Bangladesh exporters find settling trade with Russia not a problem

Settlement of export proceeds for shipping apparels to Russia, a prospective market for Bangladesh, has not been affected much despite embargoes on the international transactions gateway, amid the war.

Apparel-dominated exports fetched $593 million from Russian market last year. Exporters have set a target worth $1 billion this year from that market but a “go slow” interim policy is hurting Dhaka's trade with Moscow.

When a host of Western sanctions hit Moscow, following its invasion of Ukraine in February, some Russian banks were banned from using the Swift system, an international transaction mechanism to settle international trades.

Though the exporters were worrying regarding the proceeds, their payments have not been largely affected so far, as most of the transactions are not being settled straight with Russia.

“Except for the Russian banks under sanctions, transactions are being done almost regularly. Besides, our exporters don’t always need to have contacts with the Russian partners directly,” Shahidullah Azim, vice president of Bangladesh Garment Manufacturers and Exporters Association (BGMEA), said.

In addition, most of the country’s readymade garment business transactions have been settled through Hong Kong for many years, he told the Business Insider Bangladesh.

“Last year, $593 million had been earned from Russia. Of this, $450 million payments were settled through Singapore, and the rest of the amount was paid through some other third countries,” he said.

Tusuka Fashions Ltd ships clothing to the Russian fashion market regularly, receiving payments from its buyers in US currency and through Swift and other country’s banking channels.

“Normally, most of the transactions happen through the Hong Kong Shanghai Banking Corp. Therefore, the war could not squeeze our payments,” Arshad Jamal Khan, chairman of Tusuka Fashions Ltd, told the Business Insider Bangladesh.

No matter what, Bangladesh’s exports to the Russian federation have declined remarkably.

“Due to the war on Ukraine, we are following a ‘go slow’ strategy, so export has been decreased largely, but payments have not been an issue,” said Executive President of the Bangladesh Knitwear Manufacturers and Exporters Association, Muhammad Hatem.

Meanwhile, Bangladesh’s apparel shipments to Russia have declined by 59.42 percent in March year on year as the exporters started following the ‘go slow’ tactic since Russia’s invasion of Ukraine on 24th February.   

According to BGMEA, “Made in Bangladesh”, the most popular brand around the globe, lost $32.48 million in Russian markets during March of this year.

The apparel fetched $22.19 million on March ’22 which was worth $54.67 million at the same time of the last year.