RMG exports rise from the rubble

Apparel exports to non-traditional markets have shown an encouraging trend amid the ongoing Covid-19 pandemic, as shipments rose 6.36 percent to $ 5.08 billion in fiscal 2020-21.

Apparel export revenue to nontraditional markets has risen from the wreckage of fiscal 2019-20 as the country and global supply chain suffered the severe impact of the pandemic.

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This year, apparel exports to non-traditional markets fell 15.95 percent to $ 4.78 billion due to the pandemic, according to data from the Bangladesh Garment Manufacturers and Exporters Association (BGMEA).

However, as the global apparel supply chain returned to normal, shipments to non-traditional markets were also revived.

Bangladesh regards all markets as non-traditional, with the exception of the 27 member countries of the EU, the USA and Canada.

In the past fiscal year, the share of non-traditional markets was 16.16 percent, in the 2019-20 fiscal year 17.10 percent and 2018-19 16.66 percent, according to the BGMEA data. Of all non-traditional or emerging markets, Japan has the highest share.

Japan is the only non-traditional and Asian destination to have $ 1 billion worth of apparel shipments from Bangladesh in FY 2018/19, while the total amount of goods shipped was $ 1.09 billion.

However, shipments of clothing to Japan declined to $ 961.94 million in fiscal year 2019-20 and to $ 944.82 million in fiscal year 2020-21 due to the aftermath of the pandemic.

China and India are two promising apparel export destinations in Bangladesh as shipments to the two have increased.

However, the pandemic has almost stalled export growth to these promising Asian markets.

For example, apparel exports to China fell to $ 271.28 million last fiscal year from $ 329.96 million in the previous fiscal year, the data said.

Before the pandemic, Bangladesh took advantage of a benevolent Chinese tariff advantage on 97 percent of its products as the country exported $ 506.51 million in goods in fiscal year 2018-19, the data said.

Garment shipments to India, one of the most promising markets, also did well before the pandemic.

However, last fiscal year shipments were only $ 421.86 million, up from $ 420.76 million in the previous fiscal year.

Before the pandemic, the amount was nearly $ 500 million in Indian markets where Bangladesh is duty-free but subject to a countervailing duty of 12.50 percent.

Among the Latin American countries, Brazil and Chile show promising apparel exports.

In the past fiscal year, local exporters delivered goods worth $ 70.73 million to Brazil and $ 82.56 million to Chile.

In both destinations, the amount of clothing items in fiscal 2019-20 was more than $ 103 million.

Bangladesh has shown a strong performance in Australia even in times of this pandemic.

For example, revenue from shipping garments to Australia was $ 731.13 million last fiscal year, up from $ 601.14 million in fiscal year 2019-20.

The amount was $ 719.78 million in fiscal 2018-19, according to BGMEA data.

Turkey, once a very promising export destination for garments where the amount was close to $ 1 billion, is now drying up due to the imposition of high tariffs of more than 17 percent on garments from Bangladesh intended to protect its own garment industry.

In the past fiscal year, revenue from apparel shipments to Turkey was only $ 117.15 million, the data said.

Fazlul Hoque, general manager of Plummy Fashions from Narayanganj, said local exporters were very strong in non-traditional markets in the pre-pandemic period.

However, the aftermath of the pandemic slowed growth in earnings from emerging markets, he said.

But shipments to these markets are now picking up and the trend is expected to continue, Hoque said as well.

Local exporters are busy with their own shops, factories and traditional markets and have not noticed shipments to the non-traditional markets, he said.

Japan is the most promising market for Bangladesh among the Asian markets. “I hope we can export more to Japan as the market recovers from the effects of Covid-19,” said Hoque, who also exports to Japan.

Faruque Hassan, president of BGMEA, said he plans to hold a roadshow in Dubai this December to gain a bigger share of the Middle Eastern markets.

In addition, BGMEA has sounded out the Russian and South African markets in order to gain more market share.

In Russia and South Africa, however, high tariffs are a challenge for clothing exporters from Bangladesh, he said.

In addition to a cash incentive of 1 percent for all markets, local exporters currently receive a cash incentive of 4 percent on income from clothing exports per year.

So exporters feel encouraged to export to the non-traditional markets when they get the cash incentive.

Apparel exports to non-traditional markets exceeded $ 5 billion from just $ 500 million in fiscal 2007-08.

However, apparel exports to emerging markets took a big step when the government introduced cash incentives in those markets in 2009.

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