According to sources, the FE says, Bangladeshi apparel is losing out in emerging markets to competitors like Vietnam, Cambodia, India and Pakistan, as many buyers cut back orders due to political unrest, safety and other compliance issues in the country.According to a report in Bangladesh’s Financial Express (FE) this morning, the country’s ready-made garments (RMG) exports to non-traditional markets have recorded just marginal growth in the fiscal year just ended (2014-15). Insiders are said to consider this alarming news for the country’s apparel sector.
According to sources, the FE says, Bangladeshi apparel is losing out in emerging markets to competitors like Vietnam, Cambodia, India and Pakistan, as many buyers cut back orders due to political unrest, safety and other compliance issues in the country.
According to the Export Promotion Bureau (EPB), apparel exports to non-traditional markets (comprising 11 new destinations) were US$ 3.907 billion against $ 3.598 billion in the previous fiscal registering growth of 8.60%. Growth was registered at 20.99% in the previous year, 2013-14 and 28.75% in 2012-13.
The declining trend in export growth is due to the impact of political unrest and industrial disasters that dented the confidence of international retailers, Atiqul Islam, president of Bangladesh Garment Manufacturers and Exporters Association (BGMEA), told the newspaper.
“By this time, we have overcome this problem and hope to boost our exports to the new destinations,” said Mr Atiq adding that a committee has been formed to explore business opportunities in new markets, especially in Mexico, Brazil and Argentina.
The country’s total export earnings from the RMG sector also recorded the poorest performance in six years with a 4.08% rise in the just-concluded fiscal year while the country’s overall export growth also recorded a 13-year low.
According the FE, the RMG sector earned $ 25.4 billion last year compared to $ 24.49 billion in the previous year. However, it said, the country’s largest export industry fell 5.20% short of export target, which was set at $ 26.89 billion. Knitwear exports totalled $12.43 billion, up by 3.13% from the previous fiscal’s $12.05 billion. Woven products earned $ 13.06 billion with 5% growth over the previous year’s $12.44 billion.
Of the total exports to the new markets, woven items registered an 8.87% rise to $ 2.029 billion, while knitwear exports amounted to $ 1.878 billion registering growth of 8.32% compared to the previous year.
Of the total earnings of $ 25.491 billion from exports of both woven and knit products in the last fiscal (2014-15), about $ 3.907 billion came from the new export destinations. The amount constitutes about 15.33% of the total RMG export.
Of the total earnings from the RMG sector, $ 15.366 billion came from Europe, $ 5.288 billion from the US, $ 928 million from Canada and the rest from other countries.
The non-traditional market’s contribution increased to 15.33% in the last fiscal, which was 14.69% in the previous fiscal while the EU, and the US accounted for 60.28% and 20.74% respectively.
Apparel exports grew by 37.05% in South Africa, 26.33% in China, 23.88% in Australia and 14.02% in Japan while it declined by 21.57% in Turkey in the just-concluded fiscal.
In fact, the FE adds, exports to the new markets have been picking up over recent years since 2008 when total exports to non-traditional markets was worth only $6 million. “This has been the outcome of ceaseless exploration of alternative markets even in the wake of global downturn in general and the Eurozone crisis in particular,” said the BGMEA president.
“Despite all the odds, the RMG export to non-traditional markets is growing up,” said Mr Atiq, who also stressed the need for continuous efforts to improve the labour standard, workplace environment and other safety compliances.”
“Because all of these endeavours, we could reduce the number of vulnerable factories to less than 2 per cent,” he said.
Dr. Khondaker Golam Moazzem of the Centre for Policy Dialogue (CPD) also identified political unrest, fluctuation in demand for clothing products due to economic slowdown and devaluation of respective currencies against the dollar acted as major factors for the slowdown in the RMG sector.
He stressed the need for increasing productivity to deal with rising production costs and to remain competitive in the new markets.