Coronavirus may hit Bangladesh’s economy

Sohel Hossain Patwary

6th February, 2020 12:11:56 printer

Coronavirus may hit Bangladesh’s economy

Bangladesh’s economy may face the effect of the disruption caused by the coronavirus outbreak in China and many other countries. 

Businesses feel that the outbreak may leave a significant impact on the country’s import-export activities. 

Data show that Bangladesh maintains some $15 billion trade with China, one of the biggest economic superpowers in the world. 

“Trade worth $1.5 billion would be at risk as Bangladesh is heavily dependent on China for all sorts of materials,” A T M AzizulAkil, Senior Vice President of Bangladesh China Chamber of Commerce and Industry (BCCCI) told the Daily Sun.

Apart from trade, projects financed and implemented by China would also face slowdown.

Industries facing the heat 

The coronavirus outbreak in China is taking a toll on the supply chain of imported raw materials for the export-oriented industries in Bangladesh. 

The readymade garment sector, which contributes 85 per cent to the national export earnings, is mostly dependant on the raw materials and machinery from China.

As one-fourth of Bangladesh’s imports originate from China, local manufacturers are now facing a crisis of raw materials. 

Besides, machinery, boilers, electrical, electronic and mechanical appliances make up 70 per cent of imports from China.

Being the biggest trade partner of Bangladesh, annual trade between the two countries is around $15 billion. According to Bangladesh Bank data, Bangladesh imported goods worth $13.65 billion to China in 2018-19 fiscal. Bangladesh exported goods worth $831.2 million during the same period. 

“The coronavirus outbreak has become a significant concern for the textile and RMG industry since we source a significant amount of our raw materials from China, while export of our finished goods to this market was $505 million dollars in last fiscal”, BGMEA president Rubana Huq told the Daily Sun.

 The BGMEA president also observed that the deepening crisis and continued shutdown of facilities in China would have some disruption in Bangladesh’s supply chain.

“In 2018-19 fiscal our import of textiles and other raw materials from China was $5.02 billion, which is almost half of our total raw material imports for the RMG industry. To the best of our understanding, the impact would be more severe for the sweater and woven sectors as we mostly depend on China for these raw materials,” Rubana Huq said. 

Chinese holiday has been extended for seven days and they are supposed to open facilities on February 10, if the crisis persists further, it will lead to an irrevocable disaster of the supply chain, she added. 

“What we are observing that the waiting time of vessels berthing has come down to zero from 4-5 days during mid-January. This means a slowdown in imports has already been started. If the crisis prolongs, the impact would be severe and perhaps unmanageable” said BGMEA president.

BCCCI Senior Vice-President ATM Azizul Akil also said Bangladesh’s export-import trade is facing pressure due to the coronavirus outbreak. 

“Apart from import, Bangladeshi export-oriented industries, especially the RMG, leather would face the impact,” he said. 

He, however, said the disruption in China would pave the way for the RMG exporters to get some new orders from countries like the US. 

“We would get some fresh orders, but it will depend on our capacity.” 

Major development projects see snail pace

Implementation of mega projects, mostly developed by Chinese technical assistance and skilled workers, would face a snail pace for a short to long period.

Skilled workers from China are now working on several projects, such as Padma Bridge, Karnaphuli tunnel, railway connection at Padma Bridge, Payra Thermal Power plant, Chittagong-Cox's Bazar-Rail Connection, BRT project. 

A large number of Chinese experts and workers are now on leave in China and asked to stay where they are.

If the work is not done in a timely manner, the cost of the projects will increase, said the sector insiders. Besides, project financed by Chinese government would also face delay due to the disruption caused by the coronavirus outbreak.

Road, transport and bridges minister Obaidul Quader on Wednesday said Padma Bridge’s construction work would be hampered if the coronavirus situation does not improve in two months.

There are 980 employees from China. Among them, 332 are now in China. Thirty-three of them have returned.

“Most of the machinery, tools and equipments are imported from China for implementing the major development projects”, said BCCCI vice-president ATM Azizul Akil.

Former finance adviser to a caretaker government Dr AB Mirza Azizul Islam said the coronavirus will affect Bangladesh’s trade with China.