$20b annual RMG exports knocking on door
Kazi Azizul Islam
Bangladesh can earn $20 billion from the shipments of readymade garments and some textile products by the end of this year.
The Export Promotion Bureau’s data showed that in the January-December period in 2010 the export earnings from readymade garments amounted to almost $15 billion with around 25 per cent growth.
Exporters, representative of importers and economist said that a robust growth of the demand for Bangladeshi garments last year and new market opportunities clearly indicate that even more growth is possible this year.
But they said that such opportunities can be missed if smooth supply of workers and energy and congenial worker-owner relations are not ensured.
A top executive of the Dhaka sourcing office of a major European retailer said that 2011 should be better than 2010 for Bangladesh’s garment sector due to more growth in shipments, both in terms of volume and value.
‘Demand from importers is really so high now that increasing garment export earnings by hundred per cent or even more is possible for Bangladesh, but growth may be similar to last year’s growth or slightly more due to poor infrastructures,’ he said.
He suggested that improvement of productivity in existing factories, increased supply of gas and power and development of more infrastructures are crucial factors now for the industry’s growth.
The EPB’s data showed that shipments in terms of value of readymade garments, in the January-December period in 2010, totaled $14,846 million against $11,892 million last year.
The EPB said that garment exports grew by 42 per cent to $8 billion in the July-December period of the current FY 2010-11
Shipments of textiles, terry towels and other textile products earned nearly $800 million in 2010, and observers say that their earnings can rise to between $1.2 billion and $1.4 billion in 2011.
In 2009 RMG shipments showed almost no growth as the tail impact of the severe recession in the EU and US markets caused decline in the demand for garments. However, Bangladesh’s export shipments on an average in that year did not decline like that of the other major apparel exporting countries.
Shafiul Islam Mohiuddin, the acting president of the Bangladesh Garment Manufacturers and Exporters Association, said that the local factories are seeing huge demand from global importers, and the simplified EU-GSP regime, effective from January 1, is set to bring more buyers to Bangladesh.
‘The government should work desperately for arranging short training courses for unemployed youths across the country as our factories can provide jobs for them, enhance production and increase exports as much as possible,’ he said.
Due to the shortage of electricity, most of the RMG manufacturers are raising production by ensuring even costlier supply of power from diesel oil-powered captive generators, said Mohiuddin. ‘The RMG industry hopes that the power supply situation will start improving soon. The government should act now to enhance the capacity of roads and rivers and ports so that transport of imported raw materials and shipments of finished products get speedier.’
He pointed out that demand by importers in the US and EU markets has already increased as many of them have diverted a portion of what they sourced to China to Bangladesh in the last few months, while the demand from new markets like Japan, Turkey, Korea and South Africa have pushed up shipments.
Khondaker Golam Moazzem, senior research fellow at the Centre for Policy Dialogue, said that the higher growth of garment shipments in 2010 was calculated on a base of low growth in 2009, but new market opportunities indicate that this high growth will be sustained in 2011.
‘Bangladesh is being regarded as a hub of sourcing by garment importers across the world, while enhanced market opportunities in Europe have opened up more scope for export,’ he added.
Moazzem advised the government to ask its embassies in Europe to proclaim the enhanced capacity of Bangladesh in making high value garments and the benefits that importers will get due to the newly provided zero duty on Bangladeshi woven garments.