The global Coronavirus (COVID-19) pandemic has been sprouting a number of adverse impacts on countries as regards health hazards and economic slowdown. Bangladesh is already exposed to this health-threat and the country is at risks of several economic impacts.
Bangladesh Garment Manufacturers and Exporters Association (BGMEA) says some 843 factories reported 697.47 million pcs worth $2.25 billion export orders have been cancelled or held up affecting approximately 1.44 million workers (until March 24).
The International Chamber of Commerce, Bangladesh (ICC,B) has urged the policymakers to take the lead in bringing both public and private sector leadership together nothing that Bangladesh economy is under threat due to COVID-19.
On March 24, we counted fourth death due to Covid-19 disease in the country while the total number of confirmed coronavirus cases in the country increased to 39.
The Centre for Policy Dialogue (CPD) has sought targeted expansionary measures to tackle coronavirus.
In view of the current situation, the civil society think tank said, targeted expansionary measures are needed to tackle this national crisis in the areas of healthcare, trade, supply chain management, public expenditure and monetary policy.
"Bangladesh in the past has demonstrated its ability and resilience in combating the aftermath of a natural calamity and we hope, we shall be able to overcome this impending danger together with courage and fortitude," said ICC,B President Mahbubur Rahman.
In a statement on Monday, he said ICC Bangladesh believes the country is in the danger of not responding promptly and robustly enough to the impending challenges.
"Therefore, there is a pressing need for our government and business to agree on an overarching policy framework in the face of growing uncertainty and volatility. We are resolute in our believe that only coordinated action will be effective in tackling a threat that, by its very nature, knows no borders," he said.
The World Health Organization (WHO) officially declared the coronavirus (COVID-19) outbreak a global pandemic on March 11, which has now spread to 170 countries and territories and infected over 330,000 people.
This number does not adequately show the scale and magnitude of this global crisis, which not only related to public health but also the health of the global economy, said the ICC,B President.
He said economists are grappling and trying to predict the aftermath of this massive disaster. "No one knows exactly what will come tomorrow and thereafter and how the society, government, healthcare and the economy will change."
Rahman said it is obvious that the marginal and growing economies will be severely affected. "Therefore, it is of great concern for Bangladesh as more than 70% of its total export destinations are USA, UK, Canada and EU countries."
The veteran business leader said Bangladesh’s export earnings fell by 4.8% in the first eight months of the current fiscal year -- to $26.24 billion from $27.56 billion in the same period of the prior fiscal year -- and this downward trend might exacerbate in the coming months in the face of wholesale cancellation of export orders.
On the other hand, he said, China is Bangladesh’s largest trading partner and the highest contributor to its supply chain, which feeds into both export and import production.
"Thus, Bangladesh’s economic activities may hinder because of direct impact on production, supply chain and market disruption as well as impact on firms and financial markets," said the ICC,B President.
Financial sector, specifically the banking sector in Bangladesh, can be the most affected sector and Bangladesh’s remittances is likely to slow down, he said.
Rahman said it is still too early to properly assess what damage the virus will have on the Bangladesh economy, since the situation is evolving every day, economic estimates can only provide a magnitude of the impact.
He said the actual ramification will depend on the extent of the spread and length of the duration of the outbreak and how quickly policymakers can take action to mitigate the health and economic damage.
BGMEA Appeal to Brands
Bangladesh Garment Manufacturers and Exporters Association (BGMEA) has urged the international community and brands to take in all their goods, and allow shipments and production to continue till July at least.
BGMEA President Rubana Huq said while the COVID-19 wreaks havoc globally, fate of Bangladesh industry and workers has ended up being uncertain.
"With brands handing out cancellations and deferment, we have no idea what tomorrow holds," said the chief of the country's apex body of the apparel industry.
She said without orders and empty production spaces, all the workers run a risk of being totally unemployed for a long time to come.
"For us it comes down to a level of bare minimum survival mode, while the western world still has the privilege of having bailouts from their privileged governments," she said.
On that consideration, Rubana called upon the international community to surface with a renewed pledge to support the workers of Bangladesh, if not just the businesses.
The BGMEA chief is reaching out the countries and brands with the request.
"I will be writing to all," Rubana told UNB mentioning that the Embassies will also be kept informed.
She has already written to German Federal Minister for Economic Cooperation and Development Dr Gerd Müller and urged him to kindly immediately address all their brands sourcing from Bangladesh not to cancel or hold any shipment up.
"While the businesses in Germany receive government support and address their losses, at our end we have an existential problem as we have to pay our workers," the letter reads.
She informed the German Minister that they have given brands the assurance that they can pay 90 days later but they still need to take the ordered goods.
"In the face of cancellation, it is only evident that we will fail to pay our workers which will create serious social unrest and I am certain the no German brands would like to see that happen in their account," the letter sent to German Minister reads.
This unfortunate occurrence, Rubana mentioned, is a disaster that neither humanity nor commerce can afford.
She said Bangladesh has a different manufacturing reality and they would be deeply grateful if the German Minister could kindly urge the German brands to take in all their goods, and allow shipments and production to continue till July at least.
"Without this support, we will have a disastrous impact on our labour force and our businesses," Rubana mentioned.
Increased budgetary allocation, according to COD, will be required for COVID-19 related areas in a focused and targeted manner in view of production and distribution of medicine, improvement of health services and availability of medical instruments and support to health professionals.
Higher demand for cash incentives in the wake of COVID-19 may put additional pressure on the budget.
Flexibility in the next budget (for FY2021) needs to be considered to cope with the potential impact of COVID-19.
The lower-income class, particularly who are dependent on daily wages, will be the most affected group from this pandemic.
In this case, the government may consider to take specific incentive measures for them.
In a presentation Dr Fahmida Khatun, CPD Executive Director, pointed out that poor budgetary allocation (0.9 per cent of GDP) for healthcare sector has been a longstanding problem for Bangladesh.
Government budget for health (as a share of GDP) is considerably lower than the targets stipulated in the Seventh Five Year Plan (7FYP) and World Health Organization (WHO) benchmark as the 7FYP target for health budget was 1.12 per cent of GDP while the WHO target is 5 per cent of GDP.
Dr Khatun mentioned that, among the healthcare facilities in Bangladesh only 5 per cent have emergency transport and about 22 per cent have alcohol based disinfectant facility.
These services are significantly inadequate to tackle national crisis as regards COVID-19.
If the current trend continues, total revenue shortfall in FY2019 may reach Tk 100,000 crore which may increase due to the economic slowdown for COVID-19 outbreak.
Ready-made garments sector, leather industry, tourism sectors are likely to have negative impact in this situation.
The government should consider some temporary incentive package for the sector, said Dr Khatun.