Statistics institute Istat showed, that in March of this year, Italy’s seasonally-adjusted retail trade index showed stability in month-over-month (MoM) value terms, maintaining equality, although volume dropped by 0.1%.
Figure: Italy’s retail trade volume remains stable by 0.1% in March’24.
This year’s first quarter (Q1) saw a decline in sales value while volume decreased by 0.4% every quarter (QoQ).
March had a 2% gain in the value of retail trade, continuing the upward trajectory in the year-over-year (YoY) series and maintaining the upward trend that began in March 2021.
Accordingly, sales volume demonstrated consecutive growth for the second month, expanding by 0.3%, the Istat said.
While small-scale distribution dropped by 1.5% year over year and non-store retail sales fell by 2.6% year over year in March of this year, large-scale distribution saw growth of 6.1% YoY.
Notably, in March of this year, internet sales showed a decline of 2.4% YoY following a five-month increasing trend.
Leaders of the country’s textile and apparel sectors expressed concern over the central bank’s recent directive not to provide gas and electricity connections to new factories outside the government-designated economic zones (EZs) and industrial areas.
The banks have also been asked to ensure mandatory clearance certificates from utility service providers before approving loans.
Bangladesh Bank has recently issued two separate circulars in these regards.
Expressing concern, the leaders said the garment industry is at a crossroads due to the current geopolitical crisis that is causing disruptions in global trade.
“And the implementation of the central bank circulars would exacerbate the crisis of the garment industry, hindering its growth and discouraging entrepreneurs from setting up new factories,” Bangladesh Garment Manufacturers and Exporters Association (BGMEA) President SM Mannan Kochi said.
He expressed the concern while presiding over a meeting with the leaders of Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), Bangladesh Textile Mills Association (BTMA) and the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) at BGMEA’s Uttara office in the city on Wednesday night.
The meeting was to discuss the current pressing issues of the ready-made garment (RMG) industry.
BKMEA Executive President Mohammad Hatem, BTMA President Mohammad Ali Khokon, FBCCI Vice President Md Munir Hossain, BGMEA Vice Presidents (Finance) Md Nasir Uddin, Abdullah Hil Rakib, Directors Md Imranur Rahman, Mohammad Sohel Sadat, Shams Mahmud, Rajiv Chowdhury, Md Jakir Hossain, and Md Rezaul Alam (Miru), among others, were present.
Talking to the FE, Mr Hatem said during the meeting, various issues of the garment industry came up for discussion, especially focusing on two circulars recently issued by the Bangladesh Bank, source tax and customs-related issues.
The leaders highlighted that many garment factories established outside the designated economic zones or areas are undergoing expansion, and new factories are under construction.
Therefore, implementation of the BB circulars at this point would disrupt ongoing expansion works and new establishment efforts, they noted.
The leaders urged the government to exempt the garment industry from the purview of the circulars for at least five years, while reiterated the demand for uninterrupted power and gas supply.
The issues related to customs, VAT, and income tax in the garment industry were also discussed in the meeting.
The business leaders urged the National Board of Revenue (NBR) to make customs, VAT, bonds, and tax-related processes faster, easier and hassle-free to facilitate sustainable industry development, aiming to achieve the target of US$100 billion from garment exports by 2030.
When asked, BTMA President Khokon said that the exporters proposed reducing the tax at source applicable to the garment industry from existing 1.0 per cent to 0.5 per cent to mitigate the increased costs of doing business and maintain competitiveness.
The leaders also discussed Bangladesh’s graduation from the Least Developed Country (LDC) status and possible strategies to retain competitiveness in the post-graduation era.
They emphasized the need for necessary policy support to attract increased investment in promising sectors for overall economic benefits
The American Apparel and Footwear Association (AAFA) told US Trade Representative (USTR) hearing on supply chain resilience that more free trade agreements are needed in addition to the removal of prison labor, while the National Council of Textile Organizations (NCTO) focused on Effect of de minimis.
Figure: FPIs receive significant preferences that essentially give FPIs the right of first refusal on US government contracts.
AAFA Senior Vice President Nate Herman said at the hearing that 3.2 million US jobs depend on the apparel industry, and they depend on access to foreign customers and global supply chains for their existence.
Resilient supply chains depend on certainty, clarity and flexibility, he added, but tentative signals from Washington suggest a willingness to diversify away from China without negotiating a new free trade agreement (FTA).
“We have seen little effort by the administration or Congress to renew expired trade programs or update existing trade agreements to make them more resilient,” Herman continued.
Meanwhile, NCTO President and CEO Kim Glas called on the United States to be more deliberate in developing trade and investment policies that support the growth and resilience of domestic textile supply chains and counter the so-called dominance of Chinese goods through alleged illegal trade practices.
She believes there are eight ways the US government can help stop the domestic damage to the apparel and textile industry:
Immediately close the de minimis tariff loophole.
Dramatically ramp up and publicise customs enforcement and trade penalty activities.
Preserve and protect the yarn forward rules of origin.
Reject proposals to expand Generalized System of Preferences product coverage to textiles or apparel.
Immediately pass the Miscellaneous Tariff bill.
Increase Section 301 penalties on textiles and apparel imports.
Fully implement the Make PPE in America Act and expand procurement opportunities.
Enhance tax incentives to bolster domestic and regional production.
Glas suggests that, despite the domestic textile industry being an integral part of the military and public health industrial base, unregulated foreign predatory trade practices, lack of effective tariff enforcement, and confusing trade policy proposals are creating unstable and unsustainable market dynamics.
In her testimony, Glas said: “The confluence of these factors is threatening the future of domestic textile manufacturing as well as the textile and apparel coproduction chain between US and our Western Hemisphere free trade agreement (FTA) partners responsible for $40bn in annual two-way trade.”
She also explained that 14 US textile factories have closed permanently in recent months and an estimated 100,000 jobs have been lost in the US and the wider hemisphere.
AAFA’s Herman defended the need for foreign input in the apparel supply chain, saying: “Successful contracting and reliability programs are fundamental building blocks for resilient supply chains, supply chains not dependent on China. Further, commodity contracting and reliability programs undermine American values on the environment and labor.” strengthens.”
Harman was keen to highlight the rigidity of the yarn forward rule limiting apparel investment and, in turn, apparel demand and textile investment: “With this vicious cycle and inflexibility the size of the pie never grows and supply chains don’t get more resilient.”
He continued, “The core rules of FTAs and trade programs aim to preserve the benefits of tariff-free trade for beneficiaries. However, restrictive regulations intended to ‘close the back door’ to China may impose substantial barriers and administrative burdens.”
On the other hand, the NCT also claims that China and other Asian countries compete by sourcing subsidized textile inputs from China, including those made with slave labor in Xinjiang where it claims 20% of the world’s cotton is produced and where synthetics like rayon have been tied to forced labor production.
Glas maintained that closing the de minimis loophole is the most important step the US Congress and the Biden administration can take to combat illegal trade practices. She said, “This loophole in US trade laws allows four million packages a day to enter the US duty-free and, in most cases, without inspection.”
AAFA acknowledged that the concept of resilient supply chains is often code for trying to create more US manufacturing and noted that it’s a goal it supports “wholeheartedly.”
However, Herman was quick to add, “The single biggest threat to US manufacturing in our sector – bigger than all others – is the US government’s own addiction to forced labor, the federal prison industry, otherwise known as Unicor or FPI, which pays US prisoners as low as $1.10 an hour.”
He explained that under US law, FPIs receive significant preferences that essentially give FPIs the right of first refusal on US government contracts, including the ability to win contracts that exclude small, minority-owned and women-owned businesses.
He alleged that US taxpayer dollars were used to promote FPI to foreign investors under the Select USA program, “robbing” critical contracts to maintain and expand US apparel and footwear manufacturers. US workforce.
Herman also claimed that the US government is actively promoting an entity that violates at least four but as many as seven of the International Labor Organization’s 11 mandatory labor indicators.
He concluded, “These are the same indicators that US Customs and Border Protection use to enforce US forced labor laws and the UFLPA against US imports of goods made with foreign forced or prison labor.”
Soft launch of German athletic apparel and footwear giant Adidas store will be held on 11 May at Gulshan-1 and there will be a formal launch later with the presence of Adidas regional Managing Director
Adidas is set to open its first outlet in Bangladesh this month at Gulshan-1 in the capital. MA Rahim Feroz, Vice Chairman of DBL Group, confirmed it saying that “We’ve scheduled a soft launch for May 11th. A formal launch, graced by the presence of the Adidas regional managing director, will follow.”
Adidas will partner up with the Bangladesh’s leading apparel manufacturer DBL Group. Earlier, DBL Group introduced the German sportswear brand Puma, the American athletic footwear and apparel brand Nike, and the American fashion brand Levi’s in the country.
Presently, DBL Group oversees five Puma stores across strategic locations such as Banani, Dhanmondi, Bashundhara City, Gulshan Unimart, and Chattogram. Additionally, there’s a Nike experience store in Banani and a Levi’s outlet in Dhaka, with plans for further expansion, including in the port city.
With the local apparel market’s annual sales exceeding $15 billion, international brands are eager to tap into this vast opportunity. For DBL Group, the primary objective behind launching these international brand stores is to bolster its brand image in conjunction with these global giants.
Under the Puma portfolio alone, DBL Group witnesses a robust 10% year-on-year sales growth, prompting them to import approximately 15% of high-end products to meet local demand.
As Bangladesh’s economy burgeons and the number of consumers opting for international brands rises, DBL Group’s initiative aligns with the aspirations of high-end customers.
Despite customer desires for discounts due to perceived high prices, DBL Group refrains from offering them, as import duties and taxes range from 100% to 125%, leaving little room for markdowns.
The country’s dominance of the global denim market — built on its position as the top supplier to the United States and the European Union — was challenged last year by a decline in shipments to both regions, show data.
For the fall, local denim-makers point the finger at a sluggish demand in the global market and high production costs at home.
According to the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), denim exports to the US and EU bloc saw negative growth of 31.07 per cent and 23.42 per cent respectively in 2023.
Denim exports to the US market fetched Bangladesh $649.96 million in 2023 calendar year — down from $942.96 million in 2022, according to OTEXA, a body under the US Department of Commerce.
Bangladesh has held the top denim supplier position in the US market since 2020, displacing Mexico.
OTEXA data also shows a decrease in total US denim apparel imports from the world last year — down 23.97 per cent to $3.16 billion from $4.16 billion in 2022.
Once the leading exporter, China fell to fifth place in the US market in 2023 with $312.47 million in exports. Pakistan and Vietnam ranked third and fourth, respectively, with $374.56 million and $336.31 million.
According to BGMEA data, Bangladesh’s denim exports to the EU also declined last year, fetching $1.20 billion compared to $1.57 billion in 2022.
Turkey and Pakistan followed Bangladesh in the EU market, with both countries experiencing negative growth exceeding 12 per cent. Bangladesh has maintained its top position in the EU market since 2017, according to BGMEA.
For the decline in denim shipments to both the US and EU, exporters blame a sluggish demand caused by the economic slowdown triggered by the Russia-Ukraine war and the resulting high inflation.
This, they say, forced Western consumers to prioritise essential goods, while rising production costs due mainly to the local energy crisis were also contributing factors.
Anwar-ul-Alam Chowdhury Parvez, managing director of Argon Denims Ltd, said consumers are focusing on meeting basic needs due to the economic climate, with fashion taking a back seat.
“This has led to a decrease in international demand for denim, not just for Bangladesh but for other exporting countries as well,” he said. “On the other hand, sales of functional wear and activewear are increasing.”
According to Mr Parvez, the situation is unlikely to improve unless global demand picks up.
Rising energy costs and central bank policies were also cited by denim-makers as factors contributing to a decline in local production.
Optimism as innovation in focus at denim expo
Referring to positive buyer projections, exporters at an international denim expo in Dhaka expressed optimism for an upturn in orders from September onwards.
The two-day Bangladesh Denim Expo, held at the International Convention City Bashundhara (ICCB) in Dhaka, features over 60 exhibitors from 11 countries showcasing their latest innovations.
Organised by the Bangladesh Apparel Exchange, the event began on Monday. Manufacturers are displaying a wide range of products, from sustainable fabrics to cutting-edge designs, highlighting the diversity of the denim industry.
The show’s theme, “Reimagine”, reflects the industry’s focus on continuous innovation and the integration of digitalisation. Organisers believe this approach can reshape the denim landscape and leverage the power of technology.
Shovon Islam, managing director of Sparrow Apparels Ltd, a company exporting value-added denim, told the Financial Express that Bangladesh controls 9-10 per cent of the global denim market, worth $85 billion, with annual exports of $8 billion.
High buyer inventory in 2021 and 2022, due to lower consumer demand during the pandemic, led to weaker sales in 2023, he said. However, he was optimistic for an upturn in orders from September onwards for the next season, based on positive buyer projections.
Mr Islam added that global demand has been on an upward trend since the beginning of 2024. Buyers are booking capacity as their inventory levels have depleted.
He also said that some orders are shifting from Egypt due to war and safety concerns.
Mr Islam, who moderated a session at the expo, told the FE that Bangladesh is adapting to changing fashion trends by producing high value-added denim goods.
Shams Mahmud, managing director of Shasha Garments Ltd, said, “Inflation and historically high interest rates set by the Federal Reserve are still impacting the US market.”
“This has led to a decrease in disposable income, affecting demand for denim, particularly entry-level high street products which are price-sensitive,” Mr Mahmud added.
However, he too expressed optimism for the future. “We are seeing new orders coming in and are hopeful that demand will pick up and exports will rebound in the near future.”
The Bangladesh Textile Mills Association estimates that over 40 local mills currently produce denim fabrics.
As India grapples with a mounting water crisis intensified by climbing temperatures and unpredictable rainfall patterns, the nation’s cotton cultivation sector faces unprecedented challenges.
According to recent data from The Aqueduct Water Risk Atlas by the World Resources Institute, a staggering 31% of global GDP, amounting to $70 trillion, is at risk due to high water stress by 2050. India, along with Mexico, Egypt, and Turkey, is expected to bear the brunt of this crisis, contributing half of the exposed GDP.
Cotton industry that supports millions of farmers and contributes significantly to India’s GDP is under threat due to its heavy reliance on water. The lack of widespread adoption of water-saving irrigation technologies in conventional cotton farming exacerbates resource strains and contributes to environmental and agricultural concerns.
Cotton, often referred to as “white gold,” is deeply ingrained in India’s agricultural landscape. However, its cultivation places immense pressure on water resources, making it particularly vulnerable to the impacts of climate change-induced water scarcity. Traditional irrigation methods, such as flood irrigation, not only waste water but also contribute to soil erosion and water pollution, exacerbating environmental degradation.
The failure to adopt water-saving irrigation technologies in conventional cotton farming exacerbates these challenges. Drip irrigation, for example, delivers water directly to the roots of plants, minimizing wastage and maximizing efficiency. Similarly, laser land leveling ensures uniform water distribution, reducing runoff and erosion. Despite the proven benefits of these technologies, their adoption remains limited across India’s cotton belt, straining water resources and perpetuating environmental and agricultural concerns.
To address these issues, stakeholders must prioritize the widespread adoption of water-saving irrigation technologies in cotton cultivation. Government support and incentives can play a pivotal role in promoting the uptake of these technologies, making them accessible to smallholder farmers who form the backbone of the cotton industry.
Many cotton farmers in India have adopted rainwater harvesting techniques to capture and store rainwater for irrigation purposes. Rainwater harvesting helps recharge groundwater resources and reduces dependence on surface water sources, making cotton cultivation more resilient to droughts and water scarcity.
Crop rotation and diversification practices are employed to improve soil health and reduce water usage in cotton farming. Intercropping cotton with legumes or other crops helps break pest cycles, enhance nutrient availability, and reduce water stress on cotton plants.
Moreover, raising awareness among farmers about the importance of water conservation and the benefits of adopting sustainable farming practices is essential. Training programs and capacity-building initiatives can empower farmers to implement water-saving technologies effectively, enhancing both productivity and environmental sustainability.
As India confronts the dual challenges of climate change and water scarcity, the future of cotton cultivation hangs in the balance. By embracing sustainable practices and fostering collaboration between stakeholders, the nation can chart a path towards a more resilient and prosperous cotton industry, safeguarding the livelihoods of millions of farmers while preserving precious water resources for future generations.
The global leather goods market value was $255.55 billion in 2023 which is expected to reach $457.53 billion by the end of 2032 at a CAGR of 6.7 percent during the furcated period.
Figure: Bangladesh and Pakistan are important suppliers of major leather raw materials in Asia.
Polaris Market Research & Consulting has recently published a research report on Leather Goods Market Share, Size, Trends, Industry Analysis Report, By Type (Genuine Leather, Synthetic Leather, and Vegan Leather); By Product; By Region; Segment Forecast, 2024 – 2032.
According to the research report, Primary market drivers include rising consumer disposable incomes, rising living standards, changing fashion trends and increasing domestic and international tourism. Demand for fashionable, current, and comfortable leather clothing, accessories, and footwear is expected to increase, which will be excellent news for the leather goods market.
The research also highlighted that Asia Pacific dominated the global market in 2022. China and India are leading the expansion of the premium and luxury goods market in the Asia Pacific region. Bangladesh and Pakistan are important suppliers of major leather raw materials in Asia.
According to the research, the footwear segment occupied the first position in this market in 2022. Major athletic footwear manufacturers such as Nike, New Balance, Adidas, Puma, Reebok, Allbirds and Converse have entered the leather athletic footwear manufacturing market in response to growing consumer demand for leather athletic footwear.
The research also suggested that the craft behind leather goods is an art form in itself, requiring skill, precision and attention to detail. Experienced craftsmen carefully select the best hides, ensuring that each piece has its own unique characteristics and texture. From cutting to stitching, every step of the manufacturing process is carried out with precision, resulting in products boasting superior quality and longevity. This dedication to craftsmanship is what sets leather goods apart, making them coveted possessions for discerning individuals.
The investment in the spinning sector has slowed down because of gas shortage and for volatile dollar markets over the last two years.
Last year, no new spinning unit was established in the primary textile sector of Bangladesh although the demand for local fabrics of both knit and woven has been increasing to shorten the lead time on export of garment items.
Figure: The investment in the spinning sector has slowed down because of gas shortage and for volatile dollar markets over the last two years.
The garment exporters started preferring the locally spun knit and woven fabrics to imported fabrics as the use of local fabrics can reduce the lead time significantly.
For instance, if the fabrics is imported from China to be used for garment making in Bangladesh it takes nearly 40 days which is too long time considering the stiff competition by the suppliers worldwide.
But if the local fabrics and materials are used it takes only a few days or one or two days for processing as the local spinners supply easily from his or her factory.
The international clothing retailers and brands do not want to spare more lead time as they also have to compete with their peers in their respective countries.
However, the investment in such a vital sector has slowed down because of gas crisis and for volatile dollar exchange over the last two years mainly stemmed from covid 19 and Russia Ukraine war fallouts.
Current status of the spinning sector
Currently there are 550 big spinning mills in the country with an investment of nearly $15billion. The total investment in the country’s primary textile sector (PTS) that includes, spinning, weaving, dyeing, washing, finishing and printing, is nearly $25 billion. Of them, only 200 are export-oriented.
The installed spinning capacity is 4,500 million kilogrammes, but they are manufacturing 2,400 million kgs of yarn currently as their full capacity can’t be utilized because of the gas and power shortage. The local spinners have been expanding their capacity to a bit for meeting the demand.
More than 60 weaving mills produce fabrics for the export-oriented garment sector. Local denim millers produce more than 700 million yards of fabrics per year, according to data from the Bangladesh Textile Mills Association (BTMA).
Setting up a new factory is time-consuming and it takes at least three years and costs Tk 700 crore to set up a medium-sized factory.
Most of the spinning mills are producing the cotton yarn and for knitwear sector where the local spinners can supply nearly 90 percent raw materials as more investment took place in the knit spinning sector.
From the very beginning the local spinners have mainly invested money in the cotton spinning sector as it was easy for them due to lack of knowhow in non-cotton yarn. As a result, of the total exported garment items from the country, some 71 percent is cotton made yarn and 29 percent is non-cotton yarn.
However, recently, the spinners have been investing money on non-cotton units aiming to grab more market of value-added garment items as the prices of non-cotton fabre made garment items are better than cotton made fibre garment.
The spinners can supply nearly 90 percent raw materials to knitwear sector and 45 percent to the woven sector while the remaining demand is met through import mainly from India, China and Pakistan.
Impact of slow investment in spinning sector
The impact of the slowdown in investment in spinning sector is dangerous. Because, the country’s $46.99 billion worth of garment items is largely dependent on the PTS integration.
The local garment exporters will have to import the yarn and fabrics with spending billions of dollars from other countries like from India, Pakistan and China.
For instance, in the fiscal 2022-23, Bangladesh imported woven fabrics worth Tk36,527crore to meet the demand of the local garment exporters, the BTMA data also said.
This is a segment of the total import of raw materials. If the amount of other sectors like yarn, knit fabrics and yarn are also added, the amount will be even higher.
Slowdown in investment will also impact on the technology knowhow and the garment sector will be dependent on the imported fabrics and yarn which will also impact the lead time.
As a result, the international retailers and brands may not choose Bangladesh as a preferred destination for souring the garment items.
Moreover, the local markets which is also billions of dollar worth will face a lot of smuggled in from other countries which might be a threat for the country’s industry.
Reasons for slow investment
Mainly for three reasons the investment in the spinning sector declined in the country over the last two years including gas crisis, volatile dollar exchange rate and for lower demand from the garment exporters.
For instance, many of the spinning mills have been running their production at 50 percent capacity because of the gas crisis in the industrial sector. As a result, the cost of production has gone high and the production has lowered for which the industry owners cannot make profit from the sales of the yarn.
Although the production fell in the spinning sector, but the government doubled the gas price in February in 2023 to Tk30 per unit from Tk16 per unit. But the gas supply situation did not improve to the expected level.
The volatile dollar exchange rate has also a negative role in inflow of investment in the spinning mills.
Many entrepreneurs have opened Letters of Credit (LCs) for importing the machinery when the dollar rate was lower and hovering around Tk86 and Tk87 per US dollar before the outbreak of the Russia Ukraine in February in 2022.
However, the war impacted the dollar exchange rate severely and the rate reached to Tk111 and Tk112 per dollar in officials which made the import expensive for the entrepreneurs.
Moreover, the dollar is not even available at the official rate for which the entrepreneurs have to buy the dollar at Tk123 from the unofficial channels and even from the banks to import capital machinery.
The western clothing retailers and brands experienced a dull sale seasons because of historic inflationary pressure stemmed from the severe fallouts from the Covid-19 pandemic and Russia Ukraine war.
As a result, the inventory of unsold stock of garment items was high in the stores of them for which the export of garment items was also low from Bangladesh.
As a result, the garment makers bought lower quantity of fabrics and yarn from the PTS in Bangladesh which also badly impacted in investment in the spinning sector.
Views of industry insiders
Khorshed Alam, chairman of Little Star Spinning Mills Ltd, also said the volatile dollar exchange rate, gas shortage and stockpiling of old unsold garment items in the stores in the western countries impacted badly in the inflow of investment in the spinning sector.
Moreover, the higher increase of gas price impacted badly in the investment as the profit declined. The spinning sector needs uninterrupted supply of gas for making profit and to run in full capacity, Alam said.
Monsoor Ahmed, chief executive officer of BTMA also echoed with the views of Alam. Even in the time of Covid-19 time few spinning mills were established but in 2023 no new unit was set up mainly because of gas shortage and volatile dollar exchange rate.
Available huge fund from the banking sector for establishing a spinning unit is also a challenge because setting up of even a small spinning mill requires more than Tk500crore which is difficult to available now at lower interest rate from the banking sector, he added.
In fine, spinning is the backbone for the local textile and garment industries and it needs good care of the sector. The uninterrupted gas supply to the spinning mills is very important for using its full capacity and for more investment.
The spinners are losing money as they have been running at 50 percent capacity due to gas shortage. The government should manage gas for the spinning sector at affordable prices so that they can make profit and expand their capacity and can go for new investment.
Exports of ready-made garments reached $3.29 billion in April 2024 which was $3.33 billion during the same period in the previous year. As a result, export earnings growth contracted to 1.01 percent in April.
Figure: RMG exports are $2.48 billion short of the strategic target in 10 months.
In the previous month at the end of March, the export of ready-made garments in the month of July-March was 5.53 percent. At the end of April, in the July-March, that growth has come down to 4.97 percent. The country’s total exports also fell from 4.39 percent to 3.93 percent.
As ready-made garments account for 85% of the total export earnings, a decrease in ready-made garments exports will cause a shock to the growth of total export earnings.
In this regard, the director of ready-made clothing manufacturers and exporters association (BGMEA). Mohiuddin Rubel said, due to the Eid holiday in April, working days were less. This is one of the reasons for the drop in exports in April.
According to him, the global economy has not been good for a long time. After the Corona epidemic, the Russia-Ukraine war, the unrest in the Red Sea has increased again. As a result, instability in the world economy continues.
The target of exports of ready-made garments in the current financial year is $52.27 billion. And the July-April 10 month strategic target is $42.97 billion.
During the period, exports were $40.49 billion i.e. $2.48 billion or 5.77 percent below the export target in the 10 months to April. An additional $2.50 billion worth of ready-made garments will have to be exported this year to meet the target.
The RMG export are increasing day by day in Bangladesh but the spinning industries still facing profitability crisis severely. In the last decades following the growth of the export oriented garments Industry Bangladesh spinning sector also made the expansion without analyzing the future market. Now, for the last 2 years the spinning sector is experiencing the real challenge to stay alive. In the recent months, export oriented garments order has gone up a little bit but the buyers are not offering good prices.
As a result, yarn prices are also low. Spinning mills therefore have to calculate loss per unit despite increase in garment orders. Almost all types of yarns except some fancy yarn orders are facing losses.
On the other hand, Bangladesh spinning mills are facing problems due to India supplying yarn at low price. Spinning mills also suffer from fiber shortages. Due to this every spinning mill is not able to utilize its full capacity. Dollar crisis is one of the reasons. Spinning mills are not able to open L/C for fiber or purchase fibre despite working capital limit. As a result, a crisis is created in the fiber and this is the scenario for almost all the spinning mills.
Diversified products or fancy yarns may be getting good prices in the case of spinning mills. Mills are facing 20 cents loss at each unit for Cotton, CVC, PC and other regular yarn. Mills are getting competitive price for slub, cyro, inject, Cotton-Modal, Cotton-tencel etc . As a result it can be said that except for fancy yarn spinning mills are facing losses for all regular yarn.
If the order quantity goes up, there will still be a hope for the spinners that they will try to mitigate losses as the RMG sectors will need support from this backward linkage industry. RMG makers will go for Bangladeshi spinners despite of having a little bit less price from India. As the quality and service of the Bangladeshi spinning mills are much more convenient for them than the same from India. If the export oriented garments industry wants to ensure smooth production and business they must have to have a very strong and healthy spinning Industry.
On the other hand, gas prices increased a lot than it was a few years ago. Salary of the workers has also increased. For gas prices government can consider a little bit for them who are producing electricity by their own using gas. On the other hand, bank support is needed to utilize the full capacity by utilizing their full working capital limit.
Also, all the spinners must have to transform their product range from regular to diversified product at the soonest possible ways. This is the high time to take the decisions whether we will shut our floors one by one or we will rise again.
