RMG export to major destinations witnesses negative growth in Q1
Bangladesh’s RMG exports to major destinations, including the European Union, Canada and some other obsolete markets, have risen negatively in the first quarter (Q1) of the current fiscal year (2019-20).
Industrialists are thinking that the sector will show negative growth in the coming months. At the end of this financial year, if the exports do not turn away from this downward trend, Bangladesh may lose its second position to Vietnam in the global apparel market.
According to the latest report by the World Trade Organization (WTO), Bangladesh currently accounts for 6.4% of the global garment market and Vietnam has 6.2%.
1.2% reduction in global clothing usage was largely attributed to the slowdown in Bangladesh, due to weak product diversity, growing online businesses, closure of retail sales centers in the western world and global forecasts.
According to the BGMEA analysis in the third week of October, the price of knitted cotton t-shirts per piece – the items sold on the last year – dropped by 26.84% and the quantity by 24%.
Siddiqur Rahman, former President of the Bangladesh Garments Manufacturers and Exporters Association (BGMEA), said, “China and US trade tensions, global effects such as rising consumption and the decline of work orders in major rival countries have reduced the number of work orders.”
“Currently, obsolete markets are contributing 15-16% of total export earnings,” he said.
In the first quarter of the current fiscal year, garment export from Bangladesh dropped 1.64% year-on-year to $8.05 billion when earnings from the sector fell 11.52% short of the quarter’s target of $9.10 billion.
On the other hand, garment shipment from Vietnam increased by 10.54% between July and September. It was 2.2% for India and 4.74% for Pakistan.
The tendency to invest in the garment sector in terms of new entrepreneurship and expansion has also weakened, as buyers are not giving good prices, according to BGMEA data.
Buyers are now trying to raise cash for unhealthy price competition among local garment manufacturers and lower production of value-added items in Bangladesh.
Besides, RMG exports to major non-traditional potential markets also decreased during the period. July-September of 2019-20 financial year, Bangladesh earned $109.98 million from China with negative growth 1.65% growth from $111.83 million in the same period of financial year 2018-19, according to Export Promotion Bureau (EPB).
Exports to India, Japan, Korea, Mexico, Russia, however, witnessed a growth ranging from 3.58% to 35.54%. Bangladesh earned $163.12 million from India with growth 12.42% growth than previous year.
Faruque Hassan, a former Senior Vice-President of the BGMEA, explains a few reasons, “leading international retail brands like Zara and H&M have established their business in India and we are the largest supplier to them.”
“Another reason is that the Indian domestic market has grown and the number of fashion-conscious consumers have increased. We import manufactured garment (RMG) raw materials such as cotton, machinery from India, so there is an increase in export. It is a win-win situation for both countries. “