In the fiscal year 2021-22, Bangladesh has crossed the milestone of $50 billion in exports for the first time. Bangladesh’s exports increased by 35.47 percent in one fiscal year. From July 2021 to June 2022, Bangladesh exported goods worth $52.08 billion in a total of 12 months, of which $42.61 billion was from ready-made garments, which accounted for 81.81 percent of total exports in the just-ended fiscal year. In the previous fiscal year, apparel exports were worth $31.45 billion.
Apparel export trend during FY22
The main reason for the success of the RMG sector in Bangladesh in the last financial year was the diversification of export destinations. Bangladesh’s RMG industry is present in 11 countries with billion-dollar exports. Out of the 11 countries in Bangladesh’s billion-dollar export list, seven are EU countries.
In FY 2021-22, the total export of garments to European Union countries was 21.41 billion, which is about 50.22 percent of the total export of the garment sector of Bangladesh. The previous year’s exports were 15.98 billion dollars. Total exports to European Union countries increased by 33.87 percent in one year. Exports to Spain increased by 39.65 percent, France by 35.16 percent, Italy by 31.27 percent, Poland by 45.32 percent, the Netherlands by 41.25 percent, and Germany by 27.74 percent over the year.
However, the US has been the largest exporter of ready-made garments in FY 2021-22. Bangladesh exported about 9.03 billion dollars’ worth of garments to the country. The previous year’s exports were 5.94 billion dollars. Exports in one year increased to about 3.06 billion dollars, which is 51.57 percent more than the previous year. The US market has shown a strong comeback and created additional demand for apparel products as they have overcome the shock of the pandemic and their market is back to normal.
Exports to the UK were $44.9 billion dollars, up 30.56 percent from the previous year. However, the biggest achievement of Bangladesh’s RMG industry in FY 21-22 is the entry into three new export markets with an export growth of billion-dollars. In FY 21-22, Canada, Denmark and Japan join these countries with new billion dollar markets.
In the last financial year, Bangladesh exported garments worth about 1.32 billion dollars to Canada. Last year’s exports were $995.6 million. Bangladesh’s RMG market in Canada has grown by 33.22 percent and Denmark by 38.16 percent. In the last fiscal year, Bangladesh’s garment exports to Denmark were 1.15 billion dollars. Besides, Japan is the only country in Asia that has joined the dollar market. In the fiscal year 2021-22, apparel exports to Japan were $1.09 billion with export growth of 16.28 percent.
Japan is one of the biggest clothing importers, providing new opportunities for fashion brands and retail sales totaling USD$100bn in 2021. Japan’s apparel market comes in just behind the US ($476 billion) and China ($411 billion) markets. Japan has emerged as a promising country for the RMG industry for Bangladesh along with Canada and Denmark.
Canada’s apparel market is worth $20.37 billion and the country imported $9.98 billion worth of apparel last year. Denmark’s apparel industry is mostly dependent on imports. Denmark’s apparel import value reached a peak, amounting to about USD 4.61 billion in 2021. Bangladesh’s contribution to Denmark’s garment market is about 25 percent. Denmark’s apparel market is set to reach a market value of around $5.52 billion this year.
The RMG industry of Bangladesh needs to maintain this trend of exports.
Bangladesh Garments Manufacturers and Exporters Association (BGMEA) Director Mohiuddin Rubel said that overall exports to our major markets have shown a positive trend but the conflict in Ukraine has created geopolitical tensions in the post-Covid world. There will be great changes in business in the coming days. The global economy and trade may present a gloomy outlook ahead, which is a concern for entrepreneurs.
Bangladesh Garments Manufacturers and Exporters Association (BGMEA) Vice President Shahidullah Azim said that Bangladesh’s apparel has created a good position in new markets and entrepreneurs are working hard to maintain this trend of export growth.
Positive exports trends in non-traditional markets
Bangladesh’s apparel sector has shown remarkable growth in exports to non-traditional markets. Total exports to non-traditional markets in 2021-22 were $637.46 million. Exports to these countries have increased by about 25.40 percent compared to the previous year. The highest growth in apparel in non-traditional markets came from Chile, Mexico, India, and Turkey. Export in Chile in the FY22 was $183.33 million. An increase of about 122.07 percent over the previous year. Besides, exports to Mexico and India increased by 73.34 percent and 69.78 percent respectively in one year.
In Turkey it increased to 65.33 percent. In addition to these countries, exports to Australia, the Republic of Korea, United Arab Emirates, Malaysia, Saudi Arabia, South Africa, New Zealand, and Brazil increased among non-traditional markets.
Also, among the rest of the EU, exports in Austria, Belgium, Finland, Greece, Ireland, Portugal, Romania, Sweden, Czech Republic, Estonia, Hungary, Latvia, Slovakia, Slovenia, Croatia, and Luxembourg increased in 2021-22 compared to 2020-21. However, exports to China and Russia decreased by 18.04 percent and 1.67 percent respectively.
In addition, exports to Bulgaria, Cyprus, Lithuania, and Malta decreased compared to the previous year. The export growth that Bangladesh has achieved so far is the result of the dedication of the RMG industry, the spirit and commitment entrepreneurs have shown in all crises. BGMEA President Faruque Hassan said BGMEA is working to facilitate new market exploration and maintain access to preferred markets.
Bangladesh government provides tremendous support for exploring non-traditional markets by cash incentives.
However, Bangladesh needs to focus on the sustainability of the RMG business. In the last few months, the price of textile raw materials has increased by 10 to 20 percent. Utility costs are also rising due to global supply chain disruptions.
Hence, depending on low-cost products will not be any more a sustainable option for Bangladesh’s RMG sector. RMG industry has to work on value addition. Value addition will be a sustainable competitive advantage for Bangladesh to achieve new markets. In addition, garment exporters in Bangladesh will now get cash incentives and subsidies from the government on exports with a 20 percent local value addition.
Both BGMEA and the Government of Bangladesh are encouraging entrepreneurs to explore new markets and work on value addition.
