Sunday, 3rd May , 2020, 03:37 pm,BDST

Lock down or open

Alimuzzaman Harun:-

Major global fashion brands have taken prompt responses to help in flattening the Coronavirus curve and this has left significant impacts on worker employment, revenues and overall operations. The economic impacts of the COVID-19 pandemic is now being witnessed at all levels and the irrevocable financial damage, which may be considered secondary to matters of health and safety, in the near future may prove just as detrimental. The UN estimates the outbreak of this deadly virus could at least cost a trillion dollars and could slow down the global economy to under 2.0 per cent this year. Bangladesh will also have to share a sizeable part of this loss. As we estimate the percentage of the global loss that we will have to bear, the government should identify the particular sectors that will be affected the most.

If the lockdown has not lifted, “More people will die in starvation than in Corona.” Indian billionaire businessman & philanthropist Infosys chief N. R. Narayana Murthy gave such a message with the industrialists. He said, “Tackling the coronavirus, or turning the wheel of the economy? If you want to fight against Corona, you have to continue the lockdown. But the lockdown should be lifted if the economy needs to gain momentum.” According to N. R. Narayana Murthy we should go the other way in this conflict which is to lift the lockdown. At the same time, he further said, “At least for the next one to one-and-a-half years, all countries need to develop the habit of living in parallel with the coronavirus.”

According to The Economist report, “Bangladesh cannot afford to close a garment factory.” This has been said in a report published by the world famous magazine Economist. It further said that garment workers are looking at the lockdown in Bangladesh as absolutely cruel. “Anyone, rickshaw puller, hawker whoever goes on the streets is beaten by the law enforcement agencies,” it has been reported. But when it comes to garment factories and mosques, the authorities say differently. About 41 lakh workers work in garment factories in Bangladesh. The situation is the same in the factory as they live in a huddle. This condition is particularly risky for Covid-19. Last year, Bangladesh’s garment industry brought in 3.4 billion by exporting ready-made garments dress, which is 13 percent of national growth. This sector has been contributing or moving forward in the impressive growth of the country for decades. Corona virus epidemic has reduced the demand for clothing in the world. However, many factory owners feel that it is not possible for them to keep the factory closed. In the meantime, orders worth about 3.5 billion have been canceled. As a result, they have become more active in meeting the conditions for what is still left. There are still some online retailers buying clothing. Demand for this specialty has grown significantly as a result of recent corporate scandals in Europe and the Americas.

Country like U.S. Small Business Administration’s paycheck protection program has been overwhelmed by demand, our neighbor country India will look forward to match urgency with careful design. Even Chinese business owners have diverted anti-virus funding to property or wealth management products. It has been reported that our neighbor country trying to think in a different way since the goal is to protect workers by giving employers an incentive to pay them, hitting that objective in a highly informal economy is the first challenge. The second is channeling credit when banks, nonbank financiers and debt mutual funds like the six local Franklin Templeton entities put into suspended animation last week are gripped by a mistrust of borrowers that predates the pandemic. Fiscal fear-mongering is the third obstacle. Also assuming the state-backed advances would be offered at a concessional rate, with the interest subsidy borne in the union budget. Banks would make loans for a fee, and turn them over to the guarantee fund, which would issue bonds to fund the purchase. Since non-payments will be made good by New Delhi, the bonds can be sovereign-backed. Who will buy them? Even if foreign investors don’t bite because of nervousness about the rupee, local banks are flush with liquidity. State Bank of India will still make money even if a customer defaults, if it sells its exposure to the fund in exchange for special sovereign bonds according to the report published in The Economic Times.

The Daily Star reports that BGMEA audits have found that, out of the 147 factories inspected so far, 144 show satisfactory levels of health and safety. The BGMEA spokesperson said that the audit teams have been paying sudden visits to factories in Dhaka, Savar, Ashulia, two zones in Gazipur, Narayanganj and Narshingdi and that the reports are being evaluated on a daily basis.

Media also report that, although the Bangladesh Garment Manufacturers and Exports Association (BGMEA) assures that only 850 factories have opened and that they are operating with fewer workers than usual and following safety guidelines, labour advocates have said that about 2,000 garment factories have restarted production and that not enough is being done to ensure safety for the four million workers in Bangladesh’s garment industry.

Source : ADB

“Who will take the responsibility if hundreds of workers become ill?”

Kalpona Akter, Executive director of the Bangladesh Center for Workers Solidarity

Ahsan H. Mansur, Executive director of the local think tank Policy Research Institute, said that at least another week should have been allowed to better prepare for reopening. “The factories have resumed operations without giving it much thought,” he said. “There is a huge risk of virus transmission among workers”.

On the other hand Bangladesh Garment Manufacturers and Exporters Association (BGMEA) President Rubana Huq has assured workers they will not lose their jobs for staying home during the Covid-19 (coronavirus) pandemic. “If a worker is absent from work, he or she will not lose their jobs in consideration of the situation. I earnestly request that all owners look at this from the view point of humanity. I believe owners in the sector which contributes a lot to the economy, will not take away jobs because of their absence,” Rubana Huq said.

When we talk about Bangladesh’s association in the world of global business, the first thing that comes to our minds is our ready-made garments (RMG) industry, which is by far the biggest export-earning sector – contributing over 84 per cent to the country’s annual export. Evidently this sector has started to witness its share of loss due to the virus outbreak globally. As of last week, 69 member companies of the Bangladesh Garments Manufacturers and Exporters Association (BGMEA) have faced order cancellation amounting to $93 million and up to $7.38 million work orders have been suspended by the top international clothing retailers and brands. As a result, industry insiders are expecting further cancellation and slashing of work orders in the foreseeable future as the world grapples with escalating numbers of infected cases and mortality rates due to the fatal virus according to the Sifat Islam Ishty, Senior Lecturer in the Department of Economics and Social Sciences at Brac University.

“It is high time the government stepped in before the situation worsens further. Policymakers should sit down with industry stakeholders and device policies that could effectively safeguard the RMG sector. Governments around the world are proposing trillion-dollar stimulus packages for their economies to help fight the coronavirus epidemic. Certainly, the RMG industry, which is the country’s major earning sector, is qualified to get a place in the government’s top priority list at this time of great peril. Industry insiders have proposed solutions such as support from disaster assistance fund, credit guarantee schemes from the central bank to encourage commercial banks’ continued support and amendment in the rules of the back-to-back letters of credit (LCs) to combat the current situation”, he further said.

Bangladesh’s over dependence on apparel export might prove to be its achilles heel. Large scale order cancellation and deferment is causing a liquidity crisis across the sector, prompting the BGMEA President to appeal for support, both from international buyers and the government. The government has responded by announcing a stimulus plan of BDT 5,000 crore, explicitly geared towards the export led sectors. The primary goal of the stimulus package is to protect jobs, facilitate regular salary payment and ensure survival of the financially weak apparel factories. Details of the plan are still being worked out and timely deployment of the fund would be imperative to stabilize the sector. That will be the main concern for the government.

Ministry of Health already set guidelines for every sectors in Bangladesh what must be followed until coronavirus fear ends. Health Minister Zahid Malek was quoted in the ministry’s press release as saying that both the lives and livelihoods of the people of the country should be maintained. If the industries, mills and especially the ready-made garments sector are kept closed for a long time, this industry may lose the world market. This could be a threat to the country’s future economy. The Ministry of Health and Family Welfare has said that the garment sector, industries and factories can be kept open by maintaining strict hygiene rules. Government should penalty whoever violate the rules of health and safety. They should strictly monitor it the same way when they monitor money embezzlement from Bank or such kind of criminal activities and impose fine for it.

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