Published in The Financial Express on Monday, 8 June 2015.
Exports of woven garment to the European Union (EU) are increasing in recent times, helping exporters compensate the loss from the US market, industry insiders said.
Despite a weakening euro, they said shipment of woven items to the market of 27-nation regional bloc is on the rise, driven by relaxed rules of origin made effective in 2011.
Shipment of woven apparel to the US market edged down by 1.6 per cent, but export of woven products to the EU posted a 7.0 per cent growth in July-April of the outgoing fiscal year, compared with the same period a year ago, according to Export Promotion Bureau (EPB) data.
The country’s shipment of woven and knit products to the EU market amounted to $5.29 billion and $7.13 billion respectively during the same period, the data showed.
Exporters blamed the tragic industrial accidents including the Rana Plaza building collapse and Tazreen fire as well as 2013 political turmoil for the downtrend in apparel exports to the US last year.
Overall apparel exports to the US market are, however, witnessing a continuous upward trend this year following a declining trend in 2014.
Bangladeshi made woven items fetched $ 3.18 billion and knit $ 1.03 billion during July-April of FY 2014-15 from the US market.
In FY 2012-13, woven export growth to the US was recorded more than 7.0 per cent, the EPB data showed.
Though Bangladesh apparel exports to the US are increasing this year, other competing countries like India and Vietnam are doing better, president of Exporters Association of Bangladesh (EAB) Abdus Salam Murshedy told the FE.
Apparel exports to the US by Vietnam, one of main competitors of Bangladesh, and India grew by 13 per cent and 9.0 per cent respectively during January to April period of 2015, he added.
“Their currencies are depreciating while local currency is appreciating against US dollar and it is eroding our competitive edge,” he noted.
He said cost of production is also going up by nearly 10 per cent in recent times due to wage hike and ongoing safety measures prescribed by Accord and Alliance.
Euro is also weakening against the US dollar, but local exporters are still maintaining competitiveness in the EU market as it allows GSP (generalised system of preferences) facility to Bangladeshi made products, he added.
Moreover, India and Vietnam are grabbing orders shifted from China as they are more competitive than Bangladesh, Aslam Sunny, vice president of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), said, adding Bangladesh Taka is appreciating against US dollar while currencies of Vietnam and India are depreciating, making imports from Bangladesh costlier.
“And the GSP facility is one of main reasons why (our) woven exports are increasing in the EU market, despite woes in the US,” said Mr Murshedy, also former president of Bangladesh Garment Manufacturers and Exporters Association (BGMEA).
Since the relaxation of the rules of origin requirement in the GSP of the EU in 2011, exports of woven products have been on the rise to the EU market, Centre for Policy Dialogue (CPD) said in its recent ‘State of the Bangladesh Economy in FY2015 and the Closure of Sixth Five Year Plan’ report.
The US levies high customs duty on the imports of woven garments from Bangladesh, realising $392 million last year, the think-tank said.