Exporters fear deeper losses amid political unrest, falling orders

The recent surge in political violence in the country has sparked concerns among exporters who are currently operating their factories at least 20% below capacity owing to declining orders from Western markets that are facing inflationary pressures for over a year.

While exporters were hopeful that the easing inflation in the USA and Europe would help in recovering orders, the ongoing political unrest is now seen as a potential risk. This has raised fears among international buyers who are becoming apprehensive about timely shipments of goods, potentially impacting the overall economy.

“We want to maintain the smooth operation of our production lines and shipments,” said Syed Mohammad Tanvir, managing director of Pacific Jeans Group, a prominent Bangladeshi apparel exporter based in the Chattogram Export Processing Zone.

A joint venture with a Korean company has also slowed down because of the political instability, he noted.

One of the country’s largest textile manufacturers seeking anonymity told TBS that most factories are currently operating at 50%-60% capacity, adding, “Continued political violence would be disastrous for the country’s economy, as the rising utility prices have doubled production costs, and textile millers are facing capital shortages due to slow business.”

An exporter also mentioned that some US buyers recently warned him about potential violence ahead of the national election, prompting them to place orders cautiously. 

Western buyers tend to be more cautious during election periods in third-world countries, he added. 

Although there were sporadic incidents of politically-charged skirmishes earlier in the year, a sense of political peace prevailed after the announcement of US visa restrictions on 24 May.

However, things changed when the BNP announced its one-point demand to topple the government and restore a non-partisan election-time government, leading to street agitation and rallies from both sides.

Economists also have expressed concerns about the escalating political instability, especially in the context of the upcoming national elections. 

They urged all political parties to stage their demonstrations peacefully, as any further unrest may adversely affect the country’s image, leading to a decline in export earnings.

Professor Mustafizur Rahman, distinguished fellow of the Centre for Policy Dialogue (CPD), said the country is facing a crucial time with both local and global challenges impacting economic activities. 

He emphasised the importance of political movements, democratic rights, transparency, accountability, and good governance for all political parties.

Mustafizur Rahman also emphasised the need to protect the economy from negative activities and disruptions in the production process.

Dr MA Razzaque, research director of the Policy Research Institute of Bangladesh, points out that any kind of uncertainty is detrimental to businesses. 

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