According to data from the Bangladesh Bank, the value addition in export-oriented ready-made garment (RMG) items decreased even further in the first quarter (July-September) of the current fiscal year 2022–23.
In a study titled "Quarterly Review on RMG: July-September, FY22" published by the central bank, the value addition in RMG products fell to 51.49%, reaching $10,274.34 million, in the aforementioned period of FY23.
The statistics showed that the value addition in RMG goods decreased by 1.93% from 53.42% in the same period of FY22 during the July to September fiscal year of FY23.
Raw materials (raw cotton, synthetic/viscose fibre, synthetic/mixed yarn, cotton yarn, textile fabrics, and accessories for clothing) were imported for $4984.13 million during this time period, making up 48.51% of all RMG export revenues.
As a result, net exports from this sector amounted to $5.29 billion in the first quarter of FY23, a decrease of 12.49% from the previous quarter but an increase of 9.31% from the same time last fiscal year.
According to data from Bangladesh Bank, the sector's export growth for the first quarter of FY22 was 53.42%, or $9.1 billion, while the cost of importing raw materials was $4.2 billion.
Industry insiders said that the value dropped due to the increase in prices of raw materials in the global market.
Moreover, the value addition also dropped to a record low of 52.24% in the third quarter (January-March) of FY22.
The report also stated that the RMG sector, the mainstay of Bangladesh's economy, experienced negative growth of 8.14% in the July-September quarter of FY23 as worldwide inflation has pushed up the living costs and forced people to reduce their expenditure on clothes in the key corresponding export destination countries.
However, the report also said that the United States, Germany, the United Kingdom, Spain, France, the Netherlands, Italy, Canada, and Belgium were the top destinations for Bangladesh's RMG exports during July-September FY23.
From these nine countries, Bangladesh earned $7.43 billion from RMG, accounting for 72.25% of total RMG exports.
However, RMG export earnings from these nine countries decreased by 9.65% as compared to that of the previous quarter but this was 12.18% higher than that of the corresponding quarter of the preceding fiscal year, BB report added.
Moreover, the total export earnings of Bangladesh from the RMG sector in the said quarter were $10.3 billion, which outperformed that of the previous year's corresponding quarter and the quarterly target by 13.41% and 2.52%, respectively.
Despite this, the global gas crisis, rising inflation, tightening financial conditions, and further US currency appreciation globally were all brought on by Russia's invasion of Ukraine.
A number of initiatives have been done by the government and Bangladesh Bank, particularly to ease the manufacture and export of RMGs. Pre-shipment credit, incentives for export expansion, and incentives for export expansion are some significant actions made to increase production and export in the RMG sector.
The central bank recommended Bangladesh change its export target countries to more promising Asian economies including Japan, India, China, South Korea, and the Middle East because the current economic unrest was more severe in the American and European countries.
At the same time, Bangladesh should also put priority on the diversification of Man-Made Fibres (MMF) and global technical textile markets as they fetch higher profits than cotton-made items.
However, the manufacturers of the country said that they are working relentlessly to increase export volume to the new markets, especially Japan, Korea, China, India, and the Middle East.
Faruque Hassan, president of the Bangladesh Garment Manufacturers and Exporters Association, said that they are observing the market situation of China, India, East Asia and the Middle East.
“We are working on what types of products they demand and also to formulate policies regarding grabbing new markets and also to diversify products,” he added.