Exporters ride past global downturn

http://www.thedailystar.net/newDesign/news-details.php?nid=215835

Ready Made Garments
Exporters ride past global downturn

Workers are pictured at a garment factory in Gazipur. Apparel buyers look to Bangladesh as a future sourcing hotspot as orders are moving out of China. Photo: Amran Hossain

Refayet Ullah Mirdha

Bangladesh exports survived the global financial crisis in 2008, helped by basic garment products. In the following years, the country’s ready-made garment exports weathered out fallout from the global recession and grew nearly 42 percent in fiscal 2010-11.

The growth rate was highly appreciated at a time when the world was in economic pain; Bangladesh was one of the few countries that witnessed exports in the positive territory.

At the same time, the country turned into the world’s second largest apparel supplier, after China. Garment exports stood at $17.91 billion in fiscal 2010-11, taking up more than 78 percent of overall exports.

Of total apparel exports, knitwear accounted for $9.49 billion, while woven was $8.43 billion in fiscal 2010-11.

In the first five months (July-November) of the current fiscal year, Bangladesh exported knitwear goods worth $4.0 billion and woven garments worth $3.57 billion.

However, exporters are predicting a double-dip recession for the debt crisis in the EU, which might hurt the growth of exports to the Eurozone, the largest garment export destination for Bangladesh.

Exporters aim to achieve apparel exports above targets, beating the debt crisis, riding on exports to new destinations — Japan, South Africa, Russia, Brazil, Chile, Mexico, New Zealand, Australia and India.

Moreover, product diversification and arrival of high-end customers like Adidas, Hugo Boss, Tommy Hilfiger, s.Oliver, Olymp and Next will play a positive role in helping exports grow above the target for 2012.

Having enjoyed a significant rise in exports in fiscal 2010-11, the commerce ministry set the target higher at $20.36 billion — knitwear garments at $10.80 billion and woven products at $9.56 billion.

Garment makers said export growth depends on the adequate supply of gas and power, a pool of skilled manpower for mid-level management and efficiency in port management and good infrastructure.

Exporters also often complain about the frequent hikes in petroleum prices, higher transportation costs, traffic congestion, workers’ unrest, soaring inflation, and internally, the list is seemingly unlimited.

Along with the internal factors, some external factors that may affect garment exports are the European debt crisis, proposed duty-waiver facility for 75 Pakistani products to the EU, higher prices of raw materials like cotton and yarn, and different tariff, para-tariff and non-tariff barriers to new export markets like India and Russia.

The year 2012 will be a determining period to grab the exporter orders shifting from China, the largest exporter of apparels globally, as countries like Bangladesh, Vietnam, Indonesia and Cambodia are likely to be benefited.

China is losing its market to competitors for higher costs of production and a shortage of workers in the sector.

Bangladeshi garment exporters are eyeing to be the number one supplier in the coming years, although the country does not have basic raw materials and machinery backup.

In the beginning of the year, EU-relaxed the Rules of Origin (RoO) under the Generalised System of Preferences (GSP) from January 1 — it became a boon for garments and a bane for the primary textiles sector.

Similarly, Japan, Norway and Switzerland also relaxed the RoO for the least developed countries (LDCs) in the beginning of the current calendar year.

In February-April, cotton and yarn prices went up to record levels at $2.35 a pound and yarn at $7.0 a kilogram.

In the middle of this year, Bangladesh bagged a duty-free entry for garment products to India. The opened a window of opportunity for local apparel makers.

In October, the US again granted a GSP facility to its market for some selected products, like sleeping bags, at the end of September.

Both the primary textiles sector and RMG sectors witnessed a sluggish investment trend in 2011, mainly for the inadequate supply of gas and power. Many industrial units cannot go into operations for the lack of gas and power connections.

The government announced an additional five percent cash incentive for the spinners who incurred losses importing high-priced cotton from the world market.

KM Rezaul Hasanat, chairman and managing director of Viyellatex Group, said at the end of the current fiscal year, garment export growth might cross 15 percent, slightly above target.

But growth will speed up from January, as orders from China are shifting to Bangladesh. “The year 2012 will be the determining year to double garment exports within the next few years,” he said.

Anwar-ul-Alam Chowdhury Parvez, former president of Bangladesh Garment Exporters Association, said five to six percent growth might take place at the end of the year for a volatile global economic situation. But he is hopeful about a rise in apparel exports from May-June.

“I do not expect a higher growth rate in 2012. A moderate growth rate hovering around 16 to 18 percent is possible, as the EU debt crisis is yet to be overcome,” Zaid Bakht, research director of Bangladesh Institute of Development Studies (BIDS).

reefat@thedailystar.net

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