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H&M says it will ‘phase out’ sourcing from Myanmar

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RMG Bangladesh
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The world’s second-biggest fashion retailer H&M has decided to gradually stop sourcing from Myanmar, it told news agency Reuters on Thursday, as reports of labour abuses in garment factories in the country increase.

H&M became the latest brand to cut ties with suppliers in the country after Zara owner Inditex, Primark, Marks & Spencer and others.

“After careful consideration we have now taken the decision to gradually phase out our operations in Myanmar,” H&M said in an email to Reuters.

“We have been monitoring the latest developments in Myanmar very closely and we see increased challenges to conduct our operations according to our standards and requirements.”

Home textile: a new pathway to $100 billion export target

POST BY
RMG Bangladesh
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The fabric enterprise in Bangladesh has been under pressure in the back of its financial growth, and inside this area, domestic textiles have emerged as a promising niche. With its professional workforce, aggressive pricing, and robust production base, Bangladesh can come to be a first-rate international participant in the domestic fabric market.

Bangladesh started its journey as a home textile manufacturer in the 1980s and managed to get $150 million in its early journey (FY 2004-05) as an exporter. In recent years the market has reached a new peak with $1 billion and has emerged as a new pathway to achieve $100 billion export target set by the government.  

Figure 1: Home textiles encompass an extensive variety of products, inclusive of bedding, towels, curtains, rugs, and fabric fabrics, which might be critical in the worldwide indoor decor market.

Home textile’s market share

In recent years, Bangladesh’s domestic fabric enterprise has skilled speedy growth, pushed with the aid of growing worldwide calls for first-rate and less costly fabric products. Home textiles encompass an extensive variety of products, inclusive of bedding, towels, curtains, rugs, and fabric fabrics, which might be critical in the worldwide indoor decor market.

The market shares are changing and the prediction says the market will be of $133.6 billion approximately. The region that would hold the most share is Asia. Here is a chart of the global share of the home textile market in 2019 and 2025 (Expected).

At present time, in the market of home textiles, Bangladesh has competitors like China, Pakistan, and India. After the Corona pandemic struck, the RMG sector was looking for a value-added product to boost export and raise income. Home textiles sure gave way to that thought. It also was expanded because China and India lost market demand in the home textile sector.

Figure 2: Market share of home textile worldwide.

Home textile as a new pathway

Bangladesh has been struggling with the export rate in this sector because it is assumed that the 40-60% market price was uncontrollable because of the raw material import. As Bangladesh has to import 98 percent raw cotton to fulfill its demand.

In recent year’s Corona Pandemic, the unstable situation in the Russia – Ukraine war have impacted the whole export sector. The inadequacy of gas and electricity is also creating some unavoidable harm to the whole textile and apparel sector.         

There is some aspect why the home textile could be a way to fulfill $100 billion export. Firstly, Bangladesh has been producing man-made textile fibers which is a good raw material for home textiles that includes bed linen, towel linen, and others. This can overcome the inadequacy of raw materials both in terms of cost and quality.      

Secondly, home cloth has huge potential in Bangladesh. However, if cumulative artwork is accomplished in this area and research fields are created, there is no question that this sector will bring manifold growth. Textile factories are working to offer the right high-exceptional products through sustainable practices, which might be desired through a manner of approach to overseas buyers. 

Bangladesh’s home textile market is expected to CAGR of 7% from 2023 to 2028. At present this sector is expanding with the raising consumer and rising real estate business. The export is also growing but the statistics show that the home textile export isn’t being able to meet the expected target rather its export is lagging. We have seen from the report of Fiscal Year 2022-23 (July – June) that the percentage fall and the difference is 32.47%. The targeted export was 1980 million USD whereas the actual export performance was 1095.29 million USD.

Figure 3: Export performance of Bangladesh.

If we see the export reports, we would see the sudden fall very clearly. The report is shown below.   

The sudden fall has indicated ongoing problems regarding the inefficiency of raw materials in the production process. The inadequacy of electricity and gas also impacted the market. The local business holders and the government have taken steps to pull this sector up and let it be our country’s second-largest export income earner.  

The Bangladesh authorities acknowledge the ability of the house fabric zone and have applied numerous projects to help its increase. These consist of coverage reforms, infrastructure development, and economic incentives for fabric producers and exporters. The authorities’ dedication to enhancing the benefit of doing enterprise and fostering good funding weather similarly strengthens the zone’s increased prospects.    

Challenges and way forward

Despite its mammoth potential, home textiles in Bangladesh facing several challenges that should be addressed for sustained growth:  

  1. Infrastructure development: Continued funding in infrastructure, inclusive of dependable electricity supply, green transportation networks, and stepped-forward logistics, is critical to fulfill developing export needs and compete efficiently on the worldwide
  2. Technology and innovation: Encouraging the adoption of superior technologies, including automation, virtual printing, and layout software, will beautify productivity, product quality, and layout capabilities, allowing Bangladesh to provide a much wider variety of modern domestic fabric products.
  3. Market Diversification: While Bangladesh already has a significant presence in traditional export markets, diversifying into emerging markets, such as South America, Africa, and the Middle East, can provide new growth opportunities and reduce dependency on a few key markets.

The home textile area holds remarkable capability for Bangladesh’s export increase and monetary development. With its value competitiveness, professional workforce, and favorable authorities support, Bangladesh is well-located to grow its marketplace percentage in the worldwide home textile industry. By addressing challenges, embracing innovation, and pursuing marketplace diversification, Bangladesh can paintings toward accomplishing its formidable aim of reaching USD hundred billion in domestic fabric exports.

Bangladesh RMG sector committed to sustaining safety accomplishments: BGMEA president

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RMG Bangladesh
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The readymade garment industry of Bangladesh is committed to carrying forward its accomplishments in ensuring workplace safety and remains a preferred hub of apparel sourcing in the world, said Faruque Hassan, president of Bangladesh Garment Manufacturers and Exporters Association (BGMEA). 

“The massive transformation over the last decade has resulted in a culture of safety in the RMG sector where entrepreneurs and workers are more aware of workplace safety than ever before. The industry views workplace safety as an integral part of the business,” he said while addressing a programme organised by the RMG Sustainability Council (RSC) to welcome 19 independent factories who have been newly enlisted in the RSC. 

Miran Ali, Vice President, BGMEA; Mohammad Hatem, Executive President, BKMEA; Nafis-Ud-Doula; Director, RSC; Abdul Haque, Managing Director, RSC; George B Faller, Chief Safety Officer, RSC; Amirul Haque Amin, President, IBC; Z.M. Kamrul Anam, President, Bangladesh Textile and Garments Workers League; China Rahman; Secretary General of the Federation of Garments Workers; and Babul Akhter, Secretary General, Bangladesh Garments Industrial Workers Federation were also present at the programme held in Dhaka on 13 August. 

In his address Faruque Hassan thanked the RSC for enlisting new garment factories without brand nomination, saying it would pave the way for more independent garment factories to join RSC. 

Previously, the factories could only be enlisted in RSC if they have the nomination from brands.  

But now any export-oriented garment factory who are the members of BGMEA and BKMEA can also be enlisted under RSC with the nomination of BGMEA. 

The RMG Sustainability Council is an unprecedented private national tripartite initiative to continue the workplace safety momentum in Bangladesh.

RMG value addition rises faster to 65.97pc

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RMG Bangladesh
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Value addition to exportable garments increases faster to 65.97 per cent in the last fiscal, the highest in a decade, as expanding local backward-linkage industry spurs the growth.

The main export sector of Bangladesh, ready-made garment (RMG), used to depend on raw materials, particularly fabrics, imported under back-to-back LC and thus much of the export value would go out to the sourcing destinations.

Value addition to the export item remained almost static between 60.51 per cent and 64.32 per cent since fiscal year (FY) 2012-13 till FY2018-19, according to the Bangladesh Bank data.

Data analyses show that the rate fell to 56.49 per cent in FY20, and went up to 59.13 per cent in FY21 while again climbed down to 54.38 per cent in FY22.

But in the just-past FY 2022-23, Bangladesh’s apparel exports fetched US$46.99 billion, while import of raw materials cost $15.98 billion. Thus, the country’s net RMG-export earnings amounted to $31.0 billion in the last fiscal-accounting for 65.97-percent value addition.

The value addition was even higher than the pre-pandemic 64.32 per cent in FY 19, the data show.

The central bank considered the main head value of the components–raw cotton, synthetic/viscose fibre, synthetic/mixed yarn, cotton yarn, textile fabrics, and accessories for garments–instead of only the raw materials brought through back-to-back LCs, according to its latest quarterly report.

Industry-insiders said Bangladesh had largely relied on imported raw materials, such as cotton, fabric, petro-chemicals and chemicals, despite being the second-largest exporter of RMG. But the country has now developed strong backward-linkage industries, especially to knit and denim subsectors.

The value addition in the case of knitwear subsector is higher than in the woven segment, as the former sources 80 per cent of its required raw materials from local market, while woven fabrics demand is largely met by import, they noted.

Asked about the development, Bangladesh Garment Manufacturers and Exporters Association (BGMEA) Vice-President Md Shahidullah Azim said prices of raw materials had significantly gone up during the last couple of years – mainly because of the pandemic that had upended normal order of life.

“Though we got huge work orders, prices of finished products did not increase in line with the high prices of raw materials. The skyrocketing raw- material prices had eaten up our value addition in fiscal 21 and fiscal 22,” he said.

Prices of raw materials and freight costs are gradually decreasing compared to Covid period, and exporters are also sourcing raw materials locally due to dollar crisis.

Bangladesh is also producing diversified value-added garment items, he noted.

“Also we are now focusing more on developing local backward-linkage industries to address the post-graduation challenges,” the industry leader says about the dos in the cusp of transition.

Talking to the FE, Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) Vice-President Fazlee Shamim Ehsan also echoed the BGMEA leader’s views.

He, however, said they are now producing many high-value items which previously Bangladesh did not manufacture, and because of producing these items, value addition to RMG is increasing.

“Value addition to knit items is higher compared to that of woven,” he said, explaining that it is because they mostly manufacture products after total processing (yarn manufacturing, knitting and dyeing) in the country.

Export earnings from knitwear also increased on the back of high demand compared to that of woven garments accounting for 46.33 per cent of total RMG shipments worth $46.99 billion, he said.

On the other hand, buyers have their own nominations – mostly for fabrics sourcing, from third countries – in case of woven garments, he noted.

He, however, said value addition to denim, a subsector of woven items, also rose significantly due to development of its backward linkages, like fabrics making and washing.

Bangladesh became largest denim exporter to the US and the EU in 2022, he said, attributing the achievement to high value addition.

According to industry-insiders, the woven subsector of the country’s export industry is likely to face strict rules-of-origin (RoO) requirements in its major destinations, including the European Union (EU), after Bangladesh’s LDC graduation.

Local clothing producers will need to comply with double-transformation requirements, irrespective of their access to GSP or GSP-plus schemes.

Bangladesh needs to invest a huge amount to develop a backward- linkage industry for woven segment – not only to add more value but also to face the post-graduation challenges and ensure competitiveness, they noted.

Both the BGMEA and BKMEA leaders requested the government for providing required policy supports, including cash incentives for non-cotton or man-made fibre (MMF) production as well as soft loan to attract investment in this regard.

According to Bangladesh Textile Mills Association (BTMA), local textile millers meet 75-80 per cent of knitters’ demand for fabrics, while the percentage is only 35-40 for woven fabrics.

Bangladesh imported 571,640 tonnes of woven fabrics in 2022, up from 552,859 tonnes in 2021, according to the BTMA data.

Bangladesh Garment Accessories and Packaging Manufacturers and Exporters Association (BGAPMEA) sources say some 1,800 factories registered with the association meet more than 95 per cent of the RMG sector’s requirements for accessories.

munni_fe@yahoo.com

RMG exports: Bangladesh earned $3.95 billion in July, says BGMEA

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RMG Bangladesh
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The total RMG export during July in FY 2023-24 stood at $3.95 billion, up from $3.37 billion dollars in the same period in FY 2022-23, indicating 17.43% year-on-year growth.

RMG export earnings from woven garments in July FY 2023-24 grew by 11.54% and reached  $1.68 billion from $1.51 billion in July FY 2022-23. At the same time, knitwear export grew by 22.24% year-on-year and reached $2.27 billion during the mentioned period, BGMEA President Faruque Hassan wrote in a letter on Sunday.

“The growth is certainly impressive, though the global economic scenario is portraying a contrasting outlook. Though inflation has started to ease off in our major export markets and the economic indicators started stabilising, yet import of apparel by USA and EU is showing a major downtrend. Therefore, it’s quite challenging to forecast the market and I personally think that we need to follow a cautiously optimistic approach for the rest of 2023, as apparel and overall global trade may see some dip compared to last year,” the letter reads.

Garment workers’ federation demands justice for 3 slain RMG workers

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RMG Bangladesh
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In a strong call for justice, the National Garment Workers Federation (NGWF) President  Amirul Haque Amir has called for the urgent need to address the tragic killings of three garment workers.

“We would not tolerate the killing of any garment workers,” he stated on Monday (14 August) while addressing a procession that demanded justice for the three recently deceased workers.

Drawing attention to the growing number of suppression faced by the garment workers in the country, he said, “When we were demanding punishment for Shahidul’s killers, we got to know about another worker, Robiul Islam, being killed in Ashulia.”

“Recently, another worker was killed life at his workplace due to factory owners’ greed to produce more,” he added.

Amirul Haque, in his address, strongly noted that ready-made garment workers have a significant contribution to the development of the country.

During the event organised by NGWF today, concerns were voiced over the series of unfortunate incidents that unfolded recently and urgent action for improved safety measures and labour practices was demanded. 

Speakers at the event claimed that the killers are threatening victims’ families due to the negligence of law enforcement agencies.

They also warned that the federation will escalate their protests to nationwide demonstrations if the government fails to ensure justice and punish the perpetrators.

Further elucidating on the incidents, NGWF president detailed that the killings in Gazipur and Ashulia were reportedly orchestrated by agents of the factory owners, while the tragic incident in Adabar was attributed to owner negligence and an unchecked pursuit of profit.

In line with international labour standards, the workers’ federation leader demanded compensation for the victims’ families from not only the factory owners but also the brand buyers and the government. The call for accountability encompasses all stakeholders involved in the garment industry.

Textech Bangladesh International Expo to be held in September

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RMG Bangladesh
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These 3 comprehensive International Exhibitions will be held at the new Bangabandhu Bangladesh-China Friendship Exhibition Center (BBCFEC), in Purbachal, near Kanchan bridge, Dhaka – Bangladesh

The entire Textile & Garment Industry of Bangladesh will once again converge for the 22nd Textech Bangladesh 2023 International Expo on Textile, Garment Technology and Machinery, 20th Dhaka International Yarn & Fabric Show 2023 featuring International Yarn, Fabric, Trims and Accessories Manufacturers, and 42nd Dye+Chem Bangladesh 2023 International Expo showcasing Dyestuff and Fine & Specialty Chemicals from 13  to 16 September 2023, reads a press release.

According to the press release, these 3 comprehensive International Exhibitions will be held at the new Bangabandhu Bangladesh-China Friendship Exhibition Center (BBCFEC), in Purbachal, near Kanchan bridge, Dhaka – Bangladesh.

CEMS-Global USA, based in New York, is a professional Multinational Exhibition & Convention Organizer, having its operations across 4 continents. Established in 1992, CEMS-Global, in this span of more than 3 decades has been committed to organizing Professional B2B Trade Shows for important Business sectors of the trade and economy.

In this span of over 3 decades, CEMS-Global has partnered with several Business Associations, Chamber of Commerce’s, Export Promotion Councils, International Trade Promotion organizations, and Governments. Our successful 40 Trade shows per annum in highly potential and developing countries of the world across 4 continents have benefited hundreds of thousands of Manufacturers, Several Industry sectors and boosted International Trade & Development in many countries.

CEMS-Global USA’s International `TEXTECH series of Exhibition’ has reached its accession in popularity in South & South-East Asia & North Africa having organized extremely successful editions in Bangladesh, Morocco & Sri Lanka.

‘TEXTECH Bangladesh’ has been serving the Textile & Apparel Sector of Bangladesh for the last 21 years now and apart from being the Oldest & Biggest Textile Garment Technology & Machinery Expo of Bangladesh, it is the ONLY International branded series of Exhibition of its kind being held in Bangladesh, Morocco & Sri Lanka annually, soon to be launched in Brazil.

After the successful 21st edition of Textech International Exhibition held in 2022, CEMS-Global is set to hold its 22nd annual edition in Bangladesh as ’22nd Textech Bangladesh 2023 International Expo’.

`Textech’ will once again be a great B2B platform and a unique B2B networking opportunity for Textile Garment Machinery manufacturers of Bangladesh to interact face to face with Textile & Apparel manufacturers in the biggest B2B platform Bangladesh can offer.

Bangladesh exports Apparels worth over US$ 42 Billion to nearly 120 countries. The Textile & Apparel Industry of Bangladesh is still undertaking a massive machinery up-gradation and importing the latest machinery with technological advancements; to ensure product quality, and the ability to produce & export value-added goods. For the past 21 years, ‘Textech’ has been providing a perfect one-of-a-kind one-stop solution to the visitors and a platform for the exhibitors to interact directly with the buyers/importers for a perfect buyer-seller meet and a strong under-one-roof marketplace for the ever-growing Textile & Garment industry of Bangladesh.

CEMS-Global USA’s International `Yarn & Fabric series of Exhibitions are organized in Bangladesh, Brazil, Morocco, and Sri Lanka. The 20th Dhaka International Yarn & Fabric Show 2023 – Summer Edition is a Comprehensive International Exhibition featuring Worldwide Yarn, Fabric Trims & Accessories Manufacturers, focusing on the entire Textile & Apparel Industry of Bangladesh. The Dhaka Yarn & Fabric Show is the Oldest and Biggest International Exhibition of Bangladesh serving the Textile & Apparel Industry of Bangladesh for the past 20 years. Bangladesh is one of the countries in South Asia leading the race for shaping up for the Textile & Apparel exports to the US & EU.

In the fiscal year 2021-2022, Bangladesh exported garments worth US $42.613 billion, making it the second-largest apparel exporter in the world.

Furthermore, CEMS-Global USA’s International `Dye+Chem Series of Exhibitions’ is now only leading series of its kind. The 42nd Dye+Chem Bangladesh 2023 International Expo is the oldest International Exhibition of Bangladesh serving the Textile & Apparel Industry of Bangladesh for the past 22 years.

42nd Dye+Chem Bangladesh 2023 will once again be the most prestigious and exclusive International Exhibition devoted to focus on all kinds of Dyestuff and Fine & Specialty Chemicals for the Bangladesh Industry and will be a one-stop single platform to showcase from home and abroad the latest developments and emerging technology for the Process Industry.

These 3 Comprehensive International Exhibitions focused on the entire Textile & Garment Industry of Bangladesh will be a unique and one-of-a-kind B2B Networking platform of Buyers-Sellers and enable them forge profitable deals. With the industry now seeing firm competition, these 3 Expos bring a perfect one-stop opportunity for expansion and investments occurring in Bangladesh in the Textile & Garment sector.

The export-oriented RMG sector in Bangladesh started as a small non-traditional export sector in the late 1970s. Now Bangladesh is one of the countries in South Asia leading the race for shaping up for the Textile & Apparel exports to the US & EU. Within three decades, RMG has transformed itself into the country’s highest revenue-generating sector, contributing most of Bangladesh’s total exports, making Bangladesh the second largest garment exporter in the world. Bangladesh imports textile and garment machinery worth more than $4 billion in Bangladesh, and growing by 20 per cent annually because of increasing capacities and upgrading of Machinery. As country’s textile & garment industry continues expansion, the demand for advanced machinery and technology is on the rise, several major sectors are ready to upgrade their machinery and equipment for driving all relative industries to the next leading level. Textile and apparel machinery manufacturers and sellers recognize Bangladesh as a lucrative business destination because of the country’s stronghold in the global readymade garment trade.

The Bangladesh Garment Manufacturers Exporters Association (BGMEA) revealed it is eyeing a 10% share of the global apparel market by 2025 and is aiming for an export target of US$100bn by 2030.

The Buyers or visitors consisting of Senior management of the Textile & Garment factories will be able to meet face-to-face and interact with over 1675 Worldwide Manufacturers across 2245 Booths & Pavilions from 37 countries featuring Textile & Garment Machinery Manufacturers; Yarn, Fabric, Trims and Accessories Manufacturers; and Dyestuff and Fine & Special Chemical Manufacturers under one roof.

These 3 comprehensive exhibitions will give a great opportunity to the visitors to explore and compare Manufacturers under one roof and clinch profitable deals, further assisting Bangladesh Textile & garment Manufacturers to enhance their competitive edge and increasing their exports.

Bangladesh outraces rivals in apparel export growth in US

POST BY
RMG Bangladesh
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Bangladesh’s apparel exporters displayed the sharpest growth in the US in 2022, leaving behind their competitors in the countries such as China and Vietnam, owing mainly to the lingering tariff war between Washington and Beijing and capacity building.  

Last year, apparel imports into the world’s largest economy jumped 22.48 percent year-on-year to $99.93 billion, according to data from the Office of Textiles and Apparel (Otexa) of the US Department of Commerce. It was $81.58 billion in 2021.

The country’s clothing imports from Bangladesh surged 36.38 percent to $9.74 billion in 2022, up from $7.16 billion in 2021 and $5.40 billion in 2018.

With this, Bangladesh retained its place as the third-largest apparel supplier for the US with a 9.75 percent share, an improvement from 8.76 percent in 2021.

Faruque Hassan, president of the Bangladesh Garment Manufacturers and Exporters Association, which represents readymade garment suppliers in the country, thinks there is a huge opportunity for Bangladesh to elevate its share in the global apparel market.

Bangladesh is already the largest denim exporter to the US.

“There are a number of product categories where we have the potential to deepen our penetration,” Hassan said, adding that there are still a number of US brands that are yet to source from Bangladesh or are sourcing on a limited scale.

“Although we are exploring ways to diversify our markets, I think we still have a lot of scope for specialisation in the existing markets.”

Volume-wise, Bangladesh’s shipment was the second-highest among all major suppliers. Only Indonesia was ahead of the country as it displayed a 24.89 per cent year-on-year growth in 2022.

The US’s garment import from Bangladesh registered a 20.65 percent year-on-year growth last year, reaching 3.14 billion square metres equivalent (SME), a means of measuring quantities of fabric and garments that are exported or imported. It was 2.60 billion SME in 2021.

China, the top apparel import source for the US with a 21.75 percent market share, posted a 10.83 percent growth to $21.73 billion in 2022. It was $19.60 billion in 2021 and $27.37 billion in 2018, Otexa data showed.

In terms of quantity, the US’s imports from China contracted 3.11 percent.

Vietnam remained in the second position in apparel shipment to the US as the Southeast Asian nation fetched $18.24 billion in 2022, which was $12.21 billion in 2018 and $14.37 billion in 2021.

The share of Vietnam in America’s total apparel imports increased to 18.26 percent in 2022 from 14.74 percent in 2018.

India and Indonesia registered more than 35 percent export growth last year compared to a year prior. Their share increased to 5.69 percent and 5.61 percent in 2022 from 4.59 percent and 5.40 percent in 2018, respectively.

Cambodia’s apparel export jumped 28.46 percent, South Korea’s shipment climbed 25.08 percent, Pakistan’s receipts rose 24 percent, Honduras’s earnings were up 19.85 percent, and Mexico’s takings grew 11.50 percent. Their share rose in the US apparel market as well.

Bangladesh’s export to the US, the single largest export market for the country, has risen every year as China has been losing its dominance in the global apparel market because of the trade war that began in 2018.

China’s share in the global apparel business was 18.2 percent in 2000, 26.6 percent in 2005, and 36.6 percent in 2010. But it declined to 31.7 percent in 2022.

Building up of the capacity and brightening of the image of the largest foreign currency earner following remediation in line with global standards have also helped Bangladesh raise its exports to the US.

Globally, Bangladesh’s reputation as a predictable supplier received a major boost during the peak of the coronavirus pandemic as the country kept factories open for most of the time whereas many competitors had kept their industries closed for a longer period.

Bangladesh has already waived the mandatory fumigation requirement for importing cotton from the US, a move that will cut the time and cost needed to bring in the key textile raw materials for importers.

“We are now approaching the US government to consider duty-free market access for the garment items made using cotton from the country. This will benefit US cotton growers and apparel brands and consumers while Bangladesh will have an extra edge,” Hassan said.

The BGMEA is also working with the American Apparel and Footwear Association to unlock the potential of Bangladesh’s RMG sector by enhancing competitiveness and facilitating trade access to the US market.

News Souch

BTMA seeks VAT cut on textile wastage

POST BY
RMG Bangladesh
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Leaders of the country’s primary textile millers have demanded withdrawal of two-stage value-added tax (VAT) on the purchase of textile wastage from local sources and recycled cotton yarn from the wastage.

Bangladesh Textile Mills Association (BTMA) in a letter last week also urged the National Board of Revenue (NBR) to introduce a new Harmonized System (HS) Code for recycled cotton fibre to avert complexities over VAT and supplementary duty on the products.

BTMA President Mohammad Ali Khokon wrote the letter to NBR Chairman Abu Hena Md Rahmatul Muneem on August 6, further requesting to take effective measures to stop export of all kinds of garment wastage, known as jhut, and textile wastage.

According to the BTMA, currently recycling industries need to pay 7.5 per cent VAT while purchasing textile wastage from the local vendors and 15 per cent VAT is applicable for selling recycled fibre or cotton produced from that wastage to spinning mills.

“As a result, spinning mills are not encouraged to use the recycled fibre as they can import virgin cotton duty free,” Mr Khokon said in the letter.

According to industry insiders, the readymade garment industry produces around 0.4-0.5 million tonnes of waste annually and only 5.0 per cent is recycled locally.

Citing the example of RBD Fiber Ltd, a recycling unit, Mr Khokon said the factory has already invested US$ 50 million and an additional investment of $50 million is in the pipeline as global demand for such recycled products is increasing.

Virgin cotton imports could be reduced by 30 per cent that could help retain US$1.0 billion annually if the wastage that is generated by export-oriented textile and garment factories could be recycled fully, he noted.

Besides, Bangladesh will face post-graduation challenges as high tariffs would be applicable in exporting garments to the European Union while garments produced from recycled fibre would enjoy a 30 per cent duty rebate which would make local garments cost-competitive, he added.

“This (duty rebate) would work as an impetus, besides cash support.”

The BTMA leader lamented that during the pre-budget discussion, BTMA requested the NBR to exempt recycled industry in the textile sector from all types of duties while Bangladesh Investment Development Authority (BIDA) in a separate letter on February 26 last had forwarded the issue before the NBR for its consideration.

“It is very unfortunate that despite assurances, there is no reflection of our demand in the national budget,” the BTMA president said.

Munni_fe@yahoo.com

Net RMG export ratio at all-time high of 71.5%

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RMG Bangladesh
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Bangladesh’s readymade garment (RMG) net exports increased significantly in the April-June quarter, contributing positively to the country’s trade balance, according to Bangladesh Bank data.

Net exports – total exports minus raw material imports – surged to an all-time high of 71.5%, reaching $8.4 billion in that quarter, meaning that apparel makers added more local value to their export products. As a result, the country’s trade deficit narrowed by 48% in FY23 compared to a year ago.

Syed Nazrul Islam, first vice president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), told The Business Standard that due to the increasing dollar stress, garment exporters are now opening letters of credit (LCs) in the taka and collecting some raw materials from the local market.

“For instance, we buy denim fabrics locally. The sellers may import yarn or dyeing chemicals from outside the country to make these fabrics. They added significant value. Due to this, our raw material import costs decreased slightly,” he added.

According to central bank data, the total export in the RMG sector in the final quarter of FY23 was $11.74 billion. Out of this amount, $3.35 billion was spent on the import of raw materials for these products, accounting for 28.5% of total earnings. That is, net exports or domestic garments added a value of $8.4 billion. This is about 39% higher than the same quarter of the previous fiscal year.

Ahsan H Mansur, executive director at the Policy Research Institute, told TBS, “Raw material import costs might have declined due to a drop in their international market prices. However, many RMG exporters bought raw materials at high prices and maintained their stock. In such cases, their value addition might be lower.”

“If the central bank data is accurate, the increasing value addition ratio is a good sign for our economy,” he added.

The expenditure on raw material imports during the April-June quarter was at its lowest in the past two and a half years. Imports were lower by $2.85 billion in the October-December quarter of FY21.

A leader of the exporters’ organisation told TBS that there is a link between raw material import and export.

“If the export increases, a country like us must increase the import of raw materials. However, even though the import has decreased continuously for the last one and a half years, the export has not decreased in that way. As a result, net export or value addition increased in the same trend,” he added.

“The net export ratio shown in the last quarter is the highest ever. Besides, the percentage of value addition seen in the last three quarters has never been so high before,” said the businessman, expressing his reservations about export growth reported by various government agencies while apparel exporters are facing declines in orders. 

MA Rahim Feroz, director of BGMEA and managing director of Dulal Brothers Ltd, said, “I think the information given by the central bank about raw material imports needs to be looked into more.”

Mentioning that export orders in knitwear garments were very low in the last two to three months, he said export orders in woven garments have come in quite well in the last few months.

“We expect the orders to start increasing again from next September through October. Accordingly, exports will perform very well in the January-March quarter of next year,” he added.

According to the central bank report, in FY23, the RMG sector made a significant contribution of 10.35% to the country’s GDP. The sector has shown signs of recovery after the pandemic. However, challenges like the ongoing Russian-Ukraine war and its resultant impact on supply chain disruptions, the global inflation hike, and monetary policy tightening by the Fed may badly impact the progress of this sector.

To overcome these challenges and boost export earnings growth, the focus should be given on inter-apparel diversification, increasing productivity and efficiency, product innovation, exploring new global markets, and the skill development of RMG workers, it added.

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RMG BANGLADESH
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Ready Made Garments sector is the key source of foreign currency and GDP for Bangladesh. Approximately 4.2 million people are dependent on the RMG sector for their bread and butter.
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