[🇧🇩] Textile & RMG Industry of Bangladesh

[Saif]

Local spinners losing yarn market to import surge

Due to higher cost of production, domestic textile millers, especially spinners, are facing 'uneven' competition with their foreign competitors and losing orders for yarn even from the local readymade-garment exporters. The RMG exporters now prefer sourcing the raw material from abroad, hinderin

thefinancialexpress.com.bd

Local spinners losing yarn market to import surge
MONIRA MUNNI
Published :
Jun 05, 2024 01:27
Updated :
Jun 05, 2024 01:27

Due to higher cost of production, domestic textile millers, especially spinners, are facing 'uneven' competition with their foreign competitors and losing orders for yarn even from the local readymade-garment exporters.

The RMG exporters now prefer sourcing the raw material from abroad, hindering further growth of the local spinning sector.

According to the central bank data, imports of yarn recorded a double digit growth during the first nine months of the current fiscal year (FY) while imports fell in cases of other raw materials like raw cotton, textile and articles, and staple fibre.

Yarn import recorded a growth of over 10 per cent during July-March period of FY 2023-24 compared to the corresponding period of the last FY, according to Bangladesh Bank data.

Bangladesh imported yarn worth US$2.32 billion during the period which was US$2.10 billion in July-March period of FY 2022-23.

Overall imports of RMG inputs recorded a 9.1 per cent decline during the first nine months - raw cotton 24.9 per cent, followed by textile and articles 8.2 per cent, staple fibre 6.1 per cent and dying and tanning materials 3.1 per cent.

During the period under review, the country spent US$12.17 billion in importing those goods which was US$13.39 billion in the corresponding period of last fiscal.

Exporters said the price of locally produced yarn is higher than the imported variety while textile millers argued that the high costs of utilities and poor gas supply pushed up their production cost and it resulted in higher prices of locally made yarn.

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[Saif]

Bangladesh’s garment export growth slows to 2.86pc amid economic challenges

The Export Promotion Bureau (EPB) has released export data for the fiscal year 2023-24, highlighting a slowdown in the growth of Bangladesh’s garment exports. From July to May of the 2023-24 fiscal year, garment exports totaled $43.85 billion, reflecting a growth rate of 2.86 per cent. This

thefinancialexpress.com.bd

Bangladesh's garment export growth slows to 2.86pc amid economic challenges
UNB
Published :
Jun 05, 2024 22:01
Updated :
Jun 05, 2024 22:09

The Export Promotion Bureau (EPB) has released export data for the fiscal year 2023-24, highlighting a slowdown in the growth of Bangladesh's garment exports.

From July to May of the 2023-24 fiscal year, garment exports totaled $43.85 billion, reflecting a growth rate of 2.86 per cent. This is a marked decrease compared to the same period in the previous fiscal year, when exports reached $42.63 billion with a growth rate of 10.67 per cent.

The decline in exports became particularly evident in April and May 2024, significantly affecting the overall growth rate.

"Our garment exports over these 11 months have lagged behind the target by 7.63 per cent," said Mohiuddin Rubel, Director of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA).

Rubel detailed that knitwear product growth dropped by 20.75 per cent and woven garment exports decreased by 12.48 per cent in May alone. He attributed this decline to several global and domestic economic pressures.

Due to inflation in the global economy and interest rate hikes to control it, consumers' purchasing power has diminished, leading to reduced retail sales and garment imports, Rubel explained. He noted that global garment imports by the United States fell by 7.18 per cent and by Europe by 12.84 per cent during January-March 2024. Additionally, significant price drops per unit of product in key markets, ranging from 8 per cent to 18 per cent, have exacerbated the situation.

Domestic challenges have also played a role. Increased minimum wages, rising costs of electricity, gas, and transportation, and bank interest rates soaring from single digits to 14 per cent-15 per cent, combined with reduced cash assistance, have hampered the industry's competitive edge. "This is somewhat reflected in the export growth," Rubel said.

It is noteworthy that the garment sector has to face continuous new challenges to survive. "On one hand, we are dealing with complexities related to NBR, ports, and banking. On the other hand, the government has decided not to provide gas-electricity connections and bank loans to any new factories outside industrial zones, a decision we have requested to be withdrawn. If implemented, such decisions could further hinder investment and exports," he added.

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[Saif]

Minimum tariff value of cotton fabrics increased

Finance minister Abul Hassan Mahmood Ali on Thursday proposed rationalising at the import level the minimum value of certain products, including cotton and synthetic fabrics, for imposing duty to safeguard the local industry...

www.newagebd.net

Minimum tariff value of cotton fabrics increased
Staff Correspondent 06 June, 2024, 22:10

| Star Mail photo

Finance minister Abul Hassan Mahmood Ali on Thursday proposed rationalising at the import level the minimum value of certain products, including cotton and synthetic fabrics, for imposing duty to safeguard the local industry.

The finance minister in his proposed budget for the financial year 2024-25 suggested increasing the minimum value of cotton fabrics and printed cotton at the import level to $4 a kilogram from exiting $3 a kilogram.

He also proposed increasing the minimum value of synthetic fabrics from $3 a kilogram to $4.50 a kilogram.

Waiving all other duties and taxes, the finance minister also proposed imposing 1 per cent customs duty on purified terephthalic acid and mono-ethylene glycol, the raw materials of polyester (synthetic) staple fibre and pet chips used in the textile industry.

The minister in his budget speech said that it was observed that the total tax incidence on the finished goods was less than its raw materials.

'In order to remove this discrepancy and for the protection of the domestic industry, I propose to impose 1 per cent customs duty on PTA and MEG and waive all other duties and taxes on these two raw materials,' Mahmood said.

The finance minister also proposed waiving all other taxes except customs duty of 5 per cent and advance income tax for importing chiller having capacity of 50 tonnes or more.

Chiller is used as essential capital equipment in various industries and a total duty of 104.68 per cent is applicable to the import of the item, which is not conducive to the related industries, he said.​

 

[Saif]

Textile, garment makers urge govt to reconsider their demands

Textile millers and garment makers in Bangladesh yesterday demanded that the government include some of their recommendations in the new national budget as many of the issues they raised remain unaddressed.

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Textile, garment makers urge govt to reconsider their demands

Textile millers and garment makers in Bangladesh yesterday demanded that the government include some of their recommendations in the new national budget as many of the issues they raised remain unaddressed.

For instance, garment exporters had demanded the reduction of source tax from the existing 1 percent to 0.5 percent for the upcoming fiscal year, which starts on July 1.

They also sought the continuation of cash incentives on export receipts until 2032 as the World Trade Organization (WTO) will allow graduating least-developed countries (LDCs) to enjoy trade benefits as LDCs till then.

As these demands were left unmet in the proposed budget for FY25, the textile millers and garment makers have asked the government to reconsider their recommendations on the grounds that such measures would improve businesses.

SM Mannan Kochi, president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), said one of the proposed measures in the budget would allow customs officials to levy a 400 percent fine if an exporter is found using inaccurate documentation.

"Such a proposal will only increase the harassment of exporters for simply making a mistaking when filing documents for the export procedure," he added.

Kochi was speaking at a post-budget press conference jointly organised by the BGMEA, Bangladesh Textile Mills Association (BTMA) and Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) at the BGMEA office in Dhaka.

The BGMEA president also demanded food rationing for garment workers as persistently higher inflation has increased essential commodity prices in domestic markets.

He also suggested the government introduce a special scheme for both saving and fostering the growth of small and medium enterprises in the textile and garment sectors.

BKMEA Executive President Mohammad Hatem said although the government takes advanced income tax, the amount charged is often not returned as per the rules.

Besides, many textile and garment factories are facing serious difficulties due to a severe gas crisis.

BTMA President Mohammad Ali Khokon said there is an opportunity to bolster earnings from the 15 million kilogrammes of garment waste generated across the country each year as many global buyers want apparel made from recycled materials.

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[Saif]

Go for recycled garments to boost exports

Bangladesh should soon go for producing recycled garment products that meet global environmental safety standards to increase its exports to the European Union (EU), according to speakers at an event.

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Go for recycled garments to boost exports
Experts say at BUILD discussion

Bangladesh should soon go for producing recycled garment products that meet global environmental safety standards to increase its exports to the European Union (EU), according to speakers at an event.

Changes in trade patterns often bring major shifts to a country's economic structure, technological advancement, government policies and emerging trade theories or agreements, they said.

However, Bangladesh needs to take adequate preparation to this end, they added.

These comments came at a discussion on the impact of EU circular textiles policies on its trading partners, organised by the Business Initiative Leading Development (BUILD) at its office in Dhaka.

The recently introduced EU Strategy for Sustainable and Circular Textiles emphasises transparency, sustainability and circularity across the textile value chain, impacting both the EU and non-EU consumers and companies.

The EU is an important destination for garment and textile exports from Bangladesh.

In fiscal 2022-23, apparel exports from Bangladesh to the EU amounted to $28.6 billion. In fiscal 2023-24, the amount was $25.44 billion, indicating a year-on-year decline of about 6.07 percent.

The EU and UK account for more than 60 percent of Bangladesh's garment exports while apparel products constitute more than 93 percent of the total shipments.

Ferdaus Ara Begum, chief executive officer of BUILD, said Bangladesh needs to devise new strategies and projections for textile exports to the EU. This includes identifying potential growth areas as well as challenges for market entry.

She said Bangladesh also needs to analyse the policy shifts and chart out a detailed scenario to support its textile and garment industries to adapt to the EU's sustainable and circular strategy.

"We need to assess the landscape of the sector before we provide feedback on potential impacts and necessary adaptations," ‍said Patrick Schroeder, senior research fellow of the environment and society programme at The Royal Institute of International Affairs, a British think-tank.

"And we need to figure out strategies for enhancing collaboration between EU and Bangladesh stakeholders to promote a sustainable and circular global textiles sector," he added.

Producer countries like Bangladesh have existing circular practices and entrepreneurship, often in the informal sector having market structures, micro enterprises and trade for pre-consumer textiles (garment waste or Jhut).

"So, the EU should take a proactive, supportive, and collaborative approach with stakeholders to formalise the Jhut sector while preserving livelihoods," he said.

The garments sector in Bangladesh is already facing a crisis given the tight margins and slowdown in global demand. However, local entrepreneurs in the sector would finance the required investment for the developing a circular economy, said Asif Ibrahim, chairman of Chittagong Stock Exchange PLC.

Saleudh Zaman Khan, vice-president of the Bangladesh Textile Mills Association, said producers need to consider developing a supply chain for cotton recycling and form local regulations for recycling.

Chowdhury Liakat Ali, director for the sustainable finance department of Bangladesh Bank, said they have taken various policy initiatives to promote sustainable finance and green banking to reduce greenhouse gas emissions and speed up investments in renewable energy, energy and resource efficiency, the circular economy and eco-projects financing, etc.

He added that the central bank fixes disbursement targets for banks with 15 percent of all loans and investments set for green financing and 20 percent for sustainable financing.​

 

[Saif]

Textile millers seek central bank intervention over unpaid $35 million

Textile millers have sought the central bank's intervention to secure payments for raw materials supplied to apparel exporters under back-to-back letters of credit (LCs) opened by commercial banks. Bangladesh Textile Mills Association (BTMA) said the banks are withholding over $35 million owed to

thefinancialexpress.com.bd

Textile millers seek central bank intervention over unpaid $35 million
Published :
Jun 13, 2024 20:48
Updated :
Jun 13, 2024 20:48

Textile millers have sought the central bank's intervention to secure payments for raw materials supplied to apparel exporters under back-to-back letters of credit (LCs) opened by commercial banks.

Bangladesh Textile Mills Association (BTMA) said the banks are withholding over $35 million owed to some 52 textile mills despite having issued maturity dates.

The BTMA, in a letter to the Bangladesh Bank (BB) on Thursday, said that after submitting buyers' acceptance and other related documents, including negotiating papers, the LC-opening banks have yet to make payments.

BTMA President Mohammad Ali Khokon signed the letter addressed to BB Deputy Governor Abdur Rouf Talukder.

"The BTMA member mills -- local fabric and yarn manufacturers -- have been facing severe liquidity crisis due to huge overdue payments, while many have been at risk of facing crisis," the letter read.

According to BTMA data, payments worth $35.86 million for the supply of yarn and fabric from 52 mills remained overdue.​

 

[Saif]

RMG sector's 'green' transition

There can be any discussion that excludes the readymade garments (RMG) sector when it comes to energy transition. It is an established fact that this sector of the economy is representative of around 85 per cent of annual exports from the country and it has developed into a global player as far as

thefinancialexpress.com.bd

RMG sector's 'green' transition
Published :
Jun 19, 2024 21:50
Updated :
Jun 19, 2024 21:50

There can be any discussion that excludes the readymade garments (RMG) sector when it comes to energy transition. It is an established fact that this sector of the economy is representative of around 85 per cent of annual exports from the country and it has developed into a global player as far as apparel market is concerned. Hence, when it comes to battling environmental pollution, carbon footprint, etc., it is natural that interventions must include the sector. Over the last decade, the RMG factories in the country have been undergoing a quiet transformation, starting from becoming the most compliant country in terms of safety measures.

Over time, Bangladesh has also come into the limelight with 220 factories becoming 'green' adhering to LEED (Leadership in Energy and Environmental Design) - a globally recognised green building rating system that emphasizes environmental responsibility and energy efficiency. Reportedly, hundreds more factories are in the pipeline waiting for LEED certification and that points to a greater realisation by RMG owners that foreign consumers wish to wear apparels that are not only ethically sourced, but are made under environmentally-accepted conditions. The problem of course has always been financing. What was witnessed during Covid-19 pandemic was a slew of cancelled orders coupled with the fact that some of the major buyers of Bangladeshi apparels were refusing to pay for shipped goods. This created a lot of problems for RMG sector but those apparently have been ironed out and the sector has moved on. While the sector moved heaven and earth to become compliant on safety issues in the years after the Rana Plaza incident, the current global economic climate will not support the RMG sector to go green at the rate desired by foreign consumers because there simply isn't enough finance to make the impact necessary to make that happen.

In the midst of all this uncertainty, the much-needed (and awaited) green transition of the country's RMG industry has got a boost. What this means is that well-established global brands like H&M Group, Gap Inc, Mango and Bestsellter have committed to the first round of decarbonisation programme in the country. The financing model that has been launched is being headed by the Fashion Pact in partnership with Apparel Impact Institute, Guidehouse, and DBS Bank. This initiative intends to provide a "collective financing model" that will help support deep decarbonisation. Of course, the devil is in the details. Although it is mentioned that that technical and financial incentives will be employed to help more factories to adopt more environmentally-friendly electrification through the use of renewable-energy solutions, it remains to be seen precisely how much cost sharing will be done.

The initiative is a multi-year proposal that hopes to facilitate not only financial incentives but also technical support "to help suppliers identify and implement low-carbon technologies." A lot of promises have been made. While members of the initiative have been making enough noise that climate change is real and actions are needed, it is also a fact that successive COP conferences have failed to get developed countries to commit funds to already agreed upon climate-change funds for developing nations. One can only hope that the initiative (of collective financing model) will be backed up s with finance and technical assistance that is tailor-made for Bangladeshi companies and if that happens, decarbonisation can happen in a fruitful manner in the RMG sector.​

 

[Saif]

RMG exports to EU witness negative growth in Jan-Apr

Bangladesh's ready-made garment (RMG) export to the European Union has sustained year-on-year negative growth during the first four months of this year. It fetched 6.01 billion euro from RMG exports to the EU during January-April period of 2024 compared to 6.67 billion euro during the correspondin

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RMG exports to EU witness negative growth in Jan-Apr
Global economic slowdown, energy shortage at home and long lead time blamed
MONIRA MUNNI
Published :
Jun 23, 2024 09:22
Updated :
Jun 23, 2024 09:22

Bangladesh's ready-made garment (RMG) export to the European Union has sustained year-on-year negative growth during the first four months of this year.

It fetched 6.01 billion euro from RMG exports to the EU during January-April period of 2024 compared to 6.67 billion euro during the corresponding period of last year, according to Eurostat data.

RMG exporters said overall import to the EU fell during the period in question due to the global economic slowdown, while Bangladesh lagged behind its competitors due to energy shortage, long lead time and customs procedure.

The EU's total apparel imports in the first four months of 2024 stood at 26.41 billion euro, which was 6.28 per cent lower than that of 28.18 billion euro during the same period of 2023.

China fetched 6.54 billion euro during the January-April period of 2024 against 6.66 billion euro, marking a 1.81-percent negative growth.

EU's import from Turkey and India recorded 11.84 per cent and 10.74 per cent decline to 3.02 billion euro and 1.52 billion euro respectively during the first four months of 2024.

Vietnam also recorded a 6.25-percent decrease to fetch 1.17 billion euro during the period, according to Eurostat data.

During the period, in terms of value, Bangladeshi made knitwear items became the top clothing exporter to the EU making shipments worth of 3.37 billion euro followed by China that fetched 3.15 billion euro.

When asked, Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) executive president Mohammad Hatem attributed high production cost, fuelled by a hike in utility prices and wage, to this negative growth.

"High lead time is one of the major reasons Bangladesh lags behind its competitors," he said, adding that competitors like China and Vietnam managed to reduce the negative growth rate unlike Bangladesh.

Due to the power and gas crisis, they could not utilise full production capacity, while facing difficulties in procuring raw materials timely, requiring 20-25 additional days to produce goods and make shipments.

"Currently, we need 70-90 days of lead time, which was earlier 50 days," Mr Hatem told the FE.

Besides, they could not receive orders at the prices buyers were offering mainly because of high production costs, followed by price hikes in gas and electricity as well as accessories.

The BKMEA leader also held customs harassment responsible for the negative growth, claiming that they faced difficulties in importing raw materials and making timely shipments.

Not only in the EU, Bangladesh recorded negative growth in the US and the UK too, he said, adding that these are the real scenario, although there is growth in the export data of the Export Promotion Bureau (EPB).

Talking to the FE, Fazlul Hoque, managing director of Plummy Fashions Ltd., also echoed Mr Hatem and added that though Bangladesh's main competitors China and Vietnam are able to gradually reduce the negative growth rate, Bangladesh could not make it up.

The former BKMEA president, however, commented that markets are yet to be stable and normal, and said there is hardly any possibility that the country's export growth situation would improve soon.

Bangladesh also recorded more than 14 per cent negative export growth to the US, its single-largest export destination, and fetched $2.30 billion during January-April period of 2024, according to US official data.​

 

[Saif]

Knitwear pushes up RMG value addition in Q3

Value addition in the country’s readymade garment sector reached a record high of 72.20 per cent in the third quarter (January-March) of the current financial year 2023-24 compared with that of 71.06 per cent in the same period of FY23...

www.newagebd.net

Knitwear pushes up RMG value addition in Q3
Staff Correspondent 25 June, 2024, 23:01

Workers sew clothes at a readymade garment factory in Narayanganj recently. Value addition in the country's readymade garment sector reached a record high of 72.20 per cent in the third quarter (January-March) of the current financial year 2023-24 compared with that of 71.06 per cent in the same period of FY23. | New Age photo

Value addition in the country's readymade garment sector reached a record high of 72.20 per cent in the third quarter (January-March) of the current financial year 2023-24 compared with that of 71.06 per cent in the same period of FY23.

This growth was primarily driven by increased shipments of knitwear products and other high value-added items, exporters said.

According to a Bangladesh Bank report titled 'Quarterly Review on RMG: January-March FY24', the import value of raw materials, including raw cotton, synthetic/viscose fiber, synthetic/mixed yarn, cotton yarn, and textile fabrics and accessories for garments, amounted to $3.84 billion in January-March of FY24, accounting for 27.80 per cent of total RMG export.

As a result, the net exports from the RMG sector stood at $9.97 billion in the third quarter of FY24, which is 18.70 per cent higher than the $8.40 billion in the preceding quarter and 14.49 per cent higher than the $8.71 billion in the same quarter of FY23, the report said.

In the third quarter of FY24, export earnings from RMG stood at $13.81 billion, marking a 17.30-per cent increase compared with that of $11.77 billion in the preceding quarter and a 12.69-per cent increase compared with that of $12.25 billion in the corresponding quarter of FY23.

Earlier, the highest value addition in the readymade garment sector was recorded at 71.48 per cent in the April-June quarter of FY23.

In the second quarter (October-December) of FY24, the value addition in the RMG sector was 71.35 per cent.

Bangladesh Knitwear Manufacturers and Exporters Association executive president Mohammad Hatem on Tuesday told New Age that the local value addition in the knitwear products topped 85 per cent and the overall value addition in the sector increased to 72.20 per cent due to increased shipments of knitwear.

He said that that the export of knitwear began to increase after the initial shock of Covid pandemic, and recently the ratio of knitwear to woven garment shipments had stood at 55:45.

At the same time, the shipment of some of high value-added woven products increased, Hatem said.

According to the business leader, the local value addition in the woven garments is 45-55 per cent.

The BB data showed that export earnings from the knitwear sector in January-March quarter of FY24 reached $7.53 billion, marking a 16.26-per cent increase compared with that of $6.47 billion in the same quarter of the previous financial year.

Additionally, knitwear exports exceeded its target by 1.69 per cent for the third quarter of FY24.

Export earnings from woven garments in the third quarter of FY24 stood at $6.28 billion, marking an 8.69-per cent increase compared with that of $5.78 billion in the same quarter of FY23.

The data showed that in January-March of FY24, RMG exports to Bangladesh's nine main destinations — the United States, Germany, the United Kingdom, Spain, France, Italy, the Netherlands, Canada and Belgium — totalled at $9.32 billion.​

 

[Saif]

RMG export to EU rises by 2% in 11 months

$21.64 billion worth of apparels were shipped to the European Union in the Jul-May period this fiscal year

www.thedailystar.net

RMG export to EU rises by 2% in 11 months
$21.64 billion worth of apparels were shipped to the European Union in the Jul-May period this fiscal year

Garment export to the European Union (EU) rose by 2 percent year-on-year to $21.64 billion in the July-May period of the current fiscal year.

Shipments to Spain, France, Netherlands, Poland and Denmark grew by 6.23 percent, 1.02 percent, 16.27 percent, 17.28 percent and 26.96 percent respectively.

On the other hand, garment export to Germany, the largest EU market for Bangladesh, declined by 10.12 percent year-on-year, according to data from the Export Promotion Bureau compiled by Bangladesh Garment Manufacturers and Exporters Association today.

Apparel export to Italy also declined by 6.1 percent in the 11 months to May this year.

Meanwhile, apparel export to the USA hit $7.46 billion in the period, posting a 3.43 percent fall.

At the same time, exports to the UK grew by 12.34 percent year-on-year to $5.15 billion and to Canada it declined by 0.31 percent to $1.3 billion.

However, garment export to non-traditional markets grew by 6.47 percent year-on-year to $8.18 billion.

Among the major non-traditional markets, shipments to Japan, Australia and South Korea posted respectively 1.83 percent, 11.76 percent and 14.34 percent growth.

But apparel export to India decreased by 23.11 percent.​

 

[Saif]

Bangladesh\'s RMG exports grow in non-traditional markets except India

Bangladesh’s readymade garments exports in the July-May period of the 2023-24 financial year grew in all non-traditional markets except neighbouring India...

www.newagebd.net

Bangladesh's RMG exports grow in non-traditional markets except India
Staff Correspondent 27 June, 2024, 22:15

A file photo shows containers at the Kamalapur Inland Container Depot in the capital Dhaka. | New Age photo

Bangladesh's readymade garments exports in the July-May period of the 2023-24 financial year grew in all non-traditional markets except neighbouring India.

The country's apparel export destinations outside the European Union, the United States, the United Kingdom and Canada are considered non-traditional markets.

According to the Export Promotion Bureau data, Bangladesh's RMG exports in July-May of FY24 to the non-traditional markets grew by 6.47 per cent to $8.19 billion compared with that of $7.69 billion in the same period of the previous financial year.

But the country's apparel exports to India in the 11 months of FY24 declined by 23.11 per cent to $728.85 million compared with that of $947.86 million in the same period of FY23.

'We are optimistic about the future growth of Bangladeshi apparel to the non-traditional markets, as exporters are receiving better prices in those markets,' Bangladesh Knitwear Manufacturers and Exporters Association senior-vice president Fazlee Shamim Ehsan told New Age on Thursday.

He said that Indian government had announced huge incentives on the investments in the RMG sector in some states to gain more share on the global market.

'With the government support, Indian manufacturers have already begun to increase their production capacity. As India expanded its capacity, Bangladesh's apparel exports have started encountering more non-tariff barriers in the market,' Fazlee Shamim said.

Although Bangladesh's apparel exports to major markets like the EU, the US and Canada have been struggling in recent months, exporters have remained optimistic about the future of non-traditional markets.

The country's apparel exports to the EU in July-May of FY24 witnessed a meagre 2 per cent growth to $21.65 billion while the earnings from the US fell by 3.43 per cent to $7.47 billion in the period compared with that in the same period of the previous year.

Among the non-traditional markets, Bangladesh's apparel exports to Australia in July-May of FY24 increased by 11.76 per cent to $1.18 billion compared with that of $1.06 billion in the same period of FY23.

RMG exports to Japan in 11 months of FY24 increased by 1.83 per cent to $1.48 billion compared with $1.46 billion in the same period of FY23.

Bangladesh's apparel exports to South Korea in July-May of FY24 increased by 14.34 per cent to $572.85 million compared with that of $501.01 million in the same period of FY23.

The country's RMG exports to Russia in the 11 months of FY24 increased by 15.50 per cent to $462.35 million while the exports to China grew by 23.23 per cent to $310.55 million in the period.

The EPB data also showed that Bangladesh's apparel exports to the United Arab Emirates in July-May of FY24 grew by 34.08 per cent to $368.94 while the RMG export earnings from Saudi Arabia increased by 58.28 per cent to $273.05 million in the period.​

 

[Saif]

Declining apparel exports - any way out?

The decline in garment export to the largest markets USA and the EU is persisting since the second half of the current fiscal. Reasons broadly attributed to the situation include inflationary pressure, increased production costs, lead time, and energy crisis. Lead time has always been a factor to c

thefinancialexpress.com.bd

Declining apparel exports - any way out?
WASI AHMED
Published :
Jul 02, 2024 22:05
Updated :
Jul 02, 2024 22:05

The decline in garment export to the largest markets USA and the EU is persisting since the second half of the current fiscal. Reasons broadly attributed to the situation include inflationary pressure, increased production costs, lead time, and energy crisis. Lead time has always been a factor to cause delay in shipments-an inherent drawback that places competitors like Vietnam and Cambodia in an advantageous position over Bangladesh. However, in the past this inadequacy was partly made up by cheap labour and large-scale production of low-end apparel products. The situation now seems to be increasingly difficult as inflationary pressure coupled with energy crisis has made garment export more challenging than in the past.

According to the US Department of Commerce's Office of Textiles and Apparel data released last week, Bangladesh's apparel export to the USA in the first four months of 2024 declined by 14.44 per cent to $2.31 billion compared with that of $2.70 billion in the same period of 2023. During the same period, exports from Vietnam grew by 0.31 per cent, while those from China declined by 4.42 per cent. The data showed that Vietnam overtook China to become the largest RMG exporter to the US in the January-April period of 2024. The US apparel imports from Cambodia in January-April of 2024 also increased by 7.92 per cent to $1.03 billion compared with those of $951.93 million in the same period of 2023. In the same period, the combined export of textile and garment from Bangladesh to the USA declined by 14.15 per cent year-on-year to $2.38 billion, according to data from the Office of Textiles and Apparel (OTEXA), a body under the US Department of Commerce.

The situation in respect of the EU is no better, if not worse. Bangladesh's RMG exports to the European Union in January-April, 2024 fell by 9.85 per cent to 6.01 billion euros compared with those of 6.67 billion euros in the same period of 2023, according to data released by Eurostat. Bangladesh managed to reduce its negative apparel export growth in the EU slightly but still performed worse compared with competitor countries in the reporting period. Exporters say, like the United States, Bangladesh lagged behind its competitors in the EU market due to severe energy crisis, high cost of utilities, increased cost of production, long lead times and cumbersome customs procedures. The EU data showed that Bangladesh's knitwear exports to the EU in January-April of 2024 dropped to 3.38 billion euros from 3.88 billion euros in the same period of 2023. Similarly, the country's woven garment exports to the EU during the period declined to 2.64 billion euros from 2.79 billion euros in the same period of 2023.

Exporters observe that despite a recent growth in US demand for apparel, and the EU too increasing its imports, Bangladesh failed to capture a larger market share due to factors such as longer shipment times and higher production costs. They say buyers are placing more orders with Vietnam and China recently, due primarily to shorter delivery times. According to the exporters, lead time for importing and processing for export has become longer-to 70-80 days from 50-55 days in the recent past.

It is pretty well known that China in the past years has been gradually moving away from exporting low-end apparel products in preference for up-end, value added varieties. This shift did offer a prospect for countries like Bangladesh, Vietnam and Cambodia to compete for a fair share of those products in global market. There was also a prediction that many Chinese apparel exporting firms would opt for relocation of their production units to these countries because of the escalating cost of labour and other vital inputs in China. There were speculations among the business community and trade experts that relocation of Chinese factories and shifting of a sizable share of Chinese apparel exports would benefit Bangladesh. It is now clear that Bangladesh could not benefit from either of the two opportunities. The opposite, however, has happened in case of Vietnam-in grabbing shifting export orders and relocation of production units.

Lead time is indeed one factor to dissuade importers to place work orders, but equally important issues that according to exporters are responsible to deter importers, especially US importers, are logistics and infrastructure-related limitations, and instable energy supply.

One sure way to cut lead time is raising local supply of raw materials and accessories. During the past two decades, substantial investment took place in the country's textile sector for meeting demands of woven and knit fabrics for export manufacturing. It is claimed that currently local textile and spinning mills have a capacity of meeting around 75-80 per cent of export requirements. But the instable energy security has led most mills to operate far below capacity.

Gas and power scarcity that seemed to take its toll on industrial production since a year ago has by now become potentially threatening to almost the entire range of industrial productivity. Notable among the sectors badly hurt include textiles, RMG, light engineering, fertiliser, cement etc. As reports have it, country's textile mills are the worst victims of gas and power shortage for several months. Production in the export-oriented textile mills has drastically fallen due to the ongoing gas supply shortage. A representative of the textile mills association has reported that local factories are operating at 60-70 per cent capacity due to energy shortages, prompting buyers to redirect orders to China and Vietnam for quicker deliveries. Some 300 textile mills located at Gazipur, Savar, Ashulia, Shreepur, Dhaka, Narayanganj, Narsingdi and Bhaluka are finding it extremely difficult to remain operational in this situation.

In order for things to improve, the most crucial requirement is ensuring adequate gas and power supply. While other areas affecting exports cannot be expected to be healed quickly, energy should be the key focus of the government.​