Bangladesh’s apparel export to the EU market is likely to face stiff competition with Sri Lanka’s following the latter regaining trade benefit from the important bloc. Industry-insiders said the European Union recently reinstated GSP (generalised scheme of preferences)-plus to Sri Lanka with effect from May 19, about seven years after the suspension in 2010. “The EU’s GSP plus granting to Sri Lanka has created a new competitor for locally made apparel,” Mahmud Hasan Khan, vice-president of Bangladesh Garment Manufacturers and Exporters Association (BGMEA), told the FE. Buyers consider the landing cost of their orders and Sri Lanka has direct transportation with the EU and the US, resulting in lower lead time, he said. As such, he added, the duty benefit would help Sri Lanka in increasing its exports to the European Union market. “This will have some negative impacts on local apparel exports as it will face competition with Sri Lanka,” he explained. Echoing the BGMEA leader’s views, Abdus Salam Murshedy, managing director of Envoy Group, said competition increases among the exporting countries when a competitor gets some trade advantages. Citing example of Vietnam, he said last year Vietnam’s export earnings from the US stood at nearly $11 billion while Bangladesh struggling to maintain $5.0 billion worth of export earnings from there. Vietnam’s export to that market grew over the years to the US due to its preferential trade benefit, he noted. Though Sri Lanka’s garment industry is not as big as Bangladesh’s, it has a strong mid-level management including marketing and merchandising, said Mr Murshedy, also a former BGMEA president. Md Hatem, a former leader of Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), however, opined that the EU’s GSP-plus facility to Sri Lanka would not much affect Bangladesh’s garment export as Bangladesh enjoys duty-free access under the EBA (everything but arms) scheme. Moreover, Sri Lanka produces value-added items. Khondaker Golam Moazzem, research director of Centre for Policy Dialogue, said 60 per cent of Lanka’s garment goes to the EU and would enjoy 5.0 to 10 per cent tariff advantage following the EU’s reinstatement of GSP-plus facility. Competition might be faced on account of both price and product, he said, adding not only Bangladesh but also all the exporting countries would face the same competition. Both Bangladesh and Sri Lanka produce some similar main products, he said, adding t-shirt, men and boy’s trousers, women trousers and shorts are some of them. Challenges would be stronger for the emerging products like lingerie that Bangladesh nowadays is focusing on, he said. Sri Lanka manufactures such specialized and upper-end products. More than 60 per cent of Bangladesh’s garment items are exported to the EU market. Bangladesh exported apparel worth $17.94 billion to the EU in 2016, according to BGMEA data. Sri Lanka’s apparel exports to the EU stood at $1.61 billion last year, almost same $1.63 billion in 2010, according to Eurostat data.
