New Dimension On Apparel Export From Banladesh

New dimension on apparel export from banladesh.

The Bangladesh textile and garment industry has been plagued by a lot of problems in the last one year. But this has not affected the sector which is blazing new trails and setting new milestones in its apparel shipments in the last fiscal year, in the midst of rising energy and raw material costs and an ever growing labor unrest in its garment factories. The fiscal year 2007-08 saw Bangladesh textile and garment sector earning US $14.11 billion in export revenues, registering a growth of 15.87 percent compared to the previous year. The largest contribution, as always, came from the readymade garment (RMG) sector. Garment exports from this small Asian country grew from $9.21 billion in the corresponding period of last year to touch a nadir of US $10.71 billion in the Bangladesh fiscal year July‘07-June’08, to post a growth of an astounding 16.18 percent. The Bangladesh garment sector has none other than the Chinese textile and garment industry to thank partly for the robust growth achieved in the last 12 months, and mainly due to the down trend witnessed by the Chinese textile juggernaut in the last few months. Chinese goods which at one time were the most price competitive in the global market, have lost their edge, because of ever increasing costs of raw materials, appreciation of the RMB and rising energy and labour costs. This in turn has helped garment exporters from other Asian countries like Bangladesh, India and Vietnam. Bangladesh is one of the few countries to have taken the maximum advantage from this situation. While exports of woven garments grew from $4.65 billion in the previous July‘06June’07 fiscal to $5.16 billion in July’07-June’08 fiscal to register a growth of 11.0 percent, shipments of knit apparels on the other hand rose by an awesome 21.48 percent to touch $5.53 billion from $4.55 billion in the corresponding periods. There is no doubt that the key driver in growth of garment exports has been the contribution of shipments of knit garments. During the fiscal under consideration, exports have consistently recorded growth in each month of the year, except for three months. Exports grew from $691.98 million in July’07 to $1143.56 million in June’08 to register a growth of a remarkable 65.41 percent. In comparison, shipments for the corresponding months of July’06 climbed from $904.89 million to just $961.24 million in June’07 to clock a growth rate of a marginal 6.30 percent. Bangladesh garment exports have no doubt been fueled by the Chinese slowdown, but other global factors have also contributed to this above average growth rates. The continuous appreciation of the Indian rupee in 2007, due to which exports of apparels and textiles from India had witnessed a slow down, in turn also helped exporters from Bangladesh to deliver such incredible results The scorching growth rates achieved in the last fiscal has emboldened the garment sector to set ambitious export targets for the next few years. It has set a target of $25 billion to be achieved by 2010. The Bangladesh garment industry has achieved an appreciable level of self sufficiency, in its raw material requirements. Due to the rapid investments made in the downstream sectors, the knitwear sub-sector obtains 80 percent raw materials from the domestic market while woven sub-sector is able to source 40 percent of its requirements. This has resulted in a massive savings in outgo of valuable foreign exchange which otherwise would have to be spent in importing of raw materials. The growth of the garment industry in the economy has no doubt filled up the space left vacant by the once effervescent jute industry. But the continuous labor unrest and labor shortages could prove to be a dampener in its goal of reaching a target of $25 billion by 2010. Infact at a recent meeting organized by the labor commissioner with members of the Bangladesh Garment Manufacturers Association to bring out a solution to the ever-growing labor unrest, it was suggested that strong motivational role of the owners, creating a sense of belonging among workers, timely intervention of management in case of agitation, would surely bring about a positive change. In the coming months the garment sector also may not have the same global competitive advantages it has enjoyed in the last few months. The Chinese government has recently raised the tax rebate availed by exporters from 11 to 13 percent. The Indian rupee has also seen a downtrend against the US dollar in the last few months and is showing signs of stability. The exporters will have do a lot more to retain the edge that helped the sector post record

figures.

Garment Exports from Bangladesh (July-June) Year Year 2006/07 2007/08 Growth % 2006/07 2007/08 Growth (US$ million)

Months

Woven Garments year 2006/07

2007/0 8

july

451.95

345.20

Aug

461.89

Sep

351.87

Oct

311.38

Nov

330.30

Dec

459.71

Jan

Feb

Mar

Apr

May

Jun Total

Growt h %

Knit Garments year 2006/07

2007/08

Growt h %

Total (Woven + Knit)

Growth %

Source: Bangladesh Garment Manufacturers Export Association