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Dr Khondaker Golam Moazzem on RMG

Published in The Financial Express on Friday, 17 July 2015.

RMG export growth to new markets declines

Ziaur Rahman

Country’s ready-made garments (RMG) exports to non-traditional markets recorded a marginal growth in the just-concluded fiscal (2014-15). The industry insiders have termed it an alarming sign for the country’s apparel sector.

According to sources, the country’s apparel products are losing their edge in the emerging markets to their competitors, namely Vietnam, Cambodia, India and Pakistan, as many of the buyers cut back their orders because of political unrest, safety and other compliance issues.

According to the Export Promotion Bureau (EPB), apparel exports to the non-traditional market (comprising 11 new destinations) stood at US$ 3.907 billion in the just-concluded fiscal (2014-15) as against $ 3.598 billion in the previous fiscal registering a growth of 8.60 per cent. The growth was 20.99 per cent in the previous year, 2013-14 and 28.75 per cent in 2012-13.

The declining trend in export growth is due to impact of political unrest and industrial disasters that dented the confidence of international retailers, said Atiqul Islam, president of Bangladesh Garment Manufacturers and Exporters Association (BGMEA).

“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 4.08 per cent rise in the just-concluded fiscal year while the country’s overall export growth also recorded a 13-year low.

The RMG sector earned $ 25.4 billion last year compared to $ 24.49 billion in the previous year. However, the country’s largest export industry fell 5.20 per cent short of export target which was set at $ 26.89 billion. The knitwear export totalled $12.43 billion, up by 3.13 per cent from the previous fiscal’s $12.05 billion. The woven products earned $ 13.06 billion with 5 per cent growth over the previous year’s $12.44 billion.

Of the total exports to the new markets, woven items registered 8.87 per cent rise to $ 2.029 billion, while knitwear export amounted to $ 1.878 billion registering growth of 8.32 per cent as compared to that of the previous year.

Of the total earnings of $ 25.491 billion from exports of both woven and knit products in last fiscal (2014-15), about $ 3.907 billion came from the new export destinations. The amount constitutes about 15.33 per cent 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 per cent in last fiscal which was 14.69 per cent in the previous fiscal while the EU and the US accounted for 60.28 per cent and 20.74 per cent respectively.

Apparel exports grew by 37.05 per cent in South Africa, 26.33 per cent in China, 23.88 per cent in Australia and 14.02 per cent in Japan while it declined by 21.57 per cent in Turkey in the just-concluded fiscal.

In fact, exports to the new markets have been picking up over the recent years since 2008 when the total export 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.

Centre for Policy Dialogue (CPD) Additional Research Director Dr. Khondaker Golam Moazzem also identified political unrest, fluctuation of demand for clothing products due to economic slowdown and devaluation of respective currencies against dollar acted as major factors for slowdown in the RMG sector.

He stressed the need for increasing productivity to deal with rising production cost and to remain competitive in the new markets.

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