Poland saves the day for Bangladesh's garment shipment to Russia

Bangladesh shipped apparel goods worth $650 million to Russia in the financial year of 2020-21 and was tipped soon to be crossing the $1-billion mark in the promising market.

The momentum seemed to have run out of steam after the Russia-Ukraine war broke out in February 2022, as suppliers were finding it difficult to deliver goods to the country since it has been sanctioned by the western powers.

The disruption came after the West banned major banks in Russia from using the Society for Worldwide Interbank Financial Telecommunications (SWIFT), which allows financial institutions to send and receive electronic payments internationally.

The interruption, however, did not prolong as exporters soon found out alternative routes instead of direct shipping to Russia. Even in many cases, they receive payments in the Chinese yuan.

Among the alternative third-party countries, Poland has emerged as a key destination to keep supplying apparel items to Russia.

Exporters say they have picked Poland to send goods to Russia and receive payments in the US dollar.

Thus, Poland, which imported apparel products worth only a few million dollars from Bangladesh a few years ago, has emerged as one of the key export destinations for the country, albeit on paper.

Suppliers say major Polish importers are buying goods in large quantities from Bangladesh to re-export to Russia.

Whatever the reason is, higher garment exports to Poland have appeared as a boon for Bangladesh at a time when the country's largest export-earning sector is facing a slowdown due to an elevated level of inflation in the West.

Garment exports to Poland grew 19.14 percent year-on-year to $884.45 million in the July-December of the current fiscal year of 2023-24, according to data from the Export Promotion Bureau (EPB).

On the back of a zero-duty benefit under the European Union's Everything but Arms (EBA) scheme, the garment shipment to Poland went past the $1-billion mark for the first time in 2020-21 to bring home $1.38 billion in the year finally.

A new record was set in the following year when shipment hit $2 billion. Although the garment export to Poland declined 13.66 percent to $1.73 billion in 2022-23, it was largely because of higher inflationary pressure.

On the other hand, garment exports to Russia declined 26.96 percent to $426.39 million in FY23 owing to the war-related restrictions. It, however, rose 29.01 percent to $233.04 million in July-December of FY24.

Poland and Russia import a lot of knitwear and sweater items from Bangladesh because of their year-round cold weather. The prices of the exported goods are also higher than other garment items.

Rajiv Chowdhury, managing director of Young 4 Ever Textiles Ltd, said Poland, which has a population of 3.75 crore, itself is a big market for Bangladesh and some Polish retailers and brands source a lot of sweaters from the country.

Chowdhury used to send garment items to Russia a lot before the conflict began. Currently, he ships a large volume of goods to Poland.

"Garment items are sent to Russian markets from Poland by roads as the countries are geographically close," said Mohammad Hatem, executive president of the Bangladesh Knitwear Manufacturers and Exporters Association.

He said the shipment of garments to Poland declined last year because of the global problem. "It is now going up again."

LPP, a large Polish buyer, sources sweater items from Bangladesh, according to Faruque Hassan, president of the Bangladesh Garment Manufacturers and Exporters Association.

"A lot of locally made garment items are being shipped to Russia through Poland."