GENEVA — The COVID-19 pandemic crisis continues to “hit hard” the garment sector in major producing countries in the Asia-Pacific region — including Bangladesh, Cambodia and Vietnam — due to the drop in global demand and the resulting delays or cancellations of orders and a collapse in garment exports, a report by the International Labor Organization said Wednesday.
The ILO warned the situation in the sector “is fluid” and stressed there is a risk another wave of the pandemic could see further disruptions impacting the industry.
“In most countries, actually consumer demand continues to remain considerably below pre-crisis levels,” and this also affects the garment sector in the Asia-Pacific, said Christian Viegelahn, senior ILO economist based at the agency’s regional office for the Asia-Pacific in Bangkok.
The report found that in countries with the most stringent COVID-19 measures “annual retail sales growth has been lower by more than 25 percentage points, relative to countries with low levels of stringency.”
Viegelahn said this has impacted the garment sector in the 10 garment countries examined, which also include China, India, Indonesia, Myanmar, Pakistan, Philippines, and Sri Lanka. These nations have witnessed widespread temporary and permanent factory closures, supply chain problems, and job losses among the region’s 65 million garment workforce.
The ILO economist said that in the first half of 2020 in some cases garment imports by major importing countries from Asian garment exporting countries dropped on a monthly basis “by as much as 70 percent compared to the year before.”
Moreover, imports of garments in the U.S., the ILO said, declined by 26 percent from January to June, compared to the same period in 2019, and contracted in the European Union by 25 percent, and in Japan by 17 percent.
Viegelahn said noted declines in wages were common as well.
The report found, for example, that in Bangladesh among 250 factories participating in the ILO’s Better Work program, 38 percent faced order reductions or were asked to hold shipments, 34 percent experienced order cancellations, and 4 percent could not produce garments due to lack of raw materials.
The report said that 348 factories closed in Bangladesh, according to interviews with representatives from the Bangladesh Garment Manufacturers and Exporters Association, while in Cambodia, at the end of the second quarter of 2020, about 15 to 25 percent of factories had no orders and more than one-quarter of Garment Manufacturers Association in Cambodia member companies had not reopened by July.
The ILO said that 43 percent of garment suppliers in Bangladesh “are operating with less than 50 percent of their pre-pandemic workforce.”
Similarly, in Vietnam, the report said, that, according to the Vietnam Textile and Apparel Association, reopened factories in July “were operating at 50 to 60 percent capacity…the association estimated an $8.5 billion to $12 billion loss to the industry by the end of 2020.”