Bangladesh's shipment to Russia fell nearly 30 per cent year-on-year to $432 million in July-May of the outgoing financial year owing to the difficulty in supplying goods to a country at war with Ukraine. 

The receipts stood at $615 million in the identical 11-month period a year earlier, meaning Bangladesh earned $183 million less in July-May of 2022-23, according to data from the Export Promotion Bureau (EPB).

The slide has dashed the hopes of suppliers to raise the earnings to more than $1 billion in a country considered the most promising among the emerging markets, on the back of higher sales of garment items such as outerwear, sweater, activewear, sportswear and jerseys.

In 2021-22, the earnings from merchandise shipments to Russia were $638.30 million and it stood at $665.31 million a year earlier. And before the beginning of the war in February last year, the year-on-year garment shipment  grew 36 per cent and local apparel exporters alone were confident of bagging $1 billion annually.

The persisting conflict has slowed down the export growth not only for apparel items but also for other goods.

For example, Snowtex Group, a garment exporter, used to ship outerwear to Russia directly before the war. Now, the company is sending goods indirectly to Russian markets and the volume fell drastically, said its Managing Director SM Khaled.

In 2021, Snowtex Group exported garment items worth $1.42 million, but the amount dropped to $33,500 in 2022, a year-on-year decline of more than 97 per cent.

Before the war, Khaled had projected that his business would grow at least by 30 per cent in the market. "The shipment did not grow because of the severe fallout of the war."

Recently, the company received orders to ship 15,000 pieces of garment items and the entrepreneur is hopeful that more orders will flow in from Russia.

Russia has been hit with massive economic sanctions since the war began as western nations are trying to limit Russia's access to money.

For example, major Russian banks have been removed from the Society for Worldwide Interbank Financial Telecommunications (SWIFT), a member-owned cooperative providing secure messaging for international transfers of money between participating banks, delaying payments.

This has forced Khaled to send goods to Russia through a third party. "Carrying out financial transactions with Russian buyers is difficult," he said.

Snowtex, however, says its overall export would rebound soon as sales in the European markets are improving. The export growth to the UK is also showing a positive trend.

The shipment of frozen fish like shrimps in the Russian market is also dull because of the fall in demand, said Md Amin Ullah, managing director of ARK Seafood Ltd, a Chattogram-based frozen food exporter.

He points to the sharp depreciation of the Russian currency rouble against the US dollar. A depreciation of a local currency makes imports costlier and exports cheaper.

The dollar traded at 63 roubles three months ago and now one US dollar fetches 83 roubles, said Amin, also the president of the Bangladesh Frozen Foods Exporters Association.

The garment sector witnessed a major fall.

In July-May of FY23, Bangladesh exported garment items worth $400.31 million, down 28.82 per cent from a year earlier, EPB data compiled by the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) showed.

Garment exporters shipped products worth $583.78 million in FY22, $593.66 million in FY21 and $440.88 million in FY20.

Mohammad Hatem, executive president of the Bangladesh Knitwear Manufacturers and Exporters Association, says the export to the Russian market has revived to some extent in recent months as local suppliers are sending goods through alternative routes and receiving payments in the Chinese currency and in the US dollar.

He said some local exporters send goods to Russia through the buying houses in Hong Kong and India and they receive payments in the Chinese yuan, while some are receiving payments from Germany in the USD.

"We are not facing any difficulty when it comes to receiving payments from Russian buyers," he said, adding that minor problems are stemming from the exchange rate between the yuan and the taka.

"We hope exports to Russia will rebound in the near future," said Hatem, whose company is also sending garment items to Russia through alternative channels.

BGMEA President Faruque Hassan said the shipment to Russia was on track to going past the $1-billion mark alone from the garment sector.

"Unfortunately, the amount is currently low because of the war."

Hassan said the $1-billion mark would be hit in the near future as orders are coming back.

Before the war, nearly 600 garment exporters used to sell apparel items in Russia.