The local value addition in the country’s ready-made garment sector witnessed a 3.66 percentage point increase in the second quarter (October-December) of the current fiscal year compared to the corresponding quarter of the previous fiscal year.
However, the sector’s export earnings decreased by 7.46% in the said period, as well as the cost of raw material imports by 17.93%, according to a quarterly review report by the Bangladesh Bank.
The report revealed that the import value of raw materials — raw cotton, synthetic fibre, synthetic/mixed yarn, cotton yarn, and textile fabrics and accessories for garments — was $3.37 billion in October-December of FY24 while total RMG export earnings stood at $11.77 billion.
Hence, the net export earnings in this sector stood at $8.40 billion, with 71.35% local value addition in the second quarter of FY24. In contrast, in the same period of FY23, net export earnings stood at $8.61 billion with a 67.69% local value addition.
The RMG sector has been facing numerous challenges such as the Russia-Ukraine conflict, currency depreciation, weak global demand, and global high inflationary pressure, all of which resulted in a slight edge down in exports in this quarter, the central bank said.
The primary markets for Bangladesh’s RMG exports include the US, Germany, the UK, France, Spain, Italy, the Netherlands, Canada, and Belgium.
During October-December of FY24, the RMG export earnings from these nine countries stood at $7.95 billion, which was nearly 68% of total exports.
The report warned that 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 geo-economic 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.
Several initiatives have been taken by the government and the Bangladesh Bank, particularly the pre-shipment credit, incentives for export expansion, Export Facilitation Fund, Export Development Fund (EDF), and Green Transformation Fund (GTF).
The central bank stated that inter-apparel diversification, reducing lead time and increasing efficiency, ensuring effective research and development, exploring new global markets, skilled RMG workforce and modernization of production process should be priority areas to escalate the RMG export earnings in the future.
In the last fiscal year, Bangladesh exported apparel items worth $46.99 billion.
