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RMG sector’s value addition grew despite challenges

Experts opined more investment in manufacturing more non-cotton to grab the high-end global market demand

In FY 19 (from July 2018 to June 2019), Bangladesh RMG sector has attained a healthy 11% export earnings growth, despite a downward trend of global apparel unit prices. A report published by the Bangladesh Bank (BB) showed this.

BD RMG value addition grew
Figure: According to the Bangladesh Bank (BB) data, the gross value addition in export earnings from the RMG sector stood at 64.32%.

According to the Bangladesh Bank (BB) data, in FY 19, the overall import price of RMG raw materials (raw cotton, synthetic/viscose fiber, synthetic/mixed yarn, cotton yarn, textile fabrics, and garments accessories) stood at USD 12.17 billion against US$34.133 bn export earning in last FY.

Which is 35.68% of the total export earnings from the RMG sector, said the Bangladesh Bank (BB) data. Meaning, the gross value addition in export earnings from this sector stood at 64.32%.

The central bank has emphasized several key factors for the growth, including penetrating new markets abroad, diversion of RMG production from China, increased productivity, entrepreneurs’ resilience, improvement of workers’ safety standards in factories, political stability, and easing export policy procedures.

Value addition of BD RMG

Though the apparel industry leaders are not optimistic about the overall progress.

Dr. Rubana Huq, President, BGMEA expressed, RMG products unit price is declining globally, while value addition of the sector is insignificant. Last four years, Bangladesh lost 1.62% unit value of its apparel items, based on the compound annual growth rate.

“Bearing in mind the present maturity of Bangladesh’s RMG industry, the value addition progress rate is rather sluggish, while it is ‘positive’ comparing to that of last six years.”

Dr. Khandaker Golam Moazzem, Additional Research Director,CPD

“It signifies Bangladesh’s lack of capacity in value addition, whereas the priority is to go for the high-end market,” stressed Rubana Huq.

As 74.14% of RMG products are made of cotton, according to the BGMEA data, depicting an alarming picture of the sector’s over-dependency on cotton-based fiber.

And unfortunately, there are pitiable efforts to grab and fulfill the demands for high value-added man-made fibers, the BGMEA boss expressed concern.

“Bearing in mind the present maturity of Bangladesh’s RMG industry, the value addition progress rate is rather sluggish, while it is ‘positive’ comparing to that of last six years,” said Dr. Khandaker Golam Moazzem, Additional Research Director of the Centre for Policy Dialogue (CPD).

Dr. Moazzem recommended higher investment in both backward and forward linkage industries, especially in product and design development as well as embracing technological up-gradation, to increase the value addition of the apparel sector. So that, manufacturing more non-cotton to grab the high-end global market demand.

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