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CPD finds Bangladeshi garment price falls sharply compared to Vietnamese

According to a study by the Centre for Policy Dialogue (CPD), Bangladeshi readymade (RMG) items have seen a sharper fall in prices compared to the Vietnamese products in the European Union and US markets.

The value of 100 kg of made-in-Bangladesh cotton fibre T-shirt dropped by 1% year-on-year to 1,091.5 euros in 2020.

CPD-study-Bangladeshi-garment-price-fall-compared-Vietnamese
Figure: Value of 100 kg of made-in-Bangladesh cotton fibre T-shirt dropped by 1% year-on-year, 
whereas the same category product manufactured in Vietnam saw a 3% price rise.

Whereas the CPD study found that the same category product manufactured in Vietnam saw a 3% price rise, reaching 2,157.9 euros last year.

Equally, the price of each 100 kg of women or girls’ cotton fibre pullover made in Bangladesh reduced by 7 percent year-on-year to 1,329.5 euros in 2020 whereas the price of the Vietnamese ones remained unchanging at 2,157.8 euros.

The prices of each 100 kg of Bangladeshi man-made fibre pullovers for women and girls fell by 6 percent to 1,319.4 euros from 1,409.6 euros in 2019 at the EU markets. Still, the Vietnamese variant has seen only a 3 percent year-on-year price fall, hitting 1,906.2 euros in 2020.

In the US market, the price of a dozen of Bangladeshi T-shirts made from cotton fell by 20 percent to $17.99 in 2020 from $22.43 in 2019 while the price of the same product made in Vietnam dropped by 17 percent to $31.9 in 2020 from $38.2 in 2019.

The price of a dozen of Bangladeshi made sweaters and pullovers dropped by 2 percent to $39.31 in 2020 from $40.23 in 2019.

Nevertheless, the prices of the same Vietnamese product remained stable at $47.1 in 2019 and 46.9 in 2020.

The price of a dozen of Bangladeshi made trousers for women and girls made from cotton fibre dropped by 12 percent to $64.17 in 2020 from $72.88 in 2019 while its Vietnamese variant has seen only a 6 percent price fall, reaching $84.6 in 2020 from $90.5 in 2019.

Bangladesh’s apparel export performance was driven by both volume and value factors, according to the CPD study. Exchange rate management is emerging as a vital factor, driving export competitiveness, CPD said.

The CPD also said the export target set for fiscal 2021 to achieve 21 percent growth over fiscal 2020 will not be achieved.

It will take some time to even reach the pre-COVID export level of $40.5 billion.

Knitwear has performed better in the July-January period of FY21 (+3.8%) compared to Woven wear (-10.9%).

Jute and jute goods (+27.1 percent) and home textiles (+44.3 percent) have posted robust growth.

The global demand for manmade fibre apparel and synthetic leather products are rising at a fast pace.

There is a need to revisit the incentive regime given new export products and export market dynamics, the CPD said in its State of the Bangladesh Economy in FY20-21.

The trade balance further weakened in FY2020 with a faster fall in exports (-16.9 percent) compared to fall in imports (-8.6 percent).

However, the scenario reversed in FY2021, when over the first half of the fiscal year, imports fell at a faster pace (-6.8 percent) than exports (-1.1 percent), leading to some improvement in the trade balance.

Thanks to the continued robust flow of remittances, the balance of payments position at the end of the first six months of FY2021 in December 2020 shows significant improvement.

However, the overall scenario hides a diverse range of undercurrents and many narratives, with the level of export earnings lowering, continued slow performance in case of import payments and the backdrop of continued healthy performance of remittances, the CPD study said.

Rubana Huq, president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) recently said, “As far as the forecast of ‘positive growth’ is concerned, we would need to calculate the growth of 2021 based on the export figures of 2019 since 2020 was an abnormal time to compare export.”

She added that it is tough to forecast the future of our exports in the backdrop of the present unstable situation but things may stay challenging for us at least till the 3rd quarter of this calendar year.

“It’s not the export market and demand only which will determine the performance of export, but the worrying financial situation of the factories here is to be factored in to assess how long it would be possible for individual enterprises to withstand the prolonged shock,” Huq added.

Huq also said that the garments sector has had a consecutive downturn in export in December by 9.64 percent, which wrapped up the annual export performance for 2020 with an unprecedented fall of 16.94 percent.

In December of 2020, woven garment export posted the worst performance since June 2020, as it dropped by 18.07 percent.

Thanks to the demand for apparel for home use, the knitwear export managed to have a comparatively stable position with -0.45 percent growth in December.

While looking at the two years’ trend, it shows that growth between October 2018 and 2020 was -26.03 percent, and November 2018 and 2020 was -14.32 percent.

“The 2 years change in export for December is -8.55 percent, meaning that we exported 8.55 percent less in December this year compared to what we exported in December 2018,” Huq added.

“So, given the effect of lockdowns in Europe and the USA and their impact on retail and demand, the worst ever Christmas sales the world has seen, and most of all the effect of price decline, which is around 5 percent since September 2020, it was a dark year for the industry,” she said.

As the doubts and stresses caused by the second wave persist coupled with the relatively poor administration and unavailability of a vaccine, and the impact on the global economy it would leave, this downtrend in export will probably continue till April of this year, said Huq.

If anyone has any feedback or input regarding the published news, please contact: info@textiletoday.com.bd

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