Economy feels the heat of coronavirus
The domestic economy has started to feel the heat of coronavirus owing to disrupted supply from China.
Industries across China have halted operations due to the deadly virus outbreak, affecting supply of raw materials to producers around the world, including Bangladesh.
The situation in China has also led the bilateral trade between Dhaka and Beijing to near standstill, insiders said.
Local manufacturers and industries such as garments, steel, cement, plastic, electronics, food, medicine, cosmetics and chemicals import raw materials and intermediate goods, from China and supplies to these sectors have already been disrupted.
Industry representatives have expressed concerns to this end urging the government to chalk out steps to deal with the situation.
"Several key sectors in Bangladesh economy depend heavily on imports from China, where production has come to a near-halt due to the supply disruption," former President of the Federation of Bangladesh Chambers of Commerce and Industry ( FBCCI) M Shafiul Islam (Mohiuddin) told The New Nation.
He said even shipments from Bangladesh to China have also been halted due to the coronavirus outbreak causing losses to exporters.
"The disruption in supply of raw materials makes things worse for domestic clothing industry in conjunction with falling garments exports," Vice-President of Bangladesh Garment Manufacturers and Exporters Association (BGMEA). M.A. Rahim (Firoz) told The New Nation.
Bangladesh imported textiles and other raw materials from China worth $5.02 billion during fiscal year 2018-19, according to BGMEA.
Besides, about 40 per cent of the capital machinery and spare parts for the textile and garment industry comes from China.
"Local apparel industry meets almost half its raw materials requirement from China. If supply chains remain disrupted throughout March, many garment factories will be closed," warned Firoz calling for immediate government measures to save the country's largest export sector.
Garment export contributed 84.21 per cent to Bangladesh's total exports income of $40.53 billion in the last fiscal.
Total garment exports amounted to $34.13 billion posting an 11.49 per cent growth during the period, according to the Export Promotion Bureau (EPB).
"The deadly virus has brought a large part of the world's second-largest economy, China, to a standstill and its impact has been felt across global economy. Being an integral part of global economy, Bangladesh has also started to feel the heat of it," economist Dr Zahid Hussain told The New Nation.
Referring to a Tariff Commission report, he said, the Commission has already assessed Tk 6,000 crore possible losses in key five domestic economic sectors. "It is also working to assess possible losses in 10 other sectors amid mounting concern over the virus fallout by the industry bodies."
The Commission has already submitted its interim report to the Commerce Ministry.
"Right now China is the largest trade and investment partner of Bangladesh. The country is also implementing several mega projects, including Padma Bridge, here involving many Chinese nationals. So, the impact on the Bangladesh economy could become severe in case of a lingering coronavirus crisis in China," noted Dr Zahid.
When asked, he said the country garment sector is the most vulnerable to the coronavirus impact when China is the main raw material supplier. But several other industrial sectors like leather, jute, garment accessories and packaging may also bear the brunt due to the supply disruptions.
To offset China effect, Dr Zahid suggested the local manufacturers to look for alternative raw materials suppliers.
Bangladesh's total raw materials and other imports from China reached $13.65 billion last fiscal.
"The virus outbreak has already affected the Sino-Bangla bilateral trade. Besides, a knock-on effect of the trade disruption is expected to have an adverse impact on our outbound shipments," said economist Dr AB Mirza Azizul Islam.
"Local manufactures are passing their days in deep fear due to uncertainness on the Chinese supply. The opening of letters of credit (L/Cs) for importing industrial raw materials has already been affected. If the coronavirus epidemic lingers on in China, it will cause a further delay in supply and will certainly affect production of local industries," FBCCI Vice-President M Siddiqur Rahman told The New Nation.
He cited, "Bangladesh's apparel production will hit the most and the national economy will ultimately bear the brunt of it."
Besides, prices of a number of commodities and consumer goods imported from China have already spiked in the domestic market in conjunction with the supply disruption.
In this situation, economists have urged the government to explore alternatives to overcome the situation.
"For Bangladesh, China is an important trading partner and policymakers should be more 'watchful' of the developments that are taking place," said Dr Zahid.