Shipment of garments from Bangladesh to Russia dropped 47 per cent year on year in the July to December 2022 period of the current fiscal year. Before the war, Russian buyers used to place work orders in big volumes. Ever since the war with Ukraine, Russian buyers have delayed payments. Before the war, nearly 600 garment exporters in Bangladesh used to send apparel items to the Russian markets as they were paid better prices.
Russia was an emerging market for Bangladesh as exports had been growing rapidly because of high demand for clothing items at competitive prices. Export receipts from garment shipments to Russia registered a 35 per cent year on year growth from July to February period of the last fiscal year.
In fact, growth in export receipt was showing a positive trend despite the fallout of the war because payments of previous work orders were being made. In the early days of the war, garment exports faced no major disruption since shipments were being made via alternative routes such as China and Hong Kong and suppliers were receiving payments from China in Chinese currency. Indeed shipments of garments continued through alternative routes for a few months against work orders placed prior to the conflict.
Collapse due to ban by SWIFT
The real detrimental effects of the war started to materialize from the middle of the last year. Now, garment exporters are facing trouble in shipments to Russian markets. Almost all major retailers and brands have left the Russian market and Western countries have put a ban on the use of SWIFT (Society for Worldwide Interbank Financial Telecommunication) by Russian banks. This has made engaging in transactions with Russia difficult. There is uncertainty over receiving payments and sending goods through alternative routes as the traditional ones have turned dysfunctional because of the war.
Some exporters are still sending goods to Russia through alternative routes and receiving payments from Turkey and in Chinese currency but the number and amount is still little.
Need to find alternatives
Exporters feel Bangladesh and Russia should arrange a special mechanism such as a barter system, creating alternative routes for shipping goods and introducing alternative currencies for payments instead of the dollar, such as the Chinese yen.