Fall in garment export shrinks export earnings

After witnessing growth in the first month of the current fiscal year, Bangladesh's export earnings started declining in August, and the slide continued through September. Decrease in the apparel export contributed significantly to the decline of the country's export earnings.

According to the Export Promotion Bureau (EPB), Bangladesh's merchandise export earnings in July, the first month of the 2019-20 fiscal year, posted an 8.55 percent growth to $3.88 billion.

But the country's export shipments in August, the second month of the current fiscal year, saw an 11.49 percent fall to $2.84 billion amid negative growth of apparel exports.  

And Bangladesh's export shipments dropped by 7.30 percent, to $2.92 billion in September, down from $3.15 billion in the same period a year ago.

Exports earnings during July to September, the first quarter of the current fiscal year, plunged by 2.94 percent to $9.65 billion, down from $9.94 billion in the same period a year ago.

EPB data released on Sunday revealed that during the first quarter of this fiscal year apparel exports dropped by 1.64 percent, which has had a huge impact on the overall export earnings of the country. 

Experts say that the shrink in export earnings is not a matter of concern because the market during the period from summer to winter goes through a sluggish phase. 

But businessmen are concerned about the overall fall of the price of apparels around the world. 

The bulk of Bangladesh's export earnings comes from apparel export, so the fall in price is a matter of grave concern. The leather sector is also going through a crisis. This became noticeable in the fall in export earnings, said Dr Nazneen Ahmed, senior research fellow at the Bangladesh Institute of Development Studies.

The Export Promotion Bureau of Bangladesh says that the export of leather products declined by 5.06 percent during the first quarter of the current fiscal year. 

Dr Nazneen advised the government to put pressure on the buyer's forum through diplomatic channels to ensure a fair price for apparels. At the same time the government should take an initiative to reduce the production cost of readymade garments. 
Rubana Huq, president of the Bangladesh Garments Manufacturers and Exporters Association, said Bangladeshi suppliers are getting fewer orders from buyers, and this trend might continue for the next couple of months. 

She also said, "Sustained growth is not easy at this point. Vietnam is getting a fair share of orders, and orders being diverted to Pakistan and India as well. All these countries are offering incentives and privileges (for garment manufacturers)."

She also emphasised the importance of government support for the readymade garment sector because it is the main driving force for the country's foreign currency earnings. 

Rubana Huq also pointed out that many garment factories have closed down after the increase in minimum wage for workers, and this has contributed to a decline in exports.  

Keeping the overall situation in mind, we could ask for policy cooperation. Otherwise export figures will dip and factory closures will continue, she added.

"Other countries are offering good prices, they are becoming more competitive because of packages and incentives and also through their currency situation," said Rubana Huq. 

Recently many orders from global buyers were shifted from Bangladesh to Pakistan, Myanmar and India. 

For example, Mohammad Hatem, first vice president of the Bangladesh Knitwear Manufacturers and Exporters Association and managing Director of MB Knit Fashion Limited, said he was supplying T-shirts for $1.40 per piece to a US buyer for the last 18 months. But the buyer recently got an offer from a Pakistani manufacturer who could supply the T-shirts for $1.28 per piece and threatened to shift the order to Pakistan.  

Businessmen proposed that the government should take an incentive to pay an increased rate in exchange for dollars earned through export. 

But experts opposed the proposal, saying that this demand from businessmen is not feasible because the government is already providing a subsidy amounting to Tk28,000 crore for garment exports.