Global uncertainties related to future geoeconomic landscape, weak productivity growth and a complex financial environment might cause setback to the local readymade garment exports in the coming months, according to a recent report of the central bank.
The Bangladesh Bank in its Quarterly Review report on Readymade Garments (RMG) for the first quarter of the current fiscal year (2023-24) also recommended inter-apparel diversification, reducing lead time and increasing efficiency.
The BB further suggested ensuring effective research and development, exploring new global markets, skilled RMG workforce and modernizing production process as priority tasks to increase the RMG export earnings in the future.
The BB report also showed a downtrend in the import of RMG raw materials like cotton, yarn, fabrics and accessories since the first quarter (July-September) of fiscal’23.
Bangladesh imported raw materials worth US$3.39 billion against its total RMG exports worth of US$11.61 billion during July-September period of current fiscal of 2023-24.
RMG raw materials imports in the corresponding period of July-September of fiscal 2022-23 were US$4.98 billion against US$10.27 billion RMG exports, the BB report showed.
The country imported RMG raw materials worth US$4.11 billion, US$ 3.54 billion and US$3.34 billion against exports of US$12.72 billion, US$ 12.25 billion and US$11.73 billion respectively during October-December, January-March and April-June period of fiscal 2022-23, according to the report.
Imports were US$5.13 billion and US$5.50 billion during April-June and January-March against exports of US$11.18 billion and US$11.52 billion respectively in fiscal 2021-22.
“As the global economy is facing major challenges including subdued economic activities owing to higher inflation and higher interest rates, heightened uncertainties regarding the future geoeconomic landscape, weak productivity growth and a complex financial environment, export receipts from the RMG sector may also face some challenges in the upcoming months of the current fiscal year,” reads the report.
Despite these uncertainties and challenges, the RMG industry of Bangladesh started to rebound in receiving fair share of work orders from international retailers and major global brands which is indicating a sign of recovery from Covid-19 pandemic and the Russia- Ukraine war, it noted.
When asked, Fazlul Hoque former president of Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) said “We have already been facing the challenges for a long time though official data has recently started showing the same.”
There has been a downtrend which might continue until January, he noted.
If there is no further or new issues, he said, exports might see an uptrend from February next as buyers enquiry for next season mostly autumn or winter have slightly increased compared to that of last one year.
Talking about imports of raw materials, an exporter, on condition of anonymity, said value addition in garment sector has not increased ‘significantly’ as there was no such revolution.
Less import means less exports, the exporter said adding the import data showed the real picture that contradicted the official data of Export Promotion Bureau.
About $2.0 billion to $3.0 billion gaps in first quarter exports earnings, he noted.
Responding to the issue of raw materials prices decline, he said it is true that prices of raw materials have declined but not that much.
News Sources : thefinancialexpress
