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Should Buyers Be Worried About Unrest in Bangladesh?

I am glad to report that, despite ongoing riots or “hartals” unsettling Bangladesh, I had a very safe and productive visit. To be candid, I was a little concerned about my safety in advance of traveling. I’ve never had any trouble traveling through Bangladesh in the past but the news of increasing unrest made me a bit wary this trip. I log a lot of time on factory floors and the prospect of getting caught within a sudden uprising of disgruntled workers was definitely a source of unease.

When I reached the Radisson, I was surprised to see a steady flow of travelers in and out of the hotel. And based on the nightly rate, and my inability to negotiate it down, I concluded that there is no scarcity of buyers willing to visit Bangladesh.

Still, I had some reservations, especially given the the grim accounts I kept hearing on the local news. I could tell the country was in disrepair, struggling with widespread unrest. In order to get a clearer sense of the situation, I called my dear friend Habib Hirijii, Managing Director of Simco Spinning and Textiles Limited, and requested an hour of his time for discussion. As a very successful businessman with an impressive network of political connections, I knew he would be a valuable source of information.

The first point Hirijii wanted to make very clear was that the current unrest had nothing to do with the textile and garment industry. Since the new minimum wage was announced and then put into effect December 1, factory workers have been going to work as usual. There has been no real discord among the workers in the textile industry. Rather, the strikes have been organized by the main opposition political party, allegedly fighting for fair and free elections. They’re demanding that the current prime minister step down but he is clinging to his office, defying calls for his resignation.

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So what does all this mean for garment trade? Are the riots affecting production or shipment schedules? Should buyers be worried?

Since laborers continue to come to work each day, production continues unabated. But the industry is still indirectly threatened by problems related to persistent political instability.

The riots have caused a massive disturbance in transportation, making it both more costly and more dangerous to shuttle goods from the port in Chittagong to the factories in Dhaka and back.

Understanding the need to keep the industry afloat, the BGMEA is stepping in to help. They’re providing police escorts to ensure factories can safely get their shipments to the port, especially early in the morning and late at night when the roads are generally clear.

Still, delays persist. These limited time slots are simply not enough to cover all the shipments and, in response to rising demand for reliable transportation, trucking companies have been significantly hiking their prices. I’ve heard reports that, in some instances, prices are much as five times the normal rate to get a shipment to Chittagong.

There can be no doubt that the current situation in Bangladesh is stoking fear among buyers. The good news is that, at least for the time being, business continues to move. Exports continue to increase year over year and there remains strong buyers’ interest and robust demand.

My advice to anyone working in Bangladesh today is to maintain an open line of communication with your agent, local office, factory, etc. There may be shipment delays and this is the only way to stay abreast of problems as they arise. Allow for some extra time for deliveries and have a clear, precise sense of your t&as.

Hopefully, once the elections are over much of the unrest will subside. Bangladesh relies so heavily upon garment trade, it’s in the country’s best interest to keep business humming. If not, the long-term damage could be much worse than a few delayed shipments or higher transportation costs.