million a day as the curfew and lack of connectivity wore on.
While Steve Lamar, president and CEO of the American Apparel & Footwear Association, which represents prominent names such as Adidas, Gap Inc. and H&M, didn’t directly address a question about Bangladesh’s perceived reliability, he said that his organization’s “primary” goal has been to “keep our workers safe and minimize disruptions.”
“We continue to watch the situation closely and have urged all parties to approach this dispute peacefully,” he said. “We hope the recent Bangladesh government decree implementing the Supreme Court decision will effectively resolve the situation so that the industry can continue to support livelihoods across the country.”
The immediate disruption aside, the recent unrest has also raised serious questions about Bangladesh’s political and economic stability under Prime Minister Sheikh Hasina, said Joseph Parkes, senior Asia analyst at global risk intelligence firm Verisk Maplecroft.
With the ruling Awami League’s repeated “one-sided” elections—Hasina was sworn in for a fourth consecutive term in January—the risk of insurrection has been “baked into the system,” he said. And considering that the protests have grown beyond opposition to the quota system by “tapping into a well of anti-government sentiment,” similar dynamics will likely play out as the space for democratic opposition continues to contract.
“Hasina is likely to remain in power beyond the current crisis, but her domestic and international reputation has been severely dented,” Parkes said. “Hasina is unlikely to moderate her approach to governing; for the garment sector, that means the next round of unrest is unlikely to be far away.”
Noor-e-Alam Siddiquee, general manager of merchandising at the Dhaka-based conglomerate Dekko ISHO Group, said that Hasina’s government needs to be more prudent and “avoid self-hurting measures for the greater interest” to restore confidence.
“Certainly, this event has both short-term and long-term impacts on the supply chain and sourcing strategy of the customers,” he said. “If the situation does not stabilize soon, it could have a deeper impact in the long run.”
But Md. Rafiqul Islam Rana, an assistant professor of retailing at the University of South Carolina, said that multiple industry sources have denied encountering either major backlash or order cancellations from buyers thus far. Instead, brands and retailers have shown a willingness to extend shipment deadlines, “recognizing the national crisis,” he said.
Rana noted, however, that there is a tendency among Bangladeshi industry professionals and state-controlled media to downplay any negative aspects due to fears of long-term business repercussions. This “social desirability bias,” he said, means that the information shared may “sometimes paint a more optimistic picture to avoid alarming international buyers.”
Nevertheless, most factories may have to resort to overtime, subcontracting and hiring part-time workers to meet any shortfalls, even though Rana expects the measures to cover only 10-20 percent of total order deficiencies. It’s still unclear, labor campaigners say, if workers were paid during their forced furlough.
Plummy Fashions’ Hoque said his factory is currently negotiating with buyers to adjust expectations, something the multi-stakeholder Ethical Trading Initiative said in a recent communique that “responsible businesses” should do. Even a few days’ extension of the original deadlines, he said, would help it avoid overtime or paying for expensive air freight.
“But the bigger loss will be if we don’t get the expected orders because buyers feel a little bit scared about placing orders in Bangladesh,” he said. “That is a possibility that we apprehend may happen.”
Solve the daily Crossword
