US-China trade war, and good performance of apparel exports in non-traditional markets acted as a catalyst for the rise in apparel export
Bangladesh’s overall merchandise export earnings have registered a 10.55% growth to $40.53 billion in the just concluded fiscal year, riding mainly on apparel exports, according to the provisional data of Export Promotion Bureau (EPB).
In the last 21017-18 fiscal year, Bangladesh exported goods worth $36.66 billion, posting a 5.81% growth.
Exporters have given credit to safety and compliance upgradation in the apparel industry, in helping to boost buyer’s confidence on sourcing more clothing from the country.
On the other hand, economists have opined the US-China trade war, and good performance of apparel exports in non-traditional markets acted as a catalyst for the rise in apparel export.
RMG sector contributes highest
Readymade garment (RMG) sector has contributed 84.21%, or $34.13 billion to the total export receipts. The sector posted 11.49% growth over last fiscal year, bagging $30.61 billion from apparel items.
Apparel sector exceeded the export target by 4.42%, as the estimated earnings from RMG were set at $32.68 billion for 2018-19 fiscal year.
Of the $34.13 billion, Knitwear products fetched $16.88 billion, which is 11.19% higher than last fiscal year. Woven items earned $17.24 billion, registering an 11.79% growth.
What makes double digit growth
“Currently, the apparel industry is safer than what had been in the past. This is only because of the safety improvement and compliance, which boosted global buyers’ confidence to purchase clothing products from Bangladesh,” BGMEA former senior vice president Faruque Hassan has told the Dhaka Tribune.
“Besides, the sector went on a massive machinery upgradation scheme to ensure product quality, and ability to produce value added goods .”
On top of that, manufacturers mobilized for new market explorations, and product diversification, which altogether pushed the export earnings up, said Hassan also managing director of Gian Group.
However, economists have said the US-China tariff war opened an opportunity for Bangladesh as the global buyers shifted orders from China to Bangladesh to remain on the safe side.
“As a whole, the export earnings fared well, when the apparel sector performed very well. And the apparel sector did better due to the US-China trade war, which made Bangladesh’s position in the US market stronger than it was in the past,” Policy Research Institute (PRI) executive director Ahsan H Mansur told Dhaka Tribune.
US economy was better in the last year, which also helped the country to export more. Beyond this, export performance to non-traditional export destinations including China, Japan, and India were better, adds Mansur.
In the coming days, Bangladesh may get some more perks from the trade war, if it escalates further, he hopes.
Export performance of other major sectors
Among other major sectors, agricultural products have posted a sharp rise, making a 27.84% growth to $909 million during the period, which was $674 million in the same period last year. Among the agricultural products, vegetable earned $100 million, tobacco $63.33 million, and dry food $227 million.
In addition, export earnings from the pharmaceuticals sector rose by 25.60% to $130 million, and plastic goods by 21.65% to $120 million, according to the EPB data.
Specialized textile sector saw a 28.51% growth to $144 million, while non-leather footwear exports rose by 11.24% to $$271.53 million.
Export earnings from furniture, a newly emerging export item, posted 18.53% rise to $75 million, which was $63 million in the last fiscal year.
However, export earnings from leather and leather goods, the second largest foreign currency earner, witnessed a 6.06% negative growth down to $1.01 billion, which was $1.08 billion last fiscal year.
Jute and jute goods, the third largest export earning sector, also registered a 20.41% negative growth lowering to $816.27 million.
Exports of frozen, and live fish registered a marginally negative growth by 1.58%, and earned $500.40 million , which was $508.43 million in the previous year.
Besides, home textile sector has seen a negative growth by 3.07% to $851.72 million, which was $878.68 million a year earlier.
How to sustain the double digit growth
Industry people have termed the growth rate satisfactory but they are worried about making it sustainable in the new fiscal year.
“The present growth rate is satisfactory but there are challenges ahead for the sector in retaining the growth rate,” says Mohammad Hatem former vice president of BKMEA.
For value addition, and high-end products, the sector needs investment on research and innovation, adds Hatem, saying: “For this the government should continue policy support, and allocate funds from the budget for research.”
Meanwhile, economists have suggested for attracting foreign investment in tech-based manufacturing sector. They also called for grabbing orders, which are being relocated from china.
“Most of the export earnings from the apparel sector are from basic goods, which is a concern for us. To get better price, Bangladesh should invest in technology for value addition, and foreign investment can be a solution as they have experience,” former advisor to caretaker government AB Mirza Azizul Islam tells Dhaka Tribune.
On the other hand, Bangladeshi manufacturers have to establish links with the buyers who are shifting from China to other countries, adds the economist.