Coronavirus Fallout

Supply chain, int’l trade face gloom

Sohel Hossain Patwary

28th February, 2020 02:02:31 printer

Supply chain, int’l trade face gloom

Almost all trade and business sectors including the country’s export, import and supply chain systems may face a serious impact in the coming months due to the prolonged coronavirus situation around the world, especially in China.

Some 26 business bodies in a combined report have assessed the potential impact on each sector in Bangladesh amid the coronavirus fallout that has already sent a shockwave across the global economy and international supply chains.

Exporters apprehend that due to the prolonged coronavirus situation in China, industrial production will be hampered due to the scarcity of raw materials, shooting up prices and disrupting export.

In the report, BGMEA said 60 per cent raw materials of woven fabrics and 80-85 per cent raw materials for knitting, dyeing chemical and accessories come from China.

As the export-import trade with china remains stalled now, the supply chain of the country’s apparel sector is going to face a serious adverse impact, the report said.

Chattogram Chamber of Commerce and Industry (CCCI) has assessed that RMG sector imported raw material worth $5.02 billion in 2018-19 fiscal and imported 40 per cent if its machinery from China.

As the volume of LC (letter of credit) has declined drastically, raw materials import will be decreased too, which will hamper the production and profit.

BGMEA president Rubana Huq said continued shutdown of facilities in China would have some disruption in the supply chain in Bangladesh.

“To the best of our understanding, the impact would be more severe for a sweater and woven sectors as we mostly depend on China for these raw materials,” she said.

It may be mentioned that Bangladesh is heavily dependent on China in every aspect of bilateral trade and investment. In 2018-19 fiscal, the trade between the two countries was $14.69 billion. Of that, import volume was $13.86 billion and export was $831 million.

Trade statistics show that 35 per cent of Bangladesh’s yearly total import is with China as most of the industrial raw materials and equipment come from China.

Bangladesh Live and Chilled Food Association said that crab and kuchia farmers and exporters have been hit hard by the suspension of export to China.

Bangladeshi crab and kuchia exporters shipped 90 per cent of their products to China but the trade now remains halted. As there is no local or alternative market for crab and kuchia, exporters are counting huge loss.

Bangladesh Plastic Goods Manufacturers and Exporters Association in its assessment said that they have already faced problems in the supply chain due to the scarcity of raw materials and machinery shortage and it will deepen in coming days.

Bangladesh Jute Association mentioned the situation stocked the raw jute sector due to a fall in export.

Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) observed that the knitting sector is facing a huge challenge as the production cost is rising gradually due to the disruption in trade with China.

“Knitwear sector is deeply involved with China. Stocked raw materials for the knitwear sector have already finished and there is no alternative import destination. In this situation, the production cost is increasing and have to supply the orders at the current price, incurring a loss,” said BKMEA.

It also said that they have explored some alternative sources and found the prices higher than in China.

Leather and leather goods exporters said that they export 60-65 per cent of their products to China and amid the coronavirus outbreak they are counting a loss of Tk 3000 crore.

Leather Goods and Footwear Exporters Association Chairman Mohiuddin Ahmed Mahin said leather and leather goods sector is going through a tough time over the last one year and the coronavirus outbreak has made the situation worse.

Exporters are highly dependent on China for raw materials which now remain almost off, hurting the production and export, he added.

Like these sectors, agro-processors, cosmetic exporters and importers, electrical merchandisers, jute spinners, printing association, medical instruments dealers and manufacturers, computer samity, electronic merchants, fresh fruits importers, chemical and perfumery and poultry feed association are feared to count loss in coming days due to the serious disruption in trade with China.