Bangladesh’s export earnings from the apparel industry, the lifeline of foreign currency earners, have seen only a 0.20% rise reaching to $28.15 billion in 2016-17 financial year. The growth of the year has been the lowest on record in the last one and a half decades. Whereas for India apparel export reached to USD 17.5 billion in FY 2016-17 from USD 16.8 billion export of FY 2015-16 securing around 12 percent growth.
When asked why Indian apparel export is increasing fast but not the same for Bangladesh, Bangladesh Garments Manufacturing and Exporters Association (BGMEA) President Siddiqur Rahman said, “Garments buyers are going to Indian market from Bangladesh due to inefficient port facility and extra lead-time”. He also informed that the value of taka against dollar, poor infrastructure and shortage of power and gas are the key challenges for the export oriented RMG sector.
India recently is expecting to earn USD 20 billion in FY 2017-18 banked on the competitive advantages the country has got recently. Bangladesh on the contrary is fighting heard with the cost increase and infrastructure back logs. BGMEA asked for immediate policy support from the government.
According to BGMEA, the government meanwhile has ordered all the ports including the port of Chittagong to remain open for 24 hours for 7 days of the week to ease the export activities. The government has also taken several positive steps at Hazrat Shahjalal International Airport, which has reduced the lead-time.
There are many reasons behind the export growth decrease; hence buyers are going to other competitive countries.
Currency depreciation against USD in competitive countries hit Bangladeshi garment exporters the most. The currency itself is giving huge advantage to countries like India as shown in table 1. With continuous increase in salaries, gas and electricity price, system losses Bangladeshi apparel manufacturers are struggling to keep the advantage over the major competing countries. According to BGMEA, Garments production cost has increased near 18.01 percent in last two years in Bangladesh.
Table 2 shows the cost components which are increasing rapidly for Bangladeshi garment makers. Some of the similar costs are also increasing in competitive countries but the rate of increment is much high in Bangladesh.
The structure of Indian textile industry is also an advantage for them. As India has allowed global apparel brands to open their stores in India with a close that at least 30 percent of their products have be made in Bangladesh, the apparel manufacturing Industry of India is getting another advantage. This policy has helped India to keep the manufacturing of global brands in their domestic factories.
When Indian local consumption is getting stronger, the apparel manufacturers are likely to gain more advantages in coming days.
The impact of Indian advantages is also reflected in Bangladesh’s apparel export to India.
The figure 2 showed that, in the last fiscal year, garment shipments from Bangladesh to India, a market of more than $40 billion, fetched $129.81 million, down 4.85 percent year-on-year.
BGMEA President said, “All factory owners have implemented corrective action plans in time stipulated by the Accord and Alliance, the initiatives would not need to extend their tenure in Bangladesh”, said Siddiqur Rahman.
Extensive interventions of initiatives like Accord and Alliance in Bangladesh has also hit Bangladeshi apparel makers. Bangladesh had to go through a major safety transformation for last four years. This process has made Bangladesh as one of the safest places for garment making now. But within the transformation period some global buyers went to India. Meanwhile apparel makers had to invest a lot for complying Accord, Alliance other regulatory requirements. As initiatives like Accord, Alliance was not applicable for countries like India, they could remain their advantage over Bangladesh.
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