Apparel exports to non-traditional markets jumped this fiscal. We need to leap
To encourage apparel exports to non-traditional markets, the government declared a 4 per cent cash incentive. That played an important role in increasing Bangladesh’s apparel export in recent years
In fiscal year 2022-2023, Bangladesh exported apparel worth $46.99 billion. One of the unique traits of the country's total apparel export in the last fiscal year is that the apparel export growth in non-traditional markets has been exponential.
There has been a 7.91 year-on-year export earnings growth in non-traditional markets despite the ongoing global economic crisis.
According to Export Promotion Bureau (EPB) data, Bangladesh earned $11.89 billion from the market in fiscal year 2022-2023, which was $11.02 billion in fiscal year 2021-2022. In the last fiscal year, contribution of non-traditional markets to total apparel export also increased to 21.39 per cent, which was 21.15 per cent in the previous fiscal.
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By non-traditional markets, we mean markets outside the EU and USA. For a long time, Bangladesh's apparel exports were concentrated in these markets. To encourage apparel exports to non-traditional markets, the government declared a 4 per cent cash incentive. That played an important role in increasing Bangladesh's apparel export in recent years.
Being a least developed country (LDC), about 70.58 per cent of Bangladesh's exports enjoy duty-free market access. The benefit will come to an end after the LDC graduation. Diversifying the country's exports to non-traditional markets can help meet existing and new challenges post-transition to LDCs in 2026.
Although the apparel industry of Bangladesh has made significant strides in safety and sustainability, to be competitive in the long run, we need to flag out market diversification as an immediate need.
The EPB data showed that in the last fiscal year, the highest 2.13 billion apparel export earnings came from India. The country earned $1.9 billion from Japan. In the last fiscal year, Australia was another billion-dollar export market, and Bangladesh's apparel export to Australia was $1.23 billion. On the other hand, the country earned $623 million from South Korea, $460 million from Russia, and $677 million from China.
However, the country's export potential in countries like the UAE, Qatar, Kuwait, Kingdom of Saudi Arabia and Bahrain still remained largely untapped. These countries have large populations and big markets. Though their apparel items are a bit different from what we currently export to Western countries, it is possible to produce these within the same set-up.
So, why are we not looking for these large markets which are still captured by countries like Indonesia, Pakistan, and Malaysia?
Apparel products made of synthetic materials, technical textiles, and other diversified sustainable items can play a significant role in achieving the $100-billion export earning target set by the BGMEA (Bangladesh Garment Manufacturers and Exporters Association).
Though the UK is one of the largest markets for Bangladesh's apparel export and is not considered a non-traditional market, it's no more a part of the EU now, after Brexit. However, last month, the UK's Developing Countries Trading Scheme came into effect with tariff cuts that would facilitate more products entering the UK market from 65 developing countries, including Bangladesh. Therefore, Bangladesh also needs to seize this opportunity to increase its apparel export to the UK.
The country's prosperity and economic growth has evolved through the contribution of manufacturing sectors, especially apparel. The stability and growth of Bangladesh's economy is largely dependent on the apparel industry and to secure this sector, we need a planned strategy for enhancing our exports to non-traditional markets, especially at this time, when Bangladesh is on its way to becoming a middle-income country.
It is high time that decision-makers invest more in market exploration. We need to organise more promotional campaigns and road-shows to introduce 'made in Bangladesh' products across non-traditional markets.
Abdullah Hil Rakib is the managing director of Team Group. He is a director of Bangladesh Garment Manufacturers and Exporters Association (BGMEA).
