Garment manufacturers in Bangladesh are seeing an influx of requests for payment delays from buyers as a result of the ongoing global coronavirus outbreak.
Speaking to just-style, Mostafiz Uddin, managing director at Denim Expert, says factories across the country are facing a “very tough time” adding that while the early impact of the outbreak saw pressures on raw material supply coming out of China, the problem has intensified, with factories now increasingly being told to push back payment terms.
Uddin says in some cases, garment buyers are asking if payment for products can be pushed back by 30 days – sometimes more – as clothing retailers around the world are seeing significantly lower footfall due to country lockdowns limiting people’s movement.
A number of retailers including Nike and Abercrombie & Fitch have announced temporary closures of all of their stores in a bid to control the spread of the virus. Others, like Primark, have warned of the impact the outbreak is likely to have on their financial results.
“The factory owners are now seeing significant challenges, such as how to pay the salaries of their workers,” Uddin tells just-style.
He adds small and medium-sized enterprises (SMEs) with limited cash reserves and poor cashflow generally will be hardest hit.
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By GlobalDataUddin is calling on the Bangladesh government to provide policy support to the ready-made garment manufacturing community and to work with industry stakeholders to introduce short-term financial relief mechanisms for both directly impacted and supporting companies. He also urges banks to support the sector with zero-interest loans to help with cashflow problems.
“Actions should be taken sooner rather than later to ensure factories are best placed to weather the storm. It is hoped that our policymakers will sit down carefully to develop innovative, intelligent solutions which will enable the manufacturers to face head-on one of the biggest challenges for a generation.”
Meanwhile, the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) has met with Salman Rahman, the private industry and investment advisor to the Prime Minister, to discuss the current business situation and explore ways to navigate the challenge. They say they are seeking support from the government to cope with the problems and withstand the impacts on the industrial sector.
Bangladesh, the second-largest global exporter of clothing in the world after China, is understood to have confirmed three cases of the Covid-19 virus on 8 March with the government clamping down on entry into the country from four locations – Italy, South Korea, Japan and Kuwait.
Subsequently, organisers of the Bangladesh Denim Expo and Fashionology Summit took the decision to cancel the event due to be held on 6-7 April. New dates will be announced when the situation improves.
Click here for additional insight on the coronavirus outbreak: Is coronavirus a threat to the clothing industry?
