[🇧🇩] Bangladesh Export Industries

[Bilal9]

Runner Auto returns to profit in Q2 with 49% revenue growth​

The automobile maker registered a Tk64.57 lakh profit in the second quarter of FY24​

Runner Automobiles, a local two and three-wheeler maker and assembler, returned to profit in the second quarter of FY24 with a 49 percent revenue growth riding on an upbeat three-wheeler sale in the October to December quarter of the 2023-24 fiscal.

According to its unaudited consolidated financial statement, its revenue grew to Tk216 crore during the October-December period from Tk145 crore during the same time in the previous fiscal year.
The automobile maker registered a Tk64.57 lakh profit in the second quarter of FY24 in contrast to Tk26.56 crore loss posted during Oct-Dec in 2022-23 fiscal year.


The company's earnings per share (EPS) stood at Tk0.05 in the second quarter.
In its price sensitive information (PSI), the engineering firm said its three-wheeler business witnessed a significant growth in revenues, which resulted in the positive EPS.


According to its half-yearly financial statement, its losses narrowed to Tk27.36 crore during the July-December period from Tk35.49 crore in same period of the last fiscal year.


In the PSI, Runner said, "Amidst very challenging economic and political conditions, the company had set clear target and ensured dedicated focus on high prospect segments as per plan in order to deliver a significant shift in business performance."

The completely revived 3W network played the biggest role in the sales turnaround for its Bajaj RE three-wheelers in Q2.

While the newly introduced Yadea electric scooter segment started an encouraging journey, smart planning and focused drive for specific motorcycles categories also helped the business growth of Runner despite the fact that the two-wheeler industry had further dropped in this quarter, the company said.

In 2022-23 fiscal year, the Runner Automobiles had incurred a loss of Tk87.90 crore, for which the company did not declare any dividend to its shareholders. It got listed on the stock exchange in 2019.

On Thursday, its shares price fell by 2.41% or Tk0.9 each to Tk36.40 at the Dhaka Stock Exchange (DSE).

 

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Executive Woodworks envision reshaping Bangladesh’s furniture exports​

With furniture exports valued at $110.36m in the past fiscal year, Bangladesh’s 15-20 enterprises have already paved pathways across international borders​

A worker shapes wood in an automated furniture factory of Executive Woodworks Ltd, a subsidiary of Meghna Executive Holdings, in Sreepur upazila of Gazipur. The photo was taken recently. Photo: Saqlain Rizve

A worker shapes wood in an automated furniture factory of Executive Woodworks Ltd, a subsidiary of Meghna Executive Holdings, in Sreepur upazila of Gazipur. The photo was taken recently. Photo: Saqlain Rizve

In a world fuelled by creativity and innovation, the global furniture market seamlessly intertwines artistry with commerce. A monumental player, the industry boasted a staggering valuation of $516.66 billion in 2022, serving as a nexus of culture, design, and business on a worldwide canvas. Amid the frontrunners in this domain, China has emerged as an indomitable force, disseminating its craft to the far corners of the earth. With a remarkable annual furniture export figure of $86,876.3 million in 2021, China stands as a testament to manufacturing excellence and prowess.
Yet, amidst these giants, a new contender from Bangladesh takes centre stage – Executive Woodworks Limited, a subsidiary of Meghna Executive Holdings (MEH), which was established in 1965.
Meghna Executive has not only carved its niche in the furniture industry but has also diversified its business portfolio to encompass industrial goods manufacturing, light engineering, apparel and textiles, exclusive import and premium dealership of esteemed automobile brands like BMW and KIA, lifestyle products such as Kohler and Penthouse Livings, and authorised resale of cutting-edge electronics and IT products, including Apple.

Executive Woodworks Ltd, a subsidiary of Meghna Executive Holdings, in Sreepur upazila of Gazipur. Photo: Saqlain Rizvee

Executive Woodworks Ltd, a subsidiary of Meghna Executive Holdings, in Sreepur upazila of Gazipur. Photo: Saqlain Rizve

In the ever-evolving landscape of the furniture market, Executive Woodworks Limited embarks on a transformative journey that has the potential to reshape the narrative of furniture exports. Along with the Indian and Malaysian technical team, the company envisions a future where innovation and automation seamlessly converge to redefine the sector.

The company is headquartered within an expansive 6,80,000 square feet complex, housing an automated kiln dry unit, state-of-the-art woodworking machinery, dust free environment and robotic finishing lines that usher in a new era of precision and efficiency.


Yet, this story transcends mere statistics and technological advancements; it encapsulates Bangladesh's unwavering determination to etch its presence onto the global furniture stage.

With furniture exports valued at $110.36 million in the past fiscal year, Bangladesh's 15-20 enterprises have already paved pathways across international borders. As Executive Woodworks joins this esteemed group with a vision of 100% exports, it embarks on an audacious objective– to export its meticulously crafted furniture to every corner of the world, with a strategic focus on the Western market, particularly the US.


Inspired by Vietnam

In the year 2021, Vietnam secured the fifth position on the list of the world's leading furniture manufacturers and exporters. It solidified its position as Asia's second-largest furniture exporter, boasting a remarkable export value of $12,959.6 million.


A worker spray paints wood in an automated furniture factory of Executive Woodworks Ltd, a subsidiary of Meghna Executive Holdings, in Sreepur upazila of Gazipur. Photo: Saqlain Rizve

A worker spray paints wood in an automated furniture factory of Executive Woodworks Ltd, a subsidiary of Meghna Executive Holdings, in Sreepur upazila of Gazipur. Photo: Saqlain Rizve

"In 2021, during a business trip to Vietnam, Moklasur Rahman Pinto, the managing director of Meghna Executive Holdings, delved into the intricacies of furniture manufacturing and export. This experience sparked the contemplation of establishing a 100% export-oriented company in Bangladesh," revealed Masud Rana, deputy general manager of MEH.

He further said, "Over 80% of our nation's exports emanate from ready-made garments, rendering the export market somewhat monotonous. We aspire to inject diversity into this landscape through our business. We firmly believe that with augmented government support for this initiative, success is inevitable."


Fuelled by this vision, the journey commenced in 2022. The construction of the manufacturing facility began in Jaina Bazar, Gazipur, marking a significant step forward. The factory's operational capacity encompasses the production and shipment of 5 containers measuring 40ft HC each day to the US. This robust infrastructure caters to the medium-high and high-range furniture market, accompanied by a lofty annual export target of $70 million.

Dedicated to excellence and sustainability

As a 100% Export-Oriented Unit (EOU) factory, Executive Woodworks proudly holds certifications such as ISO 9001:2015, Fair Trade USA, EMS ISO 14000:2015, and UL Greengard certification. The company's commitment to sustainability is evident through the utilisation of FSC-certified timbers and sustainable materials, ranging from hogla, seagrass, water hyacinth, jute, and bamboo to ceramics, bone, and both local and imported timber.

The factory's modern manufacturing landscape stands as an indication to technological advancement.

Automated processes, including a kiln dry unit, sophisticated woodworking machinery, 6-axis CNC machines, automated veneer plants, robotic finishing lines, and a climatically controlled finished goods store, underscore a commitment to precision and quality. Notably, the factory's scope extends beyond modern creations, embracing the revival of traditional local Cane and Rattan Furniture, fostering rural employment and catering to overseas demand.

"Along with design western countries are more concerned with durability and sustainable finishing of products. Along with advanced technology, we have hired designers from different countries around the world," said Mohd Sakib, merchandising manager of Executive Woodworks Limited.

Empowering through employment

An instrumental facet of Executive Woodworks Limited's operations is its commitment to women's empowerment. The factory provides employment opportunities for 30% female workers, accompanied by amenities like daycare and breastfeeding centres, and facilities for sanitary pad usage and disposal.

Exployees plan for a project at the furniture factory of Executive Woodworks Ltd, a subsidiary of Meghna Executive Holdings, in Sreepur upazila of Gazipur. Photo: Saqlain Rizve

Exployees plan for a project at the furniture factory of Executive Woodworks Ltd, a subsidiary of Meghna Executive Holdings, in Sreepur upazila of Gazipur. Photo: Saqlain Rizve

In a world driven by innovation, Executive Woodworks Limited stands poised to redefine the furniture export landscape, embodying Bangladesh's determination to leave an indelible mark on the global stage. With its blend of craftsmanship, automation, and sustainability, the company envisions a future where every piece of meticulously crafted furniture finds its place in homes around the world.

 

[Bilal9]

Bay Economic Zone wooing local, foreign investors​

The EZ has received $175m investments so far​

Infograph: TBS
Bay Economic Zone, set up by Bay Group on 65 acres of land in Konabari, Gazipur with modern facilities, is now fully ready to woo local and foreign investments with 40% of the land already leased out to potential investors.

A number of foreign companies seeking to shift factories outside China and investors from Taiwan, South Korea and some European countries are keen on investing in the economic zone developed in the private sector.

Chinese toymaker Meigo (Bangladesh) and Bay's own sportswear factory have already gone into production there, according to high officials of Bay Group.


"Some 40% of the 65 acres of land have already been leased out to the investors. A number of companies from South Korea, Europe and Taiwan have shown investment interest," Bay Group Managing Director Ziaur Rahman told The Business Standard.


"It is mainly the companies that seek to transfer their production facilities from China to other countries who are coming. We're talking to their representatives. Hopefully, some foreign investments will come here soon," he added.

He stated that the Bay Economic Zone has roped in more than $100 million in foreign investment apart from Bay's own investment of nearly $75 million, including cost of infrastructure development.


Meigo (Bangladesh), which exports toys to Japanese and European markets, started its operations in the first economic zone in Gazipur in 2018 with $15.8 million investment – a year after the zone secured a licence from the Bangladesh Economic Zones Authority (Beza) in 2017.

Additionally, the Taiwanese apparel maker Makalot, under its registered name in Bangladesh – Makalot (BD) Ltd – will invest $17 million to set up a factory here, according to Bay officials.


With the setting up of a factory in a six-storey building, Makalot (BD) will create employment opportunities for around 1,500 people to produce sportswear, readymade garment, sleepwear, leisure clothing and outdoor garment.


In January 2023, the zone authorities signed an agreement with the Taiwanese investor for allotting 10,119 square metres of space. Currently, Makalot has over 33,000 employees in factories in Indonesia, Vietnam, Cambodia, China and the Philippines.

The Bay Group MD said the construction work of Makalot's factory in Bangladesh is now underway and the factory is likely to go into production by April this year.


Ziaur said their own factory in the economic zone – Bay Sports Wear Limited – manufactures export quality shoes in collaboration with international shoe-maker Stella.

Other factories awaiting the start of production at the economic zone include Formoza Mold and Lasting Ltd producing plastic items; Bay Box Limited manufacturing packaging and accessories items; Essential Dyeing Ltd producing composite knit garments; and Bay Cargo Centre Ltd producing logistic items.

"We'll now selectively allocate land to companies producing high-end value products. Some textile companies, which will manufacture man-made fibres, are talking to foreign companies to acquire land. We are ready to serve these investors," Ziaur Rahman told TBS.

Some 10,000 new direct employment will be created in the economic zone. Another 50% more indirect employment would be generated there through the supporting businesses.

There is a plan to expand the economic zone to 100 acres of land given the increased demand from the investors, both from home and abroad, Ziaur said while sharing his Bay's future expansion plan.

Currently, a total of eight private economic zones are in commercial operation. The Beza has set a target of setting up 100 economic zones across the country by 2041 to create some 10 million jobs.

The economic zone authority has set a target for $40 billion additional export earnings from those economic zones by that time frame.

Investors enjoy tax holidays, duty-free imports of raw materials and machinery, exemption from dividend tax, VAT-free electricity, gas and water and other financial facilities in the economic zones.

Besides, they also enjoy some other non-financial advantages such as bond facility, One Stop Service (OSS), repatriation of disinvestment, unlimited telephone transfers and separate customs procedures.

 

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RMG expects order pickup from April based on US, UK market reports​

Bangladeshi exporters anticipate a surge in clothing orders from the beginning of the second quarter of 2024, particularly as global retail shops have successfully cleared out their winter inventories, thanks to several festive occasions and easing inflation in the West​

After a chilly winter for the apparel industry, a sunnier outlook may bloom in the coming summer.
Bangladeshi exporters anticipate a surge in clothing orders from the beginning of the second quarter of 2024, particularly as global retail shops have successfully cleared out their winter inventories, thanks to several festive occasions and easing inflation in the West.


In discussions with The Business Standard, Bangladesh's apparel industry leaders and representatives of global buyers said retail outlets in their major export destinations such as the USA and the UK experienced a sales boost during November and December due to various festivals such as Black Friday, Cyber Monday, Christmas Day, and Boxing Day.


Data from the US Census Bureau also indicates a consistent upward trajectory in apparel store sales over the past year, increasing from $13.7 billion in monthly sales in January 2023 to $21.8 billion in November.


In December last year, US monthly apparel store sales were estimated to be $29 billion, 9% higher than in December 2022. On a year-to-date basis, the sales in 2023 were 6% higher than in 2022, according to Wazir Advisor, an Indian market research firm.
The Conference Board, a worldwide think tank, carries out a monthly assessment of US consumer sentiments, spending intentions, and outlooks regarding inflation, stock prices, and interest rates.


According to its latest survey, the US Consumer Confidence Index rose to 110.7 in December 2023, marking an increase from 102.0 in the preceding month. This figure is slightly above the index recorded in December 2022.
Retail clothing sales in the UK market went up as well.

According to data from the Office of National Statistics, the executive office of the UK Statistics Authority, monthly retail sales for apparel in the UK market exhibited an upward trend throughout 2023. However, the market also experienced a slight downturn in the last quarter.

In December last year, Bangladesh achieved its highest monthly apparel export value, totalling $4.56 billion over the 12 months of 2023. However, this figure represented a 2.4% decrease compared to December 2022, according to Export Promotion Bureau (EPB) data.

The overall growth in exports for the entire 2023 saw a slight 3.67% increase. The total export for 2023 amounted to $47.39 billion compared to the $45.71 billion recorded in 2022, EPB data shows.

Orders expected to surge from Q2

Faruque Hassan, president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), said, "Our exporters are expecting a surge in apparel orders from global buyers starting from the second quarter of this year."

Referring to the drop in inflation in Europe and the US, he said, "Brands are expected to boost their apparel sourcing from Bangladesh, having successfully cleared their inventory over the past year. Some buyers are already in talks with our exporters to ramp up orders."

Fazlee Shamim Ehsan, vice president of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), said countries belonging to the Organisation for Economic Co-operation and Development (OECD) are expected to witness a decline in inflation to 3.2%, along with projected GDP growth of 1.2% in 2024.

"We foresee a boost in Bangladesh's apparel exports during the second quarter of 2024," Shamim Ehsan said, adding that as inflation cools down, consumers are likely to spend more on clothing items.

Shofiqur Rahman, executive director (Sales and Marketing) of Zaber & Zubair Fabrics Ltd, the largest textile division of the Noman Group of Industries, also reflected the optimism expressed by leaders in the apparel industry.

"In the post-pandemic era, global brands engaged in extensive imports, with a substantial portion of the merchandise stored as inventory in their warehouses.

Nevertheless, a majority of retail outlets have already exhausted their inventories, attributed to an early winter in Western countries last year," He told TBS.

Drawing on his personal experience during last year's visit to Denmark, Shofiqur said typically, winter snowfall in the West occurs towards the end of December but snowfall occurred a month early this time which prompted retail stores to clear out their inventory.

"There is a potential for increased business opportunities. Some exporters are now in talks with buyers for order placements between May and June," Shofiqur Rahman said.

The textile manufacturers plan to start fabric production in early June, with garment production expected to start later in June, continuing through November, the Zaber & Zubair official added.

Preferring to remain anonymous, a senior official from a European brand informed TBS that they were apprehensive of potential political instability in view of the national election in Bangladesh. With the election now over, they are now of a positive outlook.

The head of business development for another multinational buying house, who also oversees the South Korean market, predicted that the current year will be favourable for the apparel business citing the decline in inflation across various countries.

The import market in Korea remains stable compared to the previous year and Bangladeshi exporters are experiencing growth due to their competitiveness, the buying house official added.

Some challenges yet to be addressed

BGMEA President Faruque Hassan said despite a potentially bright outlook, the industry is poised to encounter numerous challenges in the coming days. The recent increment in minimum wage at factories starting from December last year, a surge in lending rates, and elevated gas and electricity prices, are causing substantial increase in production costs.

Shofiqur Rahman, the executive director of Zaber & Zubair Fabrics, said freight costs hiked due to the Red Sea conflict, and lead time went up. Now every factory has to extend their shipment time and it has become a challenge for all apparel exporting countries, not only Bangladesh.

But those countries having deep sea ports will get a competitive advantage. Freight costs also will increase raw materials import costs. At this moment, our customers expect prices below the actual product cost.

Currently, some industrial zones are facing winter time gas supply shortages, but the government is looking for long-term sourcing partners for LNG, which might be a solution for gas supply, Shofiqur Rahman said.

Textile makers are trying to continue their business at break-even cost and in some cases a little bit below that, he said.

He, however, mentioned that Bangladesh's apparel industry has demonstrated resilience in dealing with adverse situations over the past 40 years.

"We have garment, textile, and accessory facilities in close proximity, which is a comparative advantage over other countries," he said.

"Our workers are using their maximum physical ability but they are not able to compete with China as they are using fully automated machinery. Workers are multi-tasking; they can operate various machines," Shofiqur Rahman added.

 

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2023 sees 134 new RMG units despite global slowdown​

Most of these investors are new while some large players also joined the race to expand their business. A large number of these factories are supposed to come into production by this year.​

Employees working at an RMG factory. File PHOTO: TBS

Despite a global economic slowdown, Bangladeshi entrepreneurs came up with fresh investments in 2023 to set up some 134 new RMG factories to tap the growing potential of the thriving sector, according to industry insiders.

Most of these investors are new while some large players also joined the race to expand their business. A large number of these factories are supposed to come into production by this year.

Apparel-makers say there is a huge potential for Bangladeshi garments on the global market as many large global buyers are shifting their sourcing destination from China to other areas, preferably Bangladesh.


In some cases, buyers are moving to Bangladesh due to geopolitical reasons.

According to the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) membership data, Badsha Group of Industries, Pacific Jeans Group, Ha-Meem Group, Sadma Group, and Beximco invested in 2023 to diversify their exportable apparel items.


Among them, Badsha Group has invested Tk800 crore in its Pioneer Denim at Madhabpur, Habiganj, to set up a state-of-the-art unit with a target of $700 million export earning a year, said the group's founder Badsha Mia.

Under this project, they are constructing two buildings with seven floors as production units, two sheds for storage facilities and three sheds for dyeing and washing plants.

The construction of a five-storey research and development building was almost complete. It already started a limited-scale operation with 10 lines on a floor from December last year.

"Production will start on a large scale at the unit in 2024 and the factory will create employment for at least 15,000 people. Currently, the group has created employment for about 25,000 people," Badsha Mia told The Business Standard.

He said they had a target to export denim garments worth $700 million a year by 2028.

Talking with TBS Md Khairul Alam Rabbi, head of HR, Admin and Compliance of Pioneer Denim, said they got the BGMEA membership last year.

Pacific jeans, the country's largest investor in Chattogram EPZ, also invested $31.75 million in Pacific Attires Limited in the same EPZ.

The new factory will produce high-value formalwear such as suits, blazers, jackets, coats, pants, and casualwear, said Pacific Jeans Group Managing Director Syed Mohammad Tanvir.

"This new unit will create job opportunities for 9,000 people in the next three years. Once fully operational, this facility will boost our exports by $250 million," Tanvir said.

Ha-Meem Group, one of the leading garment exporters, also invested in an outerwear factory.

Earlier, AK Azad, managing director of Ha-Meem Group, told TBS that while they initiated the outerwear project with three production lines in April 2023 and they have plans to expand capacity to 16 lines.

Azad noted that their strategic focus had shifted from garment capacity expansion to diversification, underpinning their business' sustainability in the foreseeable future.

Sadma Group Managing Director Md Nasir Uddin said they took three permanent memberships at the BGMEA in 2023.

Appropriate Apparel, a knit composite of the group, will employ 3,000 people and Mouchak Apparel, an underwear factory, will employ another 2,000 people.

Nasir hoped that by 2024 the group's total manpower will be 18,000 and its turnover will reach $250 million. The group's current turnover is $100 million.

Talking with TBS, BGMEA President Faruque Hassan said the Beximco Group got the highest number of factory memberships in the last two years.

"We are encouraging our members to invest in high-technology factories to produce diversified apparel to increase export growth," he added.

He said despite the slow demand RMG's growth gaining momentum, the industry is forward with a vision of $100 billion export by 2030 having "sustainability" at the core of our vision.

He said in 2022 and 2023, a total of 278 factories became permanent members of BGMEA, and 316 factories received provisional membership.

 

[Bilal9]

Non-cotton garment exports could rise from $8.5b to $19b: Study​

ERD suggests formulating fibre security strategy, ensuring duty-free access for all fibres, establishing low-cost investment fund for man-made fibre entrepreneurship​

Infographic: TBS

The country's exports of non-cotton garments, including man-made fibres, could double to $19 billion by 2025, up from the current $8.5 billion, if the existing challenges are resolved, according to a study by the Economic Relations Division (ERD).

The study has been conducted based on global market share and export projection of 20 types of non-cotton apparel items exported by the country.

The study has also underscored the need for devising a fibre security strategy, ensuring duty-free access of all fibres and establishing a dedicated low-cost investment fund, skill development to support man-made fibre investments.

The ERD conducted the study in association with the Research and Policy Integration for Development (RAPID), a non-government think tank.

The study report, "Expanding Man-Made Fibre (MMF) Apparel Export: A Strategy for Upscaling the Garment Sector", was presented to stakeholders at a programme in Dhaka on Wednesday.

"The demand for man-made fibres is growing faster than cotton in the global market. Bangladesh's position in this market is still relatively low. There is a great potential for Bangladesh in this sector, and it can be achieved by addressing existing challenges," MA Razzaque, chairman of RAPID, told The Business Standard.

"To achieve this target, it is necessary to make raw materials easily available, provide logistics, and financial and policy support," he said.

Local entrepreneurs also agree with the potential outlined in the ERD study report.

Md Saleh uz Zaman Khan Jitu, managing director of NZ DY Flax Spinning Limited, a backward linkage industry for non-cotton apparel, told TBS, "Our main challenge is the import of man-made fibres. If we are given the facility to import its raw materials duty-free, like cotton, we have the potential to go a long way."

He added, "We have customers, the market is established, and there is an opportunity to produce this textile in the existing setup. But due to a lack of proper policies, we are not able to grab this huge market."

Challenges

The ERD study finds a lack of duty-free raw materials, delay in customs clearance, complicated duty-drawback procedures, inadequate short-term financing support, insufficient FDI inflow and absence of fibre security strategy are key challenges that need to be addressed to explore the potentiality of non-cotton garment exports.

A lack of modern technology adoption, skills gap in top and mid-level managerial positions, lack of skilled workers, limited research and development activities, low level of compliance and certifications practices also act as bottlenecks to reach the untapped potentials, the study reads.

While cotton and cotton textiles are imported duty-free, man-made fibres raw materials are subject to import duties of up to 59%, the study mentioned. Although these duties are supposed to be refunded upon export, businesses get discouraged from doing so due to the complexity and additional costs involved, it finds.

Mohammad Ali Khokon, president of the Bangladesh Textile Mills Association, told TBS, "To increase our value addition, it is imperative to enhance the importance of man-made fibre."

He noted, "Flax fibre yarn is worth $18 per kilogram, while cotton yarn is worth $3 per kg. This is why we need to diversify. To do this, we must remove all types of duties and taxes on flax fibres, just as we have done in the case of cotton."

Abdullahil Rakib, MD of Team Group, one of the largest RMG exporters in Bangladesh, told TBS, "We fully agree with the findings of this study. We have opportunities ahead of us, but we need policy support to capitalise on them."

Non-cotton garments include waistcoats, T-shirts, wind jackets, brassieres, non-woven garments, trousers, synthetic dresses, shirts, overcoats, tracksuits, full or knee-length hosiery and socks, rubberized (Spandex, Lycra added) garments for women, non-knitted synthetic dress, etc.

According to the Export Promotion Bureau (EPB), non-cotton garments accounted for 29% of the country's $55.56 billion export earnings in FY23.

In 2021, non-cotton garments accounted for 54% of the global apparel market size of $505 billion, according to the ERD study.

 

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Why RMG nearshoring never posed a real threat to Bangladeshi manufacturers​

Unit costs remain significantly lower when sourcing from Bangladesh, which is why creating nearshoring options is not a direct threat to Bangladesh’s apparel manufacturers when it comes to prices​

TBS Infographics

According to the sixth edition of McKinsey & Company's Apparel Chief Purchasing Officer (CPO) Survey published in 2021, 71% percent of apparel and fashion brands were planning to raise their nearshoring share by 2025.

The report, titled 'Revamping fashion sourcing: Speed and flexibility to the fore' was taken so seriously across the globe that it gave birth to a series of analyses and op-eds speculating what Asian RMG manufacturers' new strategies should be to ensure their survival in the new reality.

Even in 2024, stories continue to surface citing the McKinsey report, on how the apparel companies are looking to change their sourcing-country mix, mainly focusing on nearshoring.

The projection, or the perceived change, was influenced by supply-chain disruptions in the wake up of Covid-19, which were "here to stay," according to the report, necessitating "speed and flexibility."

This appears to be the latest in a series of enthusiastic reports published by McKinsey. Earlier in 2018, the global management consulting firm launched another report optimistically titled, 'Is apparel manufacturing coming home?'

Both the reports mention that the majority of the interviewed CPOs said nearshoring and automation were their top priorities.

At the beginning of 2024, it is only appropriate to take a deeper look into the matter, as to how much of that target was actually achieved, and if that ever posed a threat to Bangladesh's RMG as sourcing from the nearshore would automatically mean the decline of RMG exports from Asian countries.

As it turns out, the apparel manufacturing never quite "came home" or even near home, seen from a Global North perspective. At least, the current trends do not seem to support the fulfilment of the nearshoring goals anytime soon.

Although nearshoring is attractive for big brands due to shorter lead times and reduced risks emanating from 'skyrocketing transportation costs and potential shutdowns,' limited raw-material supply and cost hike makes it impractical.

For European brands, nearshoring would mean a strong shift toward Turkey. Besides, US brands also reportedly want to take advantage of the country's capacity for design and speed.

According to the McKinsey report, in response to a question with regards to their future view of the top five country hot spots by 2025, many CPOs mentioned Turkey, which stood third in the list.


Notably, Bangladesh topped the list with a significant lead against others in the list.

The prospects of other nearshoring options such as Morocco, Tunisia, Portugal, Macedonia or the UK is not significant.

In 2022, a year after the publication of the report, Turkey saw a 10.09% growth in RMG supply to the EU, being the third largest supplier to the latter. It supplied $11.98 billion worth of apparel that year.

At the same period, Bangladesh's RMG industry posted a growth of a whopping 35.69%, reaching $22.89 billion, up from $16.87 billion in 2021.

In the 2023 calendar year, of course, both countries experienced a decline in export as the apparel import of the EU from the world decreased by around 10%.

Bangladesh's apparel export to the US, its largest customer as a single country, saw a similar decline in the same year, but that too, does not have anything to do with nearshoring. The imports of RMG by the US dropped globally in 2023.

Overall, Bangladesh is still experiencing a steady upward trend in RMG export despite all the challenges. Apparel companies are continuously making new investments in the sector to attain sustainability and to ensure compliance.

The country now houses the world's top green factories, and the industry is regarded as the safest in the world, thanks to constant push and monitoring from the brands, reciprocated by the factory owners.

Increased safety and sustainability means Bangladesh's apparel products now have a better image among the brands and the retail customers.

Although these new investments are leading to increased production cost, cheap labour gives Bangladesh's RMG industry a comfortable competitive edge over other suppliers such as China, India and Vietnam.

In 2023, unit price of apparel imports in the EU increased by 5.89%, due to price hike of products from China, Turkey, Vietnam, Sri Lanka and Indonesia. During this period, Bangladesh was the only top supplier to offer a lower unit price.

Over the past decades, mass-market clothing brands and retailers from the US and Europe were eager to relocate production to Asia to gain cost advantages due to the dramatically lower labour costs there.

But it is no longer the case. The Far East has seen rising wages for factory workers, eroding its previous low cost advantage. China, for instance, has experienced a significant increase in labour costs, evolving from being one-tenth of those in the US in 2005 to approximately one-third in recent years.

While manufacturing labour costs remain higher in nearshore countries – serving the Western European market – than those in China, the gap is narrowing. For example, manufacturing labour costs in Turkey were more than five times higher than those in China in 2005, which came down to 1.6 times by 2017.

Still, nearshoring has become economically viable in some cases, driven by savings in freight and duties.

For instance, reshoring from China to Turkey is now economically viable, with landed cost prices for denim being 3% lower.

But unit costs remain significantly lower when sourcing from Bangladesh, which is why creating nearshoring options is not a direct threat to Bangladesh's apparel manufacturers when it comes to prices.

Moreover, in some nearshore countries, the gap in labour costs compared to offshore locations has disappeared, but capacity limitations hinder rapid shifts in production.

Drawing a comparison to an African 'alternative' supplier, a former German merchandiser, seeking anonymity, said that the amount of apparel manufactured in that whole country in a year is what a single factory in Bangladesh manufactures at the same time. He added that an alternative to Bangladesh is not yet there.

Mexico, another near-shore source, now boasts lower average manufacturing labour costs than China.

Still, Bangladesh outperformed Mexico and China to become the largest denim exporter to the United States in 2020. Bangladesh's clothing exports to the US grew by 36.4% to $9.75 billion year-on-year in 2022, before facing the aforementioned slump unrelated to competition.

Onshoring apparel production, on the other hand, is still out of question. According to the McKinsey report, while nearshoring reduces cost of transport, bringing the production 'home' is not attractive at all due to high labour cost.

In addition, due to compliance and ease of due diligence in Bangladesh in the wake of European due diligence legislations, the country remains a good sourcing hub, according to Heidi Furustøl, executive director of Ethical Trade Norway, an organisation that works with both brands and manufacturers.

Notwithstanding, some apparel makers say nearshoring concerns them, but for a different reason – the advent of new technology.

"Nearshoring is a reality, and not only for apparel. All European countries and Americans are trying to move away, mainly from China. In the short-term I'm not worried. But in the long run nearshoring or reshoring can happen due to technological advancement," said Navidul Huq, managing director of Mohammadi Group and a director at Bangladesh Garment Manufacturers & Exporters Association (BGMEA).

Navid said that technology is reaching such heights that it will be able to make clothes. Technology capable of doing so with minimal human touch is already here.

"This technological advancement scares me most. In 10 to 20 years, we have no idea where the technology will reach," Navid said.

The BGMEA director added that adapting such technology will not be feasible for Bangladesh because Bangladesh's comparative advantage rests in cheap labour. When the need for labour is gone, the country will lose its advantage.

 

[Bilal9]

Eyelashes made in Saidpur headed for China​

 

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Exports hit an all-time high at $5.72b in January​

Exports grew 11.45% compared to the same period of last Fiscal Year 2023​

Bangladesh's merchandise export earnings reached $5.72 billion in January, highest in a single month so far, bringing another good news on the external sector in the first week of this month after monthly remittance hit seven-month peak.

Apparel export receipts increased by 12.45% to $4.97 billion in January, putting total exports to $33.26 billion in the first seven months of the current fiscal year. The amount is 2.52% more compared to a year-ago period, according to figures released by the Export Promotion Bureau (EPB) on Sunday.

The previous record for the highest single-month export receipts was $5.37 billion in December 2022.

Inward remittance surged 7.69% year-on-year to $2.10 billion in January, Bangladesh Bank data said on Thursday.

Exporters say shipments have reached new heights as western economies are stabilising. Most of these countries are not increasing their interest rates and are expecting a decline in inflation.

As usual, the readymade garment led the export growth, with knitwear posting a more robust growth than woven apparels in the July-January period of the current fiscal year.

Sectors such as leather and leather products, jute and jute goods, agriculture, footwear, and cotton products showed positive growth.

However, home textiles, engineering products, and frozen and live fish faced year-on-year negative growth.

During the period, the RMG export witnessed a 3.45% year-over-year growth to $28.36 billion. Of the amount, knitwear exports were $16.17 billion with 8.15% growth, and woven garments earned $12.18 billion with 2.20% growth.

Fazlee Shamim Ehsan, vice president of the Bangladesh Knitwear Manufacturers and Exporters Association, told TBS that there were additional shipments in January that were originally scheduled to be shipped in December. This delay was due to the Christmas holidays in some western countries.

Ehsan mentioned that they are currently exporting for the summer.

He also highlighted that countries belonging to the Organisation for Economic Co-operation and Development (OECD) are expected to witness a decline in inflation to 3.2%, along with a projected GDP growth of 1.2% in 2024.

These factors are anticipated to contribute to the growth of Bangladesh's exports in the coming days.

Despite all the positive indicators, exporters fear they may lose their competitiveness in the coming days as the government has withdrawn cash incentives on most apparel items and slashed them for remaining items.

Dutch fashion brand G-Star Raw Regional Operations Manager Shafiur Rahman said this year summer sales have already started in March due to fluctuations in temperature in western countries.

He said those retailers who were experiencing negative growth last year will try to return to business, adding that the US economy will enjoy money circulation ahead of their national election there, which will also help boost business.

Shafiur hoped that the apparel exporters would get better orders in the second half of this year, which will be for the spring and summer of 2025.

Faruque Hassan, president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), told TBS last week, "Most western buyers are enjoying very good sales since last November as their economies are going to be stable after a slowdown."

"Apparel stores enjoyed good sales during some festive events across the western world, especially Black Friday, Christmas Day, Boxing Day, and Cyber Monday," he said, adding the stores also cleared their previous inventory during the festivals.

"As a consequence of their sales growth in January, our export was better," said the BGMEA president.

Referring to the drop in inflation in Europe and the US, he said, "Brands are expected to boost their apparel sourcing from Bangladesh, having successfully cleared their inventory over the past year. Some buyers are already in talks with our exporters to increase orders."

He mentioned that when exporters are expecting a surge in apparel orders from global buyers starting in the second quarter of this year, the withdrawal of cash incentives will affect the businesses.

BGMEA Senior Vice President SM Mannan Kochi said Bangladesh's apparel exports to the US and the EU have been struggling for the last couple of months, but new markets are doing well.

However, the government's sudden decision to cut incentives for three major new markets will affect growth, he added.

He also mentioned that on Sunday, they had a meeting with the finance minister over the cash incentives. "We have requested the minister to restore the cash incentives for apparel, as about 70% of items went out of the benefits, which will make it difficult for factory owners to survive," he said.

 

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Air rates soar as Bangladesh garment exporters switch from ocean​

By Bangladesh Correspondent 08/02/2024

Airfreight rates in Bangladesh almost doubled over the past month, thanks to a significant rise in volumes and a capacity crunch.

Stakeholders said with the market from Dhaka now reliant on belly capacity Bangladesh-Europe rates are hitting $3.50 per kg, up from $2 in December, with exporters being charged $4.50/kg to the US, up from $3 in December.

Freight forwarders have attributed the rising demand to the end of season, pressure on transit points linked to the Chinese New Year holiday and the Red Sea crisis causing shipping delays of at least two weeks.

Data shows that in December, some 10,410 tonnes of cargo was airlifted through Dhaka Airport, which increased to 14,451 tonnes in January. Most of these shipments were destined for the US, Europe, Turkey and Egypt.

Dhaka-based garment maker Tusuka that opted to airlift some 386,000 garments to the US and EU in January in order to hit markets on time.

Nasir Ahmed Khan, director of the Bangladesh Freight Forwarders Association, told The Loadstar that due to the extended ocean transit times, buyers were preferring to get season-end goods out as quickly as possible.

“The rise in demand has also pushed freight rates from Dhaka to elsewhere,” he added.

Shahidullah Azim, vice president of the Bangladesh Garment Manufacturers and Exporters Association, said buyers now needed to wait an additional two to three weeks to get their products in hand, as ships needed to travel an extra 3,500 km to avoid the Red Sea.

“Thus, many exporters are forced to send cargo by air to meet deadlines,” he added.

 

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Export witnessed growth in January by 11.45 %​

BTJ Desk Report
05/02/2024

In January 2024, Bangladesh recorded $5.76 billion in exports, marking an 11.45% year-on-year growth, as reported by the Export Promotion Bureau (EPB). The surge follows a negative trend in previous months. The ready-made garment (RMG) sector, the leading export earner, contributed $4.97 billion, showing a 12.45% increase from the prior fiscal year.

For the first seven months of FY2023-24, total exports reached $33.26 billion, with a 2.52% YoY growth. RMG exports during this period totaled $28.36 billion, growing by 3.45%. Knitwear exports amounted to $16.17 billion, while woven items reached $12.18 billion, showing positive and negative growth rates compared to FY2022-23.

Conversely, major sectors such as home textiles, leather goods, and engineering products experienced negative growth during the July-January period of FY24. However, agricultural exports increased by 4.44%, while jute and jute goods, along with engineering products, saw declines in export earnings.

 

[Saif]

Exports to South Korea tripled in 5 years on duty benefits

Exports from Bangladesh to South Korea nearly tripled over the past five years thanks to duty-free benefits and a push by exporters to explore the world’s 13th largest economy and thereby diversify their export destinations.

www.thedailystar.net

Exports to South Korea tripled in 5 years on duty benefits​

Exports from Bangladesh to South Korea nearly tripled over the past five years thanks to duty-free benefits and a push by exporters to explore the world's 13th largest economy and thereby diversify their export destinations.

Annual exports to Korea had hovered between $200 million and $300 million in the five years up till fiscal year (FY) 2016-17. Exports started rising the following year, crossing the half-a-billion-dollar mark to reach a decade-high in FY22.

Then, in FY23, exports to the East Asian nation soared 18 percent year-on-year to $624 million.

The uptick in shipments continued in the first half of the current fiscal year, growing 7 percent year-on-year to more than $330 million, according to the Export Promotion Bureau (EPB).

The spike in exports to South Korea comes at a time when most shipments from Bangladesh remain concentrated on certain markets, namely Europe and North America.

Nine western markets, including the US, UK and Germany, account for nearly two-thirds of Bangladesh's apparel exports, which comprise around 85 percent of the country's annual export receipts.

Exports to markets termed as non-traditional have grown in recent years, reducing the share of exports to traditional markets, as per data of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA).

Since January, South Korea has been providing duty-free and quota-free entry to most products from Bangladesh, which acted as a major driver for increasing exports.

"We have been talking about cutting dependence on traditional markets and are working aggressively for this," said Mohammad Hatem, executive president of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA).

"So, it [the rise in exports to South Korea] is a reflection of that," he added.

Besides, the government's policy support in the form of a 4 percent cash incentive on exports to new markets encouraged manufacturers until December 31 last year.

However, the rate was reduced to 3 percent from January 1 this year.

Hatem informed that exports to Japan were growing as well.

Buyers from Japan and Korea are cutting their dependence on China as the country is gradually shifting away from garments due to rising wages in the industry, he said.

"Also, Bangladesh is getting preference from Korean buyers as a near shore country," Hatem added.

EPB data showed that apparel items accounted for 86 percent of total exports to South Korea recorded in FY23.

T-shirts, polos, and jackets are among the main items going to the East Asian country, according to Hatem, who also shipped knitwear to South Korea.

"We are working to boost exports to non-traditional markets. We have already been able to create a good position in the South Korean market," said BGMEA President Faruque Hassan.

"We have explored the market and assessed its demand. Besides, we are able to comply with the quality requirements of this market," he added.
Hassan also said he expects exports to South Korea to grow further in 2024.

Fazlul Hoque, managing director of Plummy Fashions Ltd, a knitwear exporter, said South Korea is a big market with significant potential.
"It [exports to Korea] can grow and we have to nurture the market," he added.

Mehdi Mahbub, an analyst on business development in South Korea, said exports to the East Asian nation were supposed to grow much earlier.
"We have not explored the market's potential," he said, adding that South Korean buyers preferred purchasing from Vietnam for various reasons.
"But now, Vietnam is becoming costly," Mahbub added.

He also said that other than woven and knitwear items, South Korea could be a good market for sportswear and outerwear.

"It is possible to increase our exports to the country to one billion dollars," he said, adding that keeping commitments is very important in South Korean culture and the country's people are very quality-conscious.​

 

[Saif]

Garment exports to rebound in May as global economy on the mend

Garment export from Bangladesh may witness a strong rebound from May as suppliers are receiving a lot of inquiries from international buyers as the global economy recovers from the severe fallout of the Covid-19 pandemic and the Russia-Ukraine war.

www.thedailystar.net

Garment exports to rebound in May as global economy on the mend​

Exporters credit rising orders, product and market diversification

Garment export from Bangladesh may witness a strong rebound from May as suppliers are receiving a lot of inquiries from international buyers as the global economy recovers from the severe fallout of the Covid-19 pandemic and the Russia-Ukraine war.

Signs of revival in garment shipments are already being seen in the export data of the current fiscal year.

In the July-January period of 2023-24, garment export grew 3.45 percent year-on-year to $28.36 billion, according to data from the Export Promotion Bureau (EPB).

Matthew Shay, president and CEO of the National Retail Federation (NRF), the largest retail trade association in the US, said in a statement last week that retailers were coming off a successful holiday season.

Sales growth is expected to be 3 percent to 4 percent, reflecting a more sustainable rate of growth than seen during the pandemic-hit years, he said.

He added that the growth reflected the fact that retailers were accommodating the expectations of consumers and demonstrated the underlying strength of the US economy.

"Inquiries from international retailers and brands, especially from Europe and the US, are increasing. This indicates that export may revive to some extent, if not significantly," said Md Fazlul Hoque, managing director of Narayanganj-based Plummy Fashions Ltd.

"I am hopeful that exports will revive from May, but it may not be that significant."

Anwar-ul Alam Chowdhury, a former president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), says inquiries from retailers and brands were low in September and October last year.

"As they are now increasing, it is expected that work orders will pick up around April or May and export will reach the previous levels as the economies of major export destinations like Europe and the US are rebounding from the global economic slowdown and historic inflationary pressures."

A major European buyer, asking not to be named, said although his company would not increase work orders significantly, there was no chance of reducing orders.

Shafiur Rahman, regional operations manager of G-Star, a Dutch designer clothing company, thinks the revival may start from June as per projections by international retailers and brands.

"2025 will be a good year for the garment business as the world economy is rebounding."

According to exporters, the shipment of garment items would increase in the coming months because inflation has fallen in the West and people are spending.

Moreover, buyers are sending a lot of inquiries to buy goods from Bangladesh, said BGMEA President Faruque Hassan.

Old inventories at stores have been reduced on the back of higher sales during the festival season in November and December like Christmas.
"Since the stock of clothing items has reduced, retailers and brands are placing a lot of work orders," Hassan added.

He said local manufacturers and suppliers have diversified in terms of both markets and products over the years and are now reaping the rewards of such initiatives.

"In many cases, local suppliers are getting premium prices from buyers as they produce high valued-added items."

Garment suppliers have also made improvements in terms of compliance, which, coupled with green initiatives, has brightened the image of the sector and the country.

"This increases buyers' confidence when sourcing garment items from Bangladesh," the BGMEA chief added.​

 

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[Saif]

Explore more export opportunities

A delegation of the Switzerland-Bangladesh Chamber of Commerce and Industry (SBCCI), led by its President Abdur Rashid, met Ahasanul Islam Titu, state minister for commerce, in a courtesy call at the commerce ministry in Dhaka on Sunday.

www.thedailystar.net

Explore more export opportunities​

State minister of commerce tells Switzerland-Bangladesh chamber leaders

Abdur Rashid, president of the Switzerland-Bangladesh Chamber of Commerce and Industry, greets Ahasanul Islam Titu, state minister for commerce, with a bouquet at the latter’s commerce ministry office in Dhaka on Sunday. Photo: Switzerland-Bangladesh Chamber of Commerce and Industry

A delegation of the Switzerland-Bangladesh Chamber of Commerce and Industry (SBCCI), led by its President Abdur Rashid, met Ahasanul Islam Titu, state minister for commerce, in a courtesy call at the commerce ministry in Dhaka on Sunday.

The state minister suggested the SBCCI explore more export opportunities to Switzerland, saying the ministry can play a pivotal role by providing all kinds of support, the chamber said in a press release.

Since Prime Minister Sheikh Hasina has labeled handicrafts as the "products of the year 2024", Titu emphasised how Bangladeshi businessmen could explore local and Swiss markets for artistic Bangladeshi handicrafts.

Bilateral trade between Bangladesh and Switzerland crossed the $1 billion mark, but Bangladesh has a huge trade deficit with Switzerland.

SBCCI President Rashid, who is also the country manager of SGS Bangladesh, said a cooperative partnership between the ministry of commerce and SBCCI was essential to overcoming obstacles and leveraging opportunities while conducting business with Switzerland.

Saad Omar Fahim, director of Clarichem and secretary general of SBCCI, provided insight into how Swiss businesses were driving innovation across various sectors in Bangladesh.

Among others, Saiful Islam, chairman and MD of Daffodil Trading House, Debabrata Roy Chowdhury, director of legal, regulatory, and corporate affairs, and company secretary at Nestle Bangladesh, Abul Hasnat, chief executive officer of Swiss Elegance, Sontosh Chandra Nath, chief executive officer of Alpha Vision, Md Rafiqul Islam, personal secretary of the state minister, and Mohammad Mohi Uddin Bhuiyan, coordinator of SBCCI, were also present.​

 

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Mirsarai Export Processing Zone (35000 Acres) update

 

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HATIL is a prominent furniture manufacturer and global brand hailing from Bangladesh. Their commitment spans sustainable production and corporate social obligations. This truth becomes evident upon delving into HATIL's manufacturing procedures, which diligently address waste management, recycling, and the judicious employment of resources. Today we'll shed light on HATIL's journey toward securing Sustainability and fulfilling Corporate Social Responsibilities.

Environmentally Friendly Factory of Hatil: Sustainability & Social Responsibilities Of HATIL - Business Inspection BD

HATIL, a leading furniture manufacturer in Bangladesh and a global brand recognizes that being an industry leader goes beyond product sales. They prioritize sustainability and corporate social responsibility in addition to their offerings.

businessinspection.com.bd

 

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Export earnings drop in April

A file photo shows containers being arranged with a crane at the Kamalapur Inland Container Depot in the capital Dhaka. Bangladesh's export earnings in April 2024 decreased slightly year-on-year compared with the same month of 2023 while the earnings in 10 months (July-April) of the current financial year 2023-24 grew by 3.93 per cent. | — New Age photo

Bangladesh's export earnings in April 2024 decreased slightly year-on-year compared with the same month of 2023 while the earnings in 10 months (July-April) of the current financial year 2023-24 grew by 3.93 per cent.

Exporters said that the shipment of apparel decreased in April due to various reasons, including Red Sea crisis, increasing cost of utilities and Eid-ul-Fitr holidays.

The country's export earnings in April declined by 0.99 per cent to $3.91 billion year-on-year compared with those of $3.95 billion in the same month of 2023, according to the Export Promotion Bureau data released on Thursday.

The EPB data showed that Bangladesh's export earnings in July-April of FY24 increased to $47.47 billion compared with those of $45.67 billion in the same period of FY23.

Export earnings from readymade garment in the 10 months of FY24 stood at $40.49 billion, which is 4.97 per cent higher than the earnings of $38.57 billion in FY23.

Export earnings from woven garments in July-April of FY24 failed to make any growth and the subsector fetched $17.61 billon which was same with the earnings in the same period of FY23.

Export earnings from knitwear in the 10 months of FY24, however, grew by 9.11 per cent to $22.88 billion compared with those of $20.96 billion in the same period of FY23.

The export growth of woven garments remained stagnant for past few months as the Red Sea crisis increased lead-time for Bangladesh by at least 15 days and buyers were shifting some orders to other manufact6uring countries, including China, Bangladesh Garment Manufacturers and Exporters association vice-president Abdullah Hil Rakib told New Age on Thursday.

He said that earnings growth from knitwear remained in positive territory as the subsector could manage lead-time due to using local raw materials.

Moreover, the increased cost of utilities increased production cost and many manufacturers failed to entertain some orders at the rate offered by the buyers, Rakib said.

He also said that in April production remained suspended in the factories more than one week due to the Eid holidays, which lowered shipment in the month.

The EPB data showed that export earnings from home textiles in July-April of FY24 fell by 25.32 per cent to $702.56 million compared with $940.8 million in the same period of FY23.

Earnings from leather and leather goods in the 10 months of FY24 fell by 13.32 per cent to $872.45 million compared with those of $1.00 billion in the corre sponding period of FY23.

Earnings from leather-footwear exports in July-April of FY24 declined by 25.80 per cent to $430.68 million compared with those of $580.40 million while the other leather products fetched $328.24 million with a 1.63-per cent growth in the period.

Export earnings from jute and jute goods in the 10 months of FY24 fell by 7.05 per cent to $716.44 million compared with those of $770.82 million in the same period of FY23.

Export earnings from agricultural products in the period, however, increased by 6.12 per cent to $774.49 million compared with those of $741.35 million.

Export earnings from frozen and live fish decreased by 13.34 per cent to $321.93 million and the earnings from shrimp exports fell by 20.48 per cent to $212.29 million in the 10 months of FY24.

Export earnings from engineering products in July-April of FY24 declined by 0.4 per cent to $436.35 million compared with those of $438.11 million in the same period of the previous financial year.

 

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With friends like these - who needs enemies...

MSN

New Delhi: Citing severe congestion at Delhi airport because of which airlines have started charging three times the normal tariff, Indian garment exporters have asked the central government to stop allowing transshipment of Bangladeshi goods to third countries via Delhi.

The congestion at the Delhi airport is due to the Red Sea crisis, which has forced companies to use air routes for export of goods.

While New Delhi and Dhaka have, over the past two years, taken collaborative steps in terms of transit and transshipment of goods, India has also been pushing its domestic textile sector to achieve a $100 billion export target by 2030 and compete with other garment giants in Asia, such as Bangladesh, Vietnam and China.

Meanwhile, Bangladesh has grown into a garment powerhouse, manufacturing for major clothing brands like H&M, Zara, Tommy Hilfiger, Gap, Calvin Klein and Hugo Boss — giving stiff competition to their counterparts in India.

Apparel Export Promotion Council (AEPC), India's official body of apparel exporters, Thursday requested the Central Board Of Indirect Taxes and Customs (CBIC) to roll back its circular dated 7 February that allowed transshipment of Bangladesh export cargo to third countries through Delhi Air Cargo complex. Previously, these goods were allowed only through Kolkata airport.

" It's unlikely the circular will be reversed because it could be seen not only as protectionist measure but also contrary to providing reciprocal trade facilitation as agreed by the leaders of the two countries in the 2022 joint statement," Mustafizur Rahman, a Distinguished Fellow at the Centre for Policy Dialogue (CPD), a Dhaka-based think tank, told ThePrint.

(Edited by Richa Mishra)

 

[Saif]

https://thefinancialexpress.com.bd/views/export-trends-and-dynamics-in-bd

Export trends and dynamics in BD
MOHAMMAD ABDUR RAZZAQUE, BARUN KUMAR DEY AND RABIUL ISLAM RABI
Published :
May 28, 2024 21:52
Updated :
May 29, 2024 21:50

Despite the success in garments exports, the overall export size in Bangladesh remains modest and is characterized by a staggering concentration. Among the Least Developed Countries (LDCs), Bangladesh is often regarded as an example of export-led growth and development. Over the past two decades, merchandise exports in Bangladesh grew from just $6.5 billion in 2003 to $55.0 billion in 2023. This was mainly spearheaded by the apparel sector, which grew during the same period from just less than $5 billion to $47 billion.

However, when compared to countries outside the LDC group, export volume (both including and excluding services) in Bangladesh appears modest. Most Southeast Asian countries have demonstrated stronger export performance. Considering Bangladesh's large population of 170 million, its current merchandise export volume of $55 billion is relatively small compared to other nations with similar population sizes. For instance, Viet Nam, with a population of 91 million, boasts a comparable export volume of over $360 billion; Indonesia, with 218 million people, exports $240 billion; and Thailand, with a population of 72 million, earns around $323 billion from exports. In addition, Southeast Asian countries with smaller population sizes like Malaysia and Singapore have equally achieved remarkable success as exporting nations.

Since the emergence of RMG in Bangladesh's export sector in the 1980s, its relative importance has consistently increased, resulting in a reduction of the share of erstwhile traditional exports (such as raw jute and jute goods, tea, leather, frozen fish) from over three-quarters to approximately 10 per cent.

To read the rest of the news, please click on the link above.​

 

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Three Chinese car companies (electric bus, truck and car mfrs., Lithium battery mfrs. as well as heavy construction equipment mfrs.) have started to look for JV partners in Bangladesh. Akij, Energypac and some other local conglomerates are in talks with them.

 

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Buyers want to shift production of Technical Textiles and Apparel from China to Bangladesh

April 29, 2024

TechTextile & TexProcess 2024, the international trade fair for technical textiles and textile processing , kicks off on April 23 in Frankfurt , Germany . The exhibition ended on April 26 . The representatives of the foreign buyers who gathered at the stalls of the participating companies in Bangladesh said that they want to bring the production of technical or technical clothes from China to Bangladesh, albeit slowly . Because the cost of production in China is increasing.

Teams Manufacturing Company , Akiz Jute Mills , Smee Apparels , M & A Sourcing Bangladesh and Nexgen Apparel participated in the four-day exhibition as co-exhibitors of Export Promotion Bureau ( EPB ) .

On the third day of the exhibition on April 25 , representatives of clothing marketing organizations in Europe including Turkey and the United Kingdom came to the Bangladesh Pavilion . The stakeholders in stalls in Bangladesh Pavilion said that Bangladesh 's steps in the production of technical textiles and clothing are at an early stage but interest and technical capability implementation are both developing rapidly.

Bugrahan Turgut, sales and marketing officer of Navistanbul Textile and Promotion , who came to the exhibition , told Merchant News , "Until now , we produce all products in Turkey and China . In China we manufacture workwear , uniforms , fashion products and promotional textiles . We want to start production in Bangladesh . "

Among the products displayed by Bangladeshi companies at the exhibition were coats apparel , professional and protective clothing , active wear , jute yarn , jute bags and other products , men's and ladies' long and short pants , workwear / uniform , oven and knitwear and lingerie .

China is currently the best producer of technical garments . Next is Vietnam .

A basic t - shirt made for $ 1.50 or $ 2 makes a profit of 2-3 cents at the end of the day . But if one can make technical clothes , there is more than 10 percent profit . During the three days of this exhibition , discussions were held with more than thirty buyers about existing and upcoming products and purchase orders .

Garment exporters said that the main materials for making rain & waterproof clothing and fireproof clothing are fabrics or fabrics produced with special technology. Bangladesh's capacity to produce such textiles and clothing is currently negligible but has high interest from buyers and factory owners.

The concerned industrialists want to increase this capacity gradually . For this purpose, they are also participating in international exhibitions on technical technical textiles and textile processing .

 

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Only 10% of planned economic zones get off the ground in a decade
BEZA now plans to set up 100 industrial enclaves by 2041 instead of initial deadline of 2030

Only 10 economic zones (EZs) have become operational since the Bangladesh Economic Zones Authority (BEZA) rolled out its massive industrialization plan in 2015, raising questions about whether its goal of setting up 100 enclaves will be materialized on time.

The board of the BEZA has approved a total of 97 EZs over the past decade. Of them, 68 zones will be set up by the government and 29 by the private sector, with the initial deadline set at 2030.

Of the 10 economic zones, two are government-run -- Bangabandhu Sheikh Mujib Shilpa Nagar (BSMSN) in Chattogram, the Sreehatta Economic Zone in Sylhet -- and eight are private.

The private EZs are City Economic Zone, Meghna Industrial Economic Zone, Meghna Economic Zone, Hoshendi Economic Zone, Abdul Monem Economic Zone, Bay Economic Zone, Aman Economic Zone, and East West Economic Zone..

He said the Beza has revised its target to set up 100 EZs by 2041 from 2030 initially since implementing an economic zone project takes time.

"We will be able to make at least 38 EZs operational by 2030."

Syed Akhtar Mahmood, a former lead private sector specialist at the World Bank Group, praised the idea of EZs as effective since there is land scarcity in Bangladesh and the country is looking for well-planned industrialization.

He suggested providing land only to investors who have good intentions of setting up factories. "Otherwise, genuine investors will not get the land when they need it."

Mahmood said the BEZA should implement EZs in phases instead of going after all of them simultaneously.

"This is because if all EZs are implemented concurrently, none of them will be executed properly since there is an involvement of a huge amount of funds."

"There will not be much delay if the BEZA puts the experience to good use when implementing the projects."

BEZA has received $28.75 billion worth of investment proposals from companies at home and abroad. The actual investment stood at $6.05 billion between 2020 and June 30 last year.

According to a report of the agency, the operating zones have employed around 60,000 people. Some 7,000 are working in government-owned zones and 53,000 in private zones.

Products worth $14.47 billion were produced in 10 EZs in the last fiscal year of 2022-23, it said.

 

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A variety of items being made in Chittagong Export Zone

 

[Saif]

Export diversification still a far cry

Although the need to diversify Bangladesh’s export basket has been a subject of great discussion for more than two decades, there has been little progress in this regard.

www.thedailystar.net

Export diversification still a far cry

Although the need to diversify Bangladesh's export basket has been a subject of great discussion for more than two decades, there has been little progress in this regard.

In fact, there has been no reflection of diversification in exports. On the contrary, readymade garments (RMG) continue to dominate, accounting for around four-fifths of all of Bangladesh's exports.

Though garment exports surged from $1.18 billion in the early 1990s to $47 billion by 2023, non-RMG exports grew from $811 million to just over $8 billion.

Between FY02 and FY23, exports soared by 828 percent from $5.9 billion to $55.55 billion, buoyed by a 925 percent rise in apparel exports.

However, despite the overall growth, the ratio of non-RMG exports to total exports declined from 24.86 percent in FY02 to 15.42 percent in FY23.

Photo: Rajib Raihan

At present, Bangladesh's exports are largely made up of knitwear (44.6 percent) and woven garments (37.2 percent), with home textile (3.3 percent), footwear (2.3 percent), jute products (1.9 percent), and fish (1 percent) being other notable products.

Bangladesh's overwhelming dependence on RMG means that its export basket is among the world's least diversified.

Bangladesh's export basket is four times more concentrated than the developing-country average, according to a report by the Asian Development Bank (ADB) titled "Fostering Export Diversification in Bangladesh".

Along with product concentration, Bangladesh also suffers from a lack of export market diversification.

More than four-fifths of its exports are destined for North American and EU markets. Furthermore, Bangladesh's top-10 export destinations account for 72 percent of its total exports, while the corresponding figures for India and Sri Lanka are 52 percent and 64 percent.

Experts identified that policy and financing barriers and a lack of infrastructure development in the non-RMG sector had slowed export diversification.

"There were four major barriers in expansion of export diversification -- policy issues, financing barriers, lack of infrastructure, and weak bargaining power of non-RMG exporters," said Selim Raihan, executive director of the South Asian Network on Economic Modeling (SANEM).

He also said that non-RMG and RMG exporters cannot practically avail the same benefits.

As an example, he said RMG exporters can import capital machinery at zero duty while non-RMG exporters have to pay high tariffs to import necessary equipment.

Non-RMG exporters cannot even avail bonded warehouse facilities as easily as RMG exporters, which is a significant barrier to expediting export diversity, he said.

He also said the agro-processing sector had been failing to live up to its potential to increase exports due to a lack of infrastructure and proper government support.

Ferdaus Ara Begum, CEO of Business Initiative Leading Development (BUILD), said: "Export diversification has not happened because of several reasons. Even within the RMG sector, little diversification has happened."

Bangladesh exports only four to five products in the RMG sector, which has given buyers the chance to bargain for the prices of cotton garments, she said, adding: "Prices are falling lower and lower."

The need is to invest in manmade fibre, which requires huge investment and utility support, she said.

She added that the gas crisis, which has been affecting industries in recent years, was preventing industries from running operations smoothly. This poses a significant barrier to large investments in the country.

According to her, financing support is another issue as the export development fund is used by limited entrepreneurs.

CHALLENGES FROM LDC GRADUATION

Intensifying its diversification initiatives in preparation for the country's graduation from least-developed country (LDC) status in 2026 is imperative for a smooth transition.

As an LDC, Bangladesh enjoys unilateral trade preferences in markets in Canada, the EU and the UK. Such duty-free market access has endowed Bangladesh with a significant competitive edge.

In fact, more than 70 percent of the country's merchandise exports enjoy some LDC-specific trade preferences, which is far higher than other LDCs in Asia and the Pacific.

However, these benefits will cease after graduation unless they are extended.

For example, Bangladesh's duty-free access to the EU is set to expire in 2029 given the EU's additional 3-year transition period for graduating LDCs.

Post-graduation market access provisions in the EU are not yet settled, but under currently proposed terms, the average tariff rate facing Bangladesh's garment exports to the EU would increase from zero percent to about 12 percent.

At the same time, Bangladesh's exporters could see average tariffs on exports rising from zero to 17 percent in Canada, 16 percent in China, 8.7 percent in Japan, and 8.6 percent in India.

"The post-LDC scenario will be grave. After the reduction of cash incentives, exports of almost all sectors will decline," Ferdaus Ara cautioned.

A mismatch in export figures between the Bangladesh Bank, Export Promotion Bureau, and National Board of Revenue has worsened the situation, she added.

She said large investment in the export sector as well as utility, financing and tax policy support must be extended for export diversification.

"RMG is our success. We need to diversify the RMG products with a view to achieving at least $150 billion in exports from this sector by the next 5 years, which is possible," she said.

"We also need a clear sector-specific strategy."

Mustafizur Rahman, a distinguished fellow at the Centre for Policy Dialogue (CPD), said the RMG sector's faster rate of growth led to its dominance in Bangladesh's export basket.

However, he added that the growth of non-RMG sectors was very slow and, in some cases, even witnessed degrowth.

Rahman added that Bangladesh had received very little export-oriented foreign direct investment (FDI), which is one of the factors holding back export diversification. Another reason is that export-centric special economic zones are yet to be implemented.

He suggested mobilising export-oriented FDI and ensuring proper one-stop services would help export diversification efforts.

He added that a lack of technology and skilled human resources, particularly at the managerial level, was also restraining non-RMG sectors.

Although many studies have been conducted to identify the sectors with export diversification potential, practically the same sectors have been identified over time.

"The strategy of "picking winners" or targeting specific sectors for growth, such as the leather sector and information technology and IT-enabled services sector, has not succeeded as export targets have been consistently unmet," the ADB said.

"For the leather sector, the government had set an ambitious export target of $5 billion by 2021. Despite this focus and support, the sector's current exports are just above $1 billion, demonstrating the inability of the 'picking winners' strategy to produce the expected results."

M Masrur Reaz, chairman of the Policy Exchange of Bangladesh, said non-RMGs' share in Bangladesh's export basket had declined due to a lack of policy reforms.

"We need to bring the right support for those sectors to build up efficiency, including logistical support and adoption of technology," he said.

He also said an initiative to bring in export-oriented FDI is imperative because it is very difficult to diversify exports without foreign investment.

Another barrier to export diversification was posed by significant differences in the income tax rates between the RMG and non-RMG sectors.

The RMG sector has historically benefitted from a relatively lower corporate tax rate, ranging from 10 percent to 12 percent.

In contrast, non-RMG sectors, such as textiles, leather and leather goods, agro-processing and home textiles, have faced higher tax rates ranging from 15 percent to 30 percent.

Only recently, in FY23, a uniform income tax rate of 12 percent for both services and goods exports was introduced. This move is expected to rectify the existing bias in income tax rates for export-oriented industries.

In its paper, the ADB recommended addressing policy-induced disincentives against exports, boosting export market responsiveness and accelerating diversification.​

 

[Bilal9]

Op-Seed Bangladesh exports a variety of electronic devices made from a basic level.



Tent House in one of the CTG EPZ's in Chittagong (there are four altogether) exports many types of camping tents overseas. Tents and Sewn Canopies are a major export item from Bangladesh.

​

 

[Bilal9]

Bangladesh’s path to export diversification​

Assessing the opportunities and challenges in a time of change
https://www.dhakatribune.com/361929


Julia Wesemann
Publish : 15 Oct 2024, 12:47 PM
Update : 15 Oct 2024, 12:47 PM


Bangladesh has long been a global leader in the ready-made garment (RMG) sector, with textiles contributing around 84% of the country’s total exports. Yet, as the country faces shifting global dynamics and recent political changes, the urgency to diversify its exports has reached a critical juncture.

The student-led revolution has brought to light underlying social, political, and economic challenges that Bangladesh must now confront. As the new leadership charts a course forward, reducing the country’s overreliance on a single sector and building a more resilient and diversified economy will be paramount.


Bangladesh’s economy continues to be heavily dependent on the RMG industry. The sector’s rapid growth has driven the country’s economic development, created millions of jobs -- especially for women -- and significantly reduced poverty. However, the concentration of exports in one industry leaves the country vulnerable to external shocks, such as changing trade policies in major markets like the US and Europe, as well as growing scrutiny over labor rights and sustainability.

The recent political crisis, coupled with global economic uncertainties, makes it clear that Bangladesh must diversify its export base to sustain long-term growth. Export diversification not only strengthens economic resilience but also creates opportunities for new job creation, technological advancement, and investment in emerging industries.

Sectors with high potential

Bangladesh has several sectors beyond garments that show significant potential for growth and diversification. The new political climate offers an opportunity for the interim government to implement reforms and attract investment in these key areas.

• Information and Communication Technology (ICT): Bangladesh has made significant progress in developing its ICT sector. The country is now positioned to become a hub for IT outsourcing, software development, and tech startups. By improving digital infrastructure and education, Bangladesh can tap into the growing global demand for digital services and position itself as a regional leader in the tech industry.
• Pharmaceuticals: Bangladesh’s pharmaceutical industry has been expanding steadily, with the country already supplying affordable generic drugs to many developing nations. As demand for healthcare rises globally -- particularly after the Covid-19 pandemic -- Bangladesh has the potential to further grow its pharmaceutical exports. With investments in research, development, and quality control, the country could become a major player in the global pharmaceutical market.
• Leather and footwear: Bangladesh is one of the world’s largest producers of leather goods and footwear. However, environmental concerns, particularly related to the tannery industry, have limited the sector’s growth. By implementing stricter environmental standards and adopting sustainable practices, the leather and footwear industry could expand into high-value markets, such as luxury goods, further diversifying the country’s export base.
• Jute: Once known as the “golden fibre” of Bangladesh, jute has seen a resurgence in global demand due to its eco-friendly and biodegradable properties. As countries and companies move toward sustainable materials, Bangladesh has a unique opportunity to reclaim its position as a leading exporter of jute and jute products, catering to industries like packaging, textiles, and home goods.
• Agriculture and agro-processing: While Bangladesh has a rich agricultural heritage, its export potential in this sector remains underdeveloped. Investments in agro-processing and value-added agricultural products, such as frozen foods, spices, and seafood, could unlock new markets. Additionally, developing supply chains and logistics for agricultural exports could position Bangladesh as a significant player in global food production.

According to Sayful Islam, Deputy Director of the Bangladesh Investment Development Authority (BIDA): “We are prioritizing foreign direct investments (FDI) in key sectors to diversify Bangladesh’s export portfolio. With China’s recent policy adjustment allowing 100% duty-free imports of Bangladeshi goods, we see a strong opportunity to expand into alternative markets beyond [RMG]. Starting with this new access to China from December, we aim to establish a foothold that will help us grow and reach more sophisticated global markets.”

A clear vision and long-term strategy for export diversification, supported by sound governance, will be critical to driving progress

Challenges to diversification

While these sectors hold promising opportunities for diversification, several critical challenges must be addressed to unlock their full potential and sustain long-term growth. Inadequate infrastructure, particularly in transportation, logistics, and energy, remains a significant barrier to export diversification. Ports, roads, and supply chains must be upgraded to support the efficient movement of goods and reduce costs for exporters.

To move into higher-value industries like ICT and pharmaceuticals, Bangladesh needs to invest in education and vocational training. Building a skilled workforce that can meet the demands of emerging sectors is crucial to long-term success.

The recent political upheaval and transition to an interim government have introduced uncertainty into the business environment. Stability is essential for attracting foreign direct investment (FDI) and building confidence in the country’s economic future. A clear vision and long-term strategy for export diversification, supported by sound governance, will be critical to driving progress.

Bangladesh will face intense competition from emerging economies like Vietnam and India, which are also expanding into ICT, pharmaceuticals, and agro-processing. To stay ahead, Bangladesh must focus on innovation, sustainability, and high-quality production to carve out a competitive advantage.


How can we all contribute?

The student-led revolution has created both challenges and opportunities for Bangladesh. This pivotal moment provides a unique chance to reimagine Bangladesh’s economic future. However, building a more resilient and diversified economy is not solely the government’s responsibility. Active participation from all stakeholders is essential for long-term success. Here’s how various groups can contribute to this shared vision:

The new government: The interim government must prioritize reforms to improve the ease of doing business, invest in critical infrastructure, and foster innovation. Streamlining regulatory processes and providing incentives for industries beyond RMG will help attract both local and foreign investment. Policies that support small and medium-sized enterprises (SMEs) in emerging sectors such as ICT, pharmaceuticals, and sustainable agriculture will be crucial.

Exporters: Exporters need to diversify their product offerings and explore new international markets. Collaboration between exporters from different sectors can also lead to innovative cross-sector opportunities. By adopting sustainable practices and focusing on value addition, exporters can build resilience in a changing global market, positioning Bangladesh as a leader in new and high-value sectors like eco-friendly products, tech services, and pharmaceuticals.

Farmers and agro-entrepreneurs: Adopting sustainable practices and improving supply chains will help with untapped export potential, positioning Bangladesh’s agriculture as a key player in global markets.

Industry associations and chambers of commerce: Industry bodies, such as trade associations and chambers of commerce, play a vital role in building bridges between the private sector, government, and international investors. By offering support to new industries, providing market insights, and advocating for policies that encourage export diversification, these associations can help businesses toward sustainable growth.

Investors and venture capitalists: Both local and international investors will play a critical role in supporting emerging sectors. Venture capitalists and private equity firms should focus on funding startups and SMEs in industries like ICT, pharmaceuticals, and sustainable agriculture.

Educational institutions and vocational training centers: As Bangladesh seeks to diversify into higher-value industries, building a skilled workforce is essential. Educational institutions must provide the technical skills needed in sectors like ICT, biotech, and renewable energy.

Civil society and NGOs: Civil society organizations and NGOs must advocate for inclusive growth, sustainability, and equitable policies. They can work to ensure that marginalized groups, such as women and rural communities, benefit from new economic opportunities.



Julia Wesemann is Director of Growing Together and Founder of Co-creation lab.

 

[Saif]

Worker rights should be ensured to protect export earnings

THE structural safety of factories has significantly improved after the Rana Plaza collapse that left more than a thousand apparel workers dead, but labour practices have largely...

www.newagebd.net

Worker rights should be ensured to protect export earnings
19 October, 2024, 00:00

THE structural safety of factories has significantly improved after the Rana Plaza collapse that left more than a thousand apparel workers dead, but labour practices have largely remained unfriendly for workers. A leading supply chain compliance provider, QIMA, reports a significant increase in worker rights violations regarding working hours and wages in the apparel sector. The organisation observes that 37 per cent of audited factories have made workers work beyond legal hours and failed to pay wages in time in January–September, which is more than double the rate reported in 2023. Bangladesh’s compliance score is lower than other apparel manufacturing countries’ and it is gradually declining. The global incidence of critical violations in working hours and wages identified in factory audits was 16 per cent, with rates of 20 per cent in China and 11 per cent in Vietnam. The compliance providers report is consistent with the claims of trade union leaders and labour organisations in Bangladesh that policymakers have since the Rana Plaza collapse been especially concerned about improved structural safety issues but left everyday labour rights violations unattended.

Apparel workers taking to the streets over wage disputes is common. In the changed political context, after the fall of the Awami League government in August, many workers were injured and at least two workers were killed when they protested against the sudden closure of factories without clearing worker’s due wages or demanded an increase in the minimum wage. Trade union activists in Dhaka and Gazipur report that at least 2,000 workers of 20 apparel factories lost their job in September. Many studies have already documented how workers had to work longer than the legal workday, partly because the minimum wage is far too low for them to survive at a time when food inflation has reached an unprecedented high. It is also because factory management often compels workers to work overtime to complete work orders. The apparel sector also has the tendency to deny workers severance or maternity benefits. There are reports that pregnant women are asked to quit the job so that the factories can avoid paying the maternity benefits. Worker’s trade union rights, as QIMA observes, are also regularly violated. Firing workers for their participation in movements for wage increase was widely reported in 2023.

The apparel sector is the largest export-earning source for Bangladesh and working-class women constitute the major part of the labour force. A progressive decline in compliance score, as reported in the QIMA report, could, therefore, risk Bangladesh’s export earnings and it may lose the competitive edge on the global market. Considering the significance of the apparel sector for the economy, the government should abandon any policy bias towards the factory-owning elite and sincerely address worker grievances. A routine delay in wage payment, denial of severance benefits, arbitrary job termination and rampant violation of trade union rights are among long-standing concerns that the government should sincerely address to ensure a steady growth in the sector.​

 

[Saif]

Challenges in export diversification

To sustain the upward trajectory of exports, expanding the range of products in our export basket is essential. The country's foreign exchange reserves are under significant pressure due to inconsistencies in export earnings, which have a ripple effect on import payments and broader macroeconomic f

thefinancialexpress.com.bd

Challenges in export diversification
Abu Mukhles Alamgir Hossain
Published :
Oct 24, 2024 21:27
Updated :
Oct 24, 2024 21:27

To sustain the upward trajectory of exports, expanding the range of products in our export basket is essential. The country's foreign exchange reserves are under significant pressure due to inconsistencies in export earnings, which have a ripple effect on import payments and broader macroeconomic factors. Over the years, leading economists, think-tanks and industry experts have consistently emphasised the need for export diversification to ensure sustainable international trade. However, little progress has been made on this much-discussed issue. The reasons behind the lack of diversification are well-known.

DEPENDENCY ON A SINGLE SECTOR: Bangladesh's export trade is heavily dependent on the apparel sector, which contributes 84 per cent of the country's export earnings. This sector receives substantial support from the government, including cash incentives, bonded warehouse facilities, easy bank financing, and policy interventions during times of difficulty. The ready-made garments (RMG) sector benefits from lower production costs and large-scale employment, creating a disincentive for exploring and developing other sectors. The sector's contribution over the last five years is as follows:

EXPORT DESTINATIONS VULNERABILITY: The United States and the European Union are the two primary export destinations for Bangladeshi products. Collectively, the EU represents the largest export market, followed by the USA as the second largest. These two destinations account for 44 per cent and 17 per cent of Bangladesh's total exports, respectively, while the rest of the world makes up 39.02 per cent. The following graph highlight the concern:

Bangladesh's excessive dependence on the USA and EU makes its exports highly vulnerable. To reduce this over-reliance, it is crucial to explore and expand into new markets, such as Southeast Asia, the Middle East, Africa, Eastern Europe, Latin America, and other regions of North America.

POTENTIAL SECTORS NOT RECEIVING THE SAME SUPPORT AS RMG: Other potential sectors, such as Leather and Leather Goods, Jute and Jute Goods, Agricultural and Processed Products, Handicrafts, Pharmaceuticals, ICT and ICT-enabled services, and Light Engineering Products do not receive the same level of support as the RMG sector. Sector-specific policy papers are needed to evaluate the pros and cons of their impact on the economy, while also considering the approaches of competing countries. The export performance of the Non-RMG products are as follows:

POLICY-INDUCED ANTI-EXPORT BIAS: Domestic manufacturers enjoy government-imposed protectionism through higher import duties, which diminishes the competitiveness of local industries against foreign products. Due to the domestic market's convenience, manufacturers are often disincentivised to export as they avoid the compliance and standards required for the global market. Dependency on import tariffs for revenue collection is another crucial factor hindering export diversification. Bangladesh is going to be graduating in November 2026 to a middle-income country, so to sustain growth and expand export destinations, there is the crucial need to liberalise international trade by considering the signing of Economic Partnership Agreements (EPA) or Free Trade Agreements (FTA) with potential countries and economic blocs.

LOW TECHNOLOGICAL ADVANCEMENT: Limited technological know-how and poor integration of technology hinder the growth of high-tech industries. Bangladesh's reliance on labour-intensive manufacturing restricts its ability to compete in technology-driven sectors, such as electronics. To diversify exports into the high-tech industry, Bangladesh must invest in ICT (bridging the digital divide), skill upgrading, STEM (Science, Technology, Engineering, and Mathematics) education, innovation hubs, and intellectual property protection. A prompt action plan should be formulated by relevant authorities, with a focus on timely implementation to maximise benefits.

INCONSISTENT TRADE POLICIES: Trade policies are often inconsistent and overly complex, creating a challenging environment for businesses to invest in new sectors. Delays in implementing reforms and a lack of long-term policy support for non-RMG sectors discourage investment.

ENVIRONMENTAL AND COMPLIANCE ISSUES: Sustainable production and compliance with global environmental standards are becoming increasingly important, especially in sectors like textiles, leather, and agriculture products. The lack of compliance makes it harder for Bangladesh to tap into eco-friendly markets or export to countries with strict regulations. Despite its significant potential, the leather sector in Bangladesh faces challenges hindering its growth. The CETP in the Saver Leather Industrial Park is not operating effectively, hindering environmental sustainability. LWG certification, essential for attracting reputable buyers, is difficult to obtain due to the park's environmental issues. Sourcing rawhide from slaughterhouses is another challenge, as the skin is often handled by unskilled or semiskilled butchers. The plastic sector also struggles to meet global standards for recycling. Despite its vast potential, it faces limitations in capturing a substantial share of the world market. Similarly, the agriculture and textile sectors encounter obstacles in tapping into international markets due to compliance challenges.

SKILL SHORTAGES: Diversifying exports requires a workforce with specialised skills in various industries. Leather, Jute, Handicrafts, Home décor, Cosmetics, Light Engineering, and ICT sectors need skills and expertise in which we are struggling. Investing in training and development programmes is crucial to equip the workforce with the necessary skills.

LIMITED INNOVATION AND RESEARCH & DEVELOPMENT (R&D): There is a limited focus on R&D, which is crucial for product and process innovation in non-traditional export sectors. Investment in innovation is low, and there is little collaboration between the private sector, academic institutions, and government bodies which needs to be enhanced. High Tech Industry needs Research and Development (R&D) with the utmost priority. To overcome these challenges, Bangladesh must increase investment in R&D, fortify intellectual property protection, invest in human capital development, streamline regulatory processes, and improve market access. By fostering a more supportive environment for innovation, Bangladesh can diversify its exports and become a more competitive player in the global economy.

LACK OF LOGISTICS: Insufficient facilities across the three modes of export shipments-air, sea, and land-are lagging compared to other competing countries. Ports in Bangladesh face issues such as inefficient cargo handling, insufficient Explosive Detection Scanners (EDS), fluctuating spot air freight prices, inadequate warehouse and cargo village facilities, and a shortage of skilled and semi-skilled manpower. As a result, exporters are unable to fully capitalise on opportunities to diversify their exports.

GLOBAL COMPETITION: Bangladesh faces stiff competition from countries like Vietnam, India, and Cambodia in diversified sectors such as electronics, leather goods, and IT services. Low brand recognition and a lack of quality standards make it hard for Bangladeshi products to penetrate new international markets. In addition, after graduating to a middle-income country in 2026, Bangladesh will no longer be able to utilise unilateral preferential market access facilities, which will further weaken our competitiveness.

LIMITED ACCESS TO FINANCE SMALL AND MEDIUM-SIZED ENTERPRISES (SMES): SMEs often face difficulties in accessing affordable credit. High interest rates, lack of required collateral discourage entrepreneurs from expanding into new sectors. As the lifeblood of the economy, SMEs must be prioritised if Bangladesh is determined to diversify its export basket. In this case, Japan's lesson/success story can be followed by Bangladesh.

Export diversification cannot happen overnight, and there is no shortcut to achieving it. Long-term strategies, sector-specific policies, business-friendly customs procedures, and efficient logistics must be ensured to diversify our export sector.

Abu Mukhles Alamgir Hossain, Director (Policy and Planning), Export Promotion Bureau (EPB).​

 

[Saif]

Looking beyond RMG-diversifying exports

Bangladesh's economy has seen remarkable growth over recent decades, largely driven by the ready-made garment (RMG) industry. This sector alone accounts for well over 80 per cent of the country's export earnings, employs millions, and has established Bangladesh as a global manufacturing hub. Howev

thefinancialexpress.com.bd

Looking beyond RMG-diversifying exports
Matiur Rahman
Published :
Oct 31, 2024 21:43
Updated :
Oct 31, 2024 21:43

Workers at a RMG unit in Dhaka Photo : FE File

Bangladesh's economy has seen remarkable growth over recent decades, largely driven by the ready-made garment (RMG) industry. This sector alone accounts for well over 80 per cent of the country's export earnings, employs millions, and has established Bangladesh as a global manufacturing hub.

However, Bangladesh's heavy reliance on RMG poses several risks, including fluctuations in global demand, increased competition from other low-cost producers, and pressure to improve labour conditions and environmental standards. For sustained growth and resilience, Bangladesh must look beyond RMG and explore diversification strategies that open new export and economic expansion avenues.

The RMG sector has undeniably played a central role in Bangladesh's development. It has provided significant employment opportunities, especially for women, lifted millions of families out of poverty, and contributed to improved social indicators across the country. However, the overwhelming reliance on a single industry has also created vulnerabilities. Bangladesh's economy remains exposed to global economic shifts, as seen during the COVID-19 pandemic when demand for apparel plummeted, and many factories faced closures.

Additionally, increased automation and technological advancements in garment manufacturing pose challenges as developed countries and competitors like Vietnam and Cambodia continue to invest in robotics, artificial intelligence, and more efficient manufacturing technologies. These advancements could diminish Bangladesh's cost advantage in the coming years, pushing the country to rethink its economic strategy.

To reduce its dependence on the RMG industry, Bangladesh must diversify its export basket and explore other sectors that can drive future economic growth. One potential area is the information technology and digital services sector, which holds considerable promise.

The IT sector, including software development, business process outsourcing (BPO), and freelancing has already demonstrated its growth potential, with annual revenue increasing steadily. Expanding and investing in IT and digital services could create high-paying jobs, bring in valuable foreign exchange, and reduce the economy's vulnerability to fluctuations in global manufacturing demand.

Another promising sector for Bangladesh is agriculture and agro-processing. Although agriculture has historically been one of the country's primary industries, it has yet to fully exploit its potential in the international market. Agricultural products like jute, fish, vegetables, and spices are in substantial demand globally. Bangladesh can expand its export base in this sector by investing in modern farming techniques, ensuring product quality, and promoting agro-processing industries.

Additionally, increased focus on organic and sustainable farming could attract new markets, especially in Europe and North America, where consumers are increasingly drawn to sustainable and ethically sourced products. Developing the agro-processing industry would diversify exports, create jobs, especially in rural areas, and enhance food security.

The pharmaceutical industry in Bangladesh is another sector that shows significant potential. Bangladesh's well-established pharmaceutical industry already meets most of the domestic drug demand and has begun exporting to various countries. With the impending patent expirations on a range of drugs globally, Bangladeshi pharmaceutical companies can capture a larger share of the global market by producing generic medicines.

Investments in research and development, quality control, and regulatory compliance are essential to seize this opportunity. If developed effectively, the pharmaceutical sector could become a significant economic growth and export revenue driver, further decreasing reliance on RMG.

The electronics and light engineering sectors could also be crucial in diversifying Bangladesh's export base. The local demand for electronics, such as smartphones, televisions, and home appliances, has surged in recent years, leading to the establishment of several domestic electronics manufacturers. With sufficient investment, these companies could also target export markets. Bangladesh could emerge as a regional electronics and light engineering player by focusing on quality improvement, branding, and cost competitiveness. Furthermore, establishing a robust supply chain within the country would reduce dependency on imported raw materials and support domestic industries.

Bangladesh's geographic location also presents opportunities to establish itself as a regional trade and logistics hub. Positioned between India and China, with access to the Bay of Bengal, Bangladesh is ideally situated for trade with South and Southeast Asia.

Investing in ports, airports, and road infrastructure could turn Bangladesh into a critical logistics and transhipment centre, facilitating regional and global trade. Enhanced trade connectivity would promote export diversification, support local businesses, and foster regional economic integration.

Bangladesh will need a strategic policy shift to achieve export diversification and sustainable growth. Government support in the form of incentives, subsidies, and regulatory reforms will be crucial to encouraging investment in new sectors. Educational reforms that align with the needs of emerging industries are also essential. This will ensure a skilled workforce that adapts to and supports a diversified economy. Building strong public-private partnerships, encouraging foreign direct investment, and streamlining bureaucratic processes will be necessary to create a conducive environment for new industries.

Environmental considerations must also guide future economic development. Industries like RMG have had significant ecological impacts, including pollution and high water usage.

Moving forward, Bangladesh should prioritise sustainable practices and invest in green technologies to reduce environmental damage and enhance the appeal of its products in environmentally conscious markets. Integrating sustainability into the diversification strategy will protect natural resources and align Bangladesh's economy with global trends toward sustainable development.

This transition will require economic investment and social and environmental commitments that reflect a sustainable and inclusive growth model. A diversified export sector will reduce the country's exposure to global market shifts, create new employment opportunities, and improve citizens' overall quality of life. With the right approach, Bangladesh can look forward to a future not defined by one industry but recognised for its innovation, sustainability, and economic resilience.

Dr Matiur Rahman is a researcher and development worker.​

 

[Saif]

US election: What is at stake for Bangladesh’s export

As millions of Americans head to the polls on November 5 to vote for either Democratic Vice President Kamala Harris or her Republican rival Donald Trump, apparel business communities in Bangladesh, more than 13,119 kilometres away from Washington, will be watching the results of the presidential...

www.thedailystar.net

US election: What is at stake for Bangladesh’s export

As millions of Americans head to the polls on November 5 to vote for either Democratic Vice President Kamala Harris or her Republican rival Donald Trump, apparel business communities in Bangladesh, more than 13,119 kilometres away from Washington, will be watching the results of the presidential election closely.

The reason is largely related to trade, as the US is the single largest buyer of ready-made garments made in Bangladesh -- the world's second-largest apparel manufacturer after China.

Local RMG makers believe US trade policy toward China, a major competitor in the global apparel market, will be crucial for their business in the coming years.

Besides, the role of the World Trade Organization (WTO) and other global trade organisations will be important as Bangladesh transitions to a developing country in 2026.

Apparel exporters say Republican Candidate Trump's plan to impose higher tariffs on imports from China could boost Bangladesh's garment exports.

But, they fear that a Trump presidency could also lead to challenges for multilateral trading institutions like the WTO and intensified global export competition.

Last year, Bangladesh exported $8.27 billion worth of garment items to the US, facing a 15.62 percent tariff.

Under both Democratic and Republican administrations, garment exports from Bangladesh to the US have remained relatively stable.

During Trump's presidency from 2017 to 2021, Bangladesh's share of garment exports to the US fluctuated between 17 percent and 18.90 percent, according to the Bangladesh Garment Manufacturers and Exporters Association (BGMEA).

Under Democratic President Joe Biden, the share has not increased too much, varying between 21.15 percent and 18.12 percent.

Asking not to be named, a renowned garment exporter to the USA from Bangladesh said Trump's anti-China move could eventually benefit Bangladesh. If he imposes more tariffs on Chinese products, there is a possibility of work orders shifting to Bangladesh.

Khandoker Rafiqul Islam, immediate president of the BGMEA, said Trump's additional tariff on Chinese goods plan has already prompted many US-based clothing retailers and brands to look for alternative sourcing destinations such as Bangladesh and Vietnam.

"If Harris is elected, it is expected that the existing US tariff will continue for China. In this case, Bangladesh's business may not be affected negatively but the possibility of an export jump is thin," he said.

However, Mohammad Abdur Razzaque, chairman of the Research and Policy Integration for Development (RAPID), a private research organisation, said there could be a significant change in approaches between Trump and Harris.

For instance, if Trump is elected, multilateral institutions and organisations like the WTO may face challenges.

"Trump may adopt a more anti-China policy and impose more tariffs on import of Chinese goods to the USA," Razzaque said, "In this case, Bangladesh may be benefited indirectly as there is a possibility of shifting of work orders from China to Bangladesh."

However, an identified geo-political rivalry and undermining the fundamental multilateral trading system may result in a demand slump, he said.

The RAPID chairman said demand for garment items has been declining over the past three to four years and most G-20 countries, including the US, have adopted protectionist trade policies.

He said Bangladesh may face additional challenges when it graduates from a Least Developed Country (LDC) to a developing nation in 2026. Rules-based trade may be affected.

According to Razzaque, a Democratic administration could lead to less intense geopolitical tensions, possibly benefiting Bangladesh through the maintenance of the multilateral trading system.

However, he reminded that the US's main interest remains containing China.

Masrur Reaz, chairman of the Policy Exchange Bangladesh, echoed Razzaque's views.

Reaz said Donald Trump was aggressive in imposing tariffs on Chinese imports during his previous term. If re-elected, he may adopt an even more aggressive stance toward Chinese imports.

Bangladesh should also restart negotiations with the US to revive the Generalized System of Preferences (GSP) for US markets, as the relationship between the two countries is improving, said Reaz.

Since the expiration of the Multi-Fibre Arrangement in 2004, Bangladesh has not enjoyed any tariff preferences on garment exports to the US.

Before the Trump administration imposed a 25 percent tariff on Chinese goods in January 2018, Chinese exporters faced a 3.08 percent duty on garment exports to the US.

According to the Hong Kong Ministerial Declaration of the World Trade Organization (WTO), the US was supposed to provide duty-free market access for all products from LDCs. However, the US government granted duty-free access to only 97 percent of products.

As an LDC, Bangladesh's garment exports were expected to be included in the 97 percent duty-free category, but apparel products were excluded from this package.​

 

[Bilal9]

US election: What is at stake for Bangladesh’s export

As millions of Americans head to the polls on November 5 to vote for either Democratic Vice President Kamala Harris or her Republican rival Donald Trump, apparel business communities in Bangladesh, more than 13,119 kilometres away from Washington, will be watching the results of the presidential...

www.thedailystar.net

US election: What is at stake for Bangladesh’s export

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As millions of Americans head to the polls on November 5 to vote for either Democratic Vice President Kamala Harris or her Republican rival Donald Trump, apparel business communities in Bangladesh, more than 13,119 kilometres away from Washington, will be watching the results of the presidential election closely.

The reason is largely related to trade, as the US is the single largest buyer of ready-made garments made in Bangladesh -- the world's second-largest apparel manufacturer after China.

Local RMG makers believe US trade policy toward China, a major competitor in the global apparel market, will be crucial for their business in the coming years.

Besides, the role of the World Trade Organization (WTO) and other global trade organisations will be important as Bangladesh transitions to a developing country in 2026.

Apparel exporters say Republican Candidate Trump's plan to impose higher tariffs on imports from China could boost Bangladesh's garment exports.

But, they fear that a Trump presidency could also lead to challenges for multilateral trading institutions like the WTO and intensified global export competition.

Last year, Bangladesh exported $8.27 billion worth of garment items to the US, facing a 15.62 percent tariff.

Under both Democratic and Republican administrations, garment exports from Bangladesh to the US have remained relatively stable.

During Trump's presidency from 2017 to 2021, Bangladesh's share of garment exports to the US fluctuated between 17 percent and 18.90 percent, according to the Bangladesh Garment Manufacturers and Exporters Association (BGMEA).

Under Democratic President Joe Biden, the share has not increased too much, varying between 21.15 percent and 18.12 percent.

Asking not to be named, a renowned garment exporter to the USA from Bangladesh said Trump's anti-China move could eventually benefit Bangladesh. If he imposes more tariffs on Chinese products, there is a possibility of work orders shifting to Bangladesh.

Khandoker Rafiqul Islam, immediate president of the BGMEA, said Trump's additional tariff on Chinese goods plan has already prompted many US-based clothing retailers and brands to look for alternative sourcing destinations such as Bangladesh and Vietnam.

"If Harris is elected, it is expected that the existing US tariff will continue for China. In this case, Bangladesh's business may not be affected negatively but the possibility of an export jump is thin," he said.

However, Mohammad Abdur Razzaque, chairman of the Research and Policy Integration for Development (RAPID), a private research organisation, said there could be a significant change in approaches between Trump and Harris.

For instance, if Trump is elected, multilateral institutions and organisations like the WTO may face challenges.

"Trump may adopt a more anti-China policy and impose more tariffs on import of Chinese goods to the USA," Razzaque said, "In this case, Bangladesh may be benefited indirectly as there is a possibility of shifting of work orders from China to Bangladesh."

However, an identified geo-political rivalry and undermining the fundamental multilateral trading system may result in a demand slump, he said.

The RAPID chairman said demand for garment items has been declining over the past three to four years and most G-20 countries, including the US, have adopted protectionist trade policies.

He said Bangladesh may face additional challenges when it graduates from a Least Developed Country (LDC) to a developing nation in 2026. Rules-based trade may be affected.

According to Razzaque, a Democratic administration could lead to less intense geopolitical tensions, possibly benefiting Bangladesh through the maintenance of the multilateral trading system.

However, he reminded that the US's main interest remains containing China.

Masrur Reaz, chairman of the Policy Exchange Bangladesh, echoed Razzaque's views.

Reaz said Donald Trump was aggressive in imposing tariffs on Chinese imports during his previous term. If re-elected, he may adopt an even more aggressive stance toward Chinese imports.

Bangladesh should also restart negotiations with the US to revive the Generalized System of Preferences (GSP) for US markets, as the relationship between the two countries is improving, said Reaz.

Since the expiration of the Multi-Fibre Arrangement in 2004, Bangladesh has not enjoyed any tariff preferences on garment exports to the US.

Before the Trump administration imposed a 25 percent tariff on Chinese goods in January 2018, Chinese exporters faced a 3.08 percent duty on garment exports to the US.

According to the Hong Kong Ministerial Declaration of the World Trade Organization (WTO), the US was supposed to provide duty-free market access for all products from LDCs. However, the US government granted duty-free access to only 97 percent of products.

As an LDC, Bangladesh's garment exports were expected to be included in the 97 percent duty-free category, but apparel products were excluded from this package.​

Trump was importing Bangladesh-made dress shirts through one of his companies sometime ago, he mentioned this during a visit to the Letterman Show on one occasion. He was quite impressed with the quality.

But we should negotiate GSP privileges with whichever administration comes to power.

 

[Bilal9]

Exports see 19pc growth in October​

Many exporters could not ship goods on time in July-September due to quota reform movement, political changeover in the student-led uprising and unrest in industrial areas. Many of these stalled goods were shipped last month.

Staff Correspondent
Dhaka

Published: 06 Nov 2024, 20: 15

Workers are seen handling a container at Chattogram sea port . Prothom Alo file photo

After major shocks in the production sector of the country in July-August, the exports have started to bounce back rapidly. In October, the country saw 18.5 per cent growth in exports.

Exports rose 16 per cent in the previous month, September, as well. The export growths were around 3 and 5.5 per cent in July and August respectively, the first two months of the current fiscal year.

National Board of Revenue (NBR) data shows that Bangladesh exported goods worth USD 4.13 billion in October, posting an 18.68 per cent (USD 650 million) year-on-year rise.

Bangladesh exported USD 3.82 billion, 4.07 billion and 3.86 billion respectively in July, August and September.

NBR's account of exports of these commodities also includes information on Export Processing Zone’s (EPZ) deemed exports and sample exports. However, the amount is not much.

Several exporters said many exporters could not ship goods on time in July-September due to quota reform movement, political changeover in the student-led uprising and unrest in industrial areas. Many of these stalled goods were shipped last month. Apart from this, exports are increasing as shipment of goods increases ahead of winter and Christmas.

According to the NBR data, goods worth USD 15.88 billion were exported in the first four months of the current fiscal year, which is USD 1.51 billion more than the corresponding period of the previous year. Besides the amount of money exports have also increased in terms of quantity.

The quantity of export was 530 million kilogram in last July, 570 kilogram in August and 580 million kilogram in September. The exports rose to 590 million in October. In total, 2.23 billion kilograms of goods were exported in the first four months of the current fiscal year, which was 2.19 billion in the same period the previous year.

Bangladesh Bank released the balance of payments data on the basis of actual commodity exports last July resulting in disclosure of a huge discrepancy in the exports.

At that time, the central Bank stated that Export Promotion Bureau (EPB) had been publishing export data for a long time, but the income was not coming to the country.

This discrepancy raised questions among local and foreign organizations. An assessment found that the export data was shown inflated. A decision was made to prepare export data based on actual earnings.

Following the revelation of significant discrepancies, EPB paused publishing the data. Last month, the EPB revealed that goods worth USD 11.37 billion were exported from the country in the first three months of the current fiscal year while the amount was USD 10.82 in the corresponding period of the last year.
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