Asia’s lockdowns are taking their toll on the region’s garment workers, who account for more than 60 percent of the 40 million people who produce the world’s clothes and shoes.
Though the Philippines, which was primed to launch a 10-year roadmap to revive its textiles industry before Covid-19 nipped plans in the bud, appears well-situated to wrest market share from high-risk hotspots in China and Myanmar, the Southeast Asian nation’s recent lockdown due to mounting coronavirus infections is likely to roll back any gains from the shifting spend.
International buyers, particularly from the United States, have moved roughly $500 million worth of orders for babywear, athletic wear, dresses and intimate apparel to the Philippines in recent months, Robert M. Young, president of the Foreign Buyers Association of the Philippines, said in a virtual forum in late April, citing the ongoing coup in Myanmar and a desire by buyers to diversify as key reasons for the reallocation.
“This translates to additional foreign revenue earnings [and] significant employment and livelihood that will somehow snowball already to related industries such as transportation, packaging, food and other sectors,” Young said.
The country’s garment industry experienced a sharp contraction in its workforce last year after exports from the Philippines tumbled more than 40 percent in the first half of 2020, the International Labour Organization wrote in a brief in October. Plunging orders from the West, coupled with disruptions in critical raw-material imports, forced exporters to slash more than 21,000 jobs, or one-fifth of the 112,000 workers employed by companies that belong to the Confederation of Wearables Exporters of the Philippines, the trade group said in September.
With retail in the United States and others slouching toward recovery, the country was poised for a rebound. Driven by North America’s predicted 11.4 percent import growth, exports from Asia are expected to rally by 8.4 percent this year after flatlining in 2020, the World Trade Organization said in March. Initial signs were promising: Apparel imports from the Philippines ticked up 6.7 percent in value to $59.82 million in the first quarter of 2021, according to the U.S. Commerce Department’s Office of Textiles and Apparel.
The quarantine, which will run through May 14 in metropolitan Manila and four adjacent provinces, may have knocked this trajectory off course, however.
The Philippines, which has recorded more than a million cases and nearly 18,000 deaths as of Friday, is battling one of the worst waves of the contagion in Southeast Asia. Shipment delays, prompted by strict lockdown protocols, could slow down business, especially since the Philippines imports some $500 million worth of textiles from countries such as China and Korea every year.
“We could have solved [the supply-chain constraints] actually a long time ago if the government just listened to our suggestion that the textile industry should be revived,” Young told BusinessMirror last month. “We do not have a textile industry. Textile is the backbone of the garment industry.”
The bottleneck goes both ways, too. Garment manufacturers are experiencing delays of up to 45 days in their shipments, according to Young. While some suppliers might have to air freight orders to meet deadlines, it’s not a sustainable solution. “We are not willing anymore because we can’t afford the air freight,” he said. “It is so expensive—that’s 10 to 15 times the cost of the sea freight.”
Young expects domestic exporters to drop $600 million worth of orders if the state of affairs persists.
Cambodia eyes 80 percent rule
Meanwhile, in Cambodia, businesses in low-risk “yellow” zones are easing back into work after a three-week lockdown in the capital of Phnom Penh put 500 garment factories on pause, leaving many of their 500,000 workers without money to pay rent and electricity bills or buy food. The government had promised $75 cash payments to families under quarantine, but officials rescinded the offer after 10 days, saying the money would be used to support food donations and vaccination drives. Residents have criticized the distribution of food and other aid as inadequate, however.
The Southeast Asian nation was relatively unscathed by the coronavirus last year, but the number of infections took a sharp turn from roughly 460 in late January to more than 17,600 Friday, with 114 deaths.
While “red” and “orange” zones, which show higher infection rates, will stay under lockdown until May 12, “yellow” zone factories with at least 80 percent of their workers fully vaccinated will be able to start back up, said Ken Loo, secretary-general for the Garment Manufacturers Association in Cambodia (GMAC). Others will be able to operate at only 50 percent capacity, he added. The Labour Advisory Committee has also recommended that factories implement 50 percent rotational shifts over the next two weeks.
“GMAC, in coordination with the Royal Government, is working to have workers vaccinated as the suspension of production affected not only businesses but the livelihoods of tens of thousands of workers,” Loo told the Khmer Times. “The decision to only allow factories with a minimum of 80 percent of employees vaccinated to completely reopen will push efforts to make sure everyone is fully covered so that the sector can come back online as quickly as possible.”
The nation’s garment industry is a backbone of its economy, employing 600,000 people and accounting for 16 percent of Cambodia’s gross domestic product and 80 percent of its export earnings. The ASEAN+ 3 Macroeconomic Research Office, or AMRO, an independent monitoring organization, warned Thursday that pandemic-induced business closures and job losses could leave “lasting scars” on Cambodia’s productive capacity and economy without effective fiscal policy.
With continued fiscal stimulus, however, AMRO projects the nation’s economy to grow by 4 percent in 2021. “The recent spike in community cases underscores the need for the government’s strong response to contain the pandemic and speed up the vaccination rollout to achieve herd immunity,” Seung Hyun Luke Hong, AMRO lead specialist, said in a statement.
Holiday anxiety in Bangladesh
Bangladesh, whose lockdown will run through at least May 15, has kept its garment factories running, but it will face a major test with the upcoming Eid-ul-Fitr holiday from May 12-13, when most workers return to their hometowns to mark the end of the holy month of Ramadan.
The Bangladesh Garment Manufacturers and Exporters Association (BGMEA) has directed its members to urge their workers to stay in their workplaces to mitigate the spread of infection. Though daily infections in the South Asian country have fallen by half since a peak nearly a month ago, the Bangladesh government has asked businesses to restrict days off for employees to no longer than three. The nation recorded 1,822 new cases Friday, its lowest in 40 days.
“We have requested owners to ensure three-day leaves, and ensure all workers stay in their workplaces to protect themselves from Covid-19,” Syed Nazrul Islam, first vice-president of the BGMEA, told the Dhaka Tribune.
Islam said both the BGMEA and union leaders are hopeful they will be able to pay wages, bonuses and other allowances by May 10 according to the Labour Ministry’s instructions, though he cautioned that the industry was in a delicate state and that government assistance will continue to be crucial.
The BGMEA, the Bangladesh Knitwear Manufacturers and Exporters Association and the Bangladesh Textile Mills Association have written to lawmakers requesting loans with favorable terms that would enable them to pay salaries, bonuses and allowances for April, May and June.
“Bangladesh’s garment industry exports garments at a lower price than other countries to maintain export potential in the world market for which profit in this sector is very low. Garment owners are forced to take orders facing loss in most cases. And, employees in this sector are paid after receiving payment from the buyers and incentive for cash assistance,” the letter, dated April 24, read. “The exporters now are unable to apply for cash assistance due to non-repatriation of export value. Many buyers are also completing the payment at a discounted rate, making it harder for the institutions to solve the liquidity crisis.”