Bangladesh’s apparel exports shipment to non-traditional markets saw sharp growth by 21.77% to $5.68 billion in the just-concluded fiscal year, thanks to government incentives.
In the FY19, readymade garment (RMG) sector has earned $34.13 billion, of which $5.68 billion came from non-traditional export markets and the rest $28.44 billion from the traditional markets.
According to Export Promotion Bureau (EPB) data, export in non-traditional markets up by 21.77%, which was $4.67 billion in the previous fiscal year. Of the total amount, woven products earned $2.79 billion, which was 22.91% higher than $2.27 billion in the corresponding period of FY2017-18. On the other hand, knitwear goods fetched $2.88 billion, up by 20.68% from $2.39 billion in the previous year.
Who are non-traditional markets?
Australia; Brazil; Chile; China; India; Japan; Korea; Mexico; Russia; South Africa; and Turkey are defined as the major non-traditional export destinations, where traditional markets include US, Canada and the European Union.
Top performers in the category
As per the data, Japan imported apparel goods of $1.09 billion, which is 28.90% higher compared to $846.74 million in the previous year.
Meanwhile, China, the second-largest importer of clothing goods imported products worth $506.51 million, up by 29.33%, which was $391.64 million in the previous year.
In addition, exports to India rose by 79.09% to $499.09 million, the highest growth in the just-concluded fiscal year.
Only export to Turkey has posted negative growth by 27% to $190 million, which was $260 million in the previous fiscal year.
Why non-traditional performed well
Government’s cash incentives against non-traditional markets played a vital role in earning more from these markets, while system up-gradation and moves to explore new markets were a catalyst for the sharp and continuous growth in export earnings.
Keilock Newage Bangladesh Ltd exports apparel products in the Australian market. “There is the demand of Bangladeshi goods in the Australian market, a new market for apparel goods, as the buyers are shifting sourcing from China,” Asif Ibrahim, Managing Director, Keilock Newage Bangladesh Ltd told Textile Today.
Government cash incentives given against apparel goods export to new export destinations have played an important role in enlarging the export earnings, said Ibrahim.
There is a huge demand for Bangladeshi clothing products in Russia and Brazil, where the population is very big in size, he said.
Apparel makers should take advantage of cash incentives as it helps to remain competitive, said Ibrahim, also a Director of Bangladesh Garment Manufacturers and Exporters Association (BGMEA).
In addition, apparel makers upgrade machinery and process to improve products quality, which is another factor for the sharp growth.
Bangladesh’s export earnings to new markets have grown due to government as well as manufacturers steps towards market diversification,” former BGMEA Senior Vice President Faruque Hassan told the Textile Today.
In the last couple of years, BGMEA in collaboration with the government has created an opportunity for the manufacturers to participate in the global expositions to reach new buyers, which has contributed a lot to exports more to new markets, said Hassan, also Managing Director of Giant Group.
“In last fiscal year, exports of apparel goods showed a sharp rise, which is due to government market diversification step and cash incentives,” Commerce Minister Tipu Munshi told the Textile Today.
Currently, apparel exporters enjoy 4% cash incentives against export to non-traditional markets, while the government offered 1% incentives for traditional markets for the current fiscal year.
Currently, apparel exporters enjoy 4% cash incentives against export to non-traditional markets, while the government offered 1% incentives for traditional markets for the current fiscal year.
We are going to visit Russia soon to explore the market opportunity, which is a part of market diversification, said the minister.
How to grow further
“Since the cash incentives for non-traditional export markers breed good result for the apparel sector, the government should continue it for gaining more,” Centre for Policy Dialogue (CPD) Research Director Khondaker Golam Moazzem told Textile Today.
However, the government should do an assessment on which market has most opportunity and importance should be given on those, he added.
In grabbing more from the pie in non-traditional markets, Bangladesh has to concentrate on products development for those markets, he added with saying “The government should move for a free trade agreement and bilateral trade relations.”
Proper product development and integrated marketing and sourcing plan will be keys to grab these markets as most of the time our manufacturers work for quantity-based orders that is not good for the industry all the time.
Mohammad Hatem, Managing Director of MB Knit Fashion, alleged that efforts were taken to explore the potential Brazil market a few years back. But unfortunately, there was no such follow-up of networking further. His company exports goods worth about $1.3 million to Brazil annually.
The main obstacle is the high duty of nearly 40 percent while in some cases it goes up to 60 percent including VAT, said Hatem expressing the hope that exports will further increase in the market as his company is getting an increased number of queries from Brazilian buyers in recent months.
Bangladeshi manufacturers need to invest in branding and promotion as well. As a whole quick response system, capability of frequent style changes, cutting room automation, use of software for designing and ERP will increase the competitiveness of enterprises here to grab these potential markets.
