Home textile export dream fading, lacks necessary support

At the beginning of the last fiscal year, key people in the home textile sector projected that export revenues from this sector might touch billions of US dollars.

But that dream still remains a dream. The latest data from the Export Promotion Bureau (EPB) reveals that export earnings from this sector are falling.   

According to the latest export data released on Tuesday, earnings from the home textile sector fell by 9.7 percent in the first seven months of the current fiscal year compared to that in the same period of the last fiscal year. 

Exporters and business leaders of the country think that the earnings fell because of unequal competition with other countries.

They say, exports in the home textile sector are decreasing because of a lack of composite factories, very few Bangladeshi-origin foreign retailers, weak backward linkage industry in home textile and high price of gas, yarn and chemicals in Bangladesh.

Earnings from terry towels also decreased drastically during the July-January period of the current fiscal year, down by 30.93 percent, bringing in only $23.98 million. The earning was $34.72 million in the same period of the previous year. 

M Shahadat Hossain, chairman of Bangladesh Terry Towel & Linen Manufacturers & Exporters Association (BTTLMEA), told The Business Standard, "The price of cotton was high in the last 2 years, but it is tolerable this year. However, in this 2-year period, the manufacturing price of Bangladeshi home textile goods has increased by 27-28 percent compared to that in India and Pakistan because of currency devaluation by those countries against the dollar, and the increased price of gas, yarn and chemicals in Bangladesh." 

"Even though Bangladeshi products have duty-free access in the European market, we can't compete with our neighbouring countries for those reasons. Hence the decline in export earnings from this sector," he added. 

The export of textiles and terry towels is declining, and will go down further in the future if the government doesn't do something about it right now, he said.

"The government needs to help us with policy support by accepting the BGMEA's proposal to devalue the Taka by Tk5 against the US dollar. The government has to make a long-term 5-year plan for home textiles and terry towel products," said Shahadat.  

"We can't reach our goal of exporting home textile goods worth one billion a year without proper planning. The current decline indicates that the sector is going down. So many small factories have already been closed after the government increased workers' wages," added the BTTLMEA chairman.

Export earnings from this sector were growing consecutively in recent years, 6.13 percent in FY2016-2017, and 9.95 percent in FY2017-2018, as per EPB data. 

Earnings saw the first down trend in the last fiscal year, with a negative growth of 3.07 percent by bringing in only $851.72 million.

And in the first seven months of the current fiscal year, the sector has brought in only $442.67 million, whereas it was $490.2 million in the same period last year. 

Many other exporters of the country think that the lack of composite factories is one of the main reasons for not getting large volume orders from big buyers. 

"Composite factories usually have all facilities such as dyeing, finishing, packaging, etc.  But most of our local textile factories are not composite. As a result, countries like India, Pakistan, Vietnam, Indonesia and Cambodia are getting the majority of the orders because they have more composite factories than we do," said Md Abdur Rouf, general manager of Virgo Fashion Ltd.    

As a result, we are lagging in the race of the home textile sector, he added.  

But the companies that are maintaining quality and have composite mills are still doing well.

Seeking anonymity, a senior official of ACS Textiles Bangladesh Ltd said, "We are doing well this year. We have never compromised with product quality, and our mills also have a good capacity. Therefore, as part of our annual forecast, we are marching ahead with the US market as our target."

Many exporters also said that other countries can offer a lower price than Bangladesh because they have a strong backward linkage industry.  

They said, foreign countries that have a strong backward linkage industry of textile products, buy raw material like yarn, chemicals, and many other necessary items from their local market. Thereby, their manufacturing price is stable, and that helps them get a larger chunk of orders from big buyers.  

AHM Jahangir, member of the Bangladesh Home Textile Manufacturers and Exporters Association (BHTMEA) told The Business Standard, "We lack foreign retailers of Bangladesh-origin compared to foreign retailors from countries like China, India and Pakistan who are our competitors. There is a huge number of Chinese-origin retail businessmen in America and in other big markets to represent China. Having retailors of home-origin in big market countries is a big factor too."

"We need Bangladeshi-origin retailers in foreign countries to represent us. Since the number of such retailers cannot be increased overnight, we need to make long term plans, and get the government to help us with policy support."

However, Professor Mustafizur Rahman, Distinguished Fellow of the Centre for Policy Dialogue (CPD), thinks that suddenly devaluing the Taka against the Dollar is not a solution at all. Also, it is not possible to lift the home textile sector to compete with other countries just by providing cash incentives only.

"Though we export products worth $40 billion, we also have to import products worth $60 billion every year. So Bangladesh is still an import-based country. Devaluing the Taka quickly will cause problems for importers, and that, in turn, will affect the whole country's economy. I think the government's present strategy of devaluing the Taka gradually should be continued," he told The Business Standard on Sunday. 

"The government provides Taka 8,000 crore as a cash incentive to exporters every year, but still the country has incentive resource limitations. Providing incentives only to the home textile sector will not be enough," he added.

He went on to say, "Actually, exporters should try to increase worker efficiency and productivity, and bring in innovative machines to upgrade the production process. The government can help them more in these processes."

There are very few home textile factories in Bangladesh compared to the number of woven or knit garments factories here. There are only about 25-30 prominent factories that make home textile products, and these are mainly in Dhaka, Gazipur and Chattogram. 

Zaber & Zubair Fabrics, Mosharraf Group, Saad Musa Group, Alltex, ACS Textile, Apex Weaving, Regent, JK Group, Classical Home, among others, have established themselves as strong exporters. Among them, Noman Group's Zaber & Zubair Fabrics is the pioneer home textile marketer in Bangladesh.

There has been robust growth of the home textile market globally, and experts say the demand is expected to reach over 160 billion dollars by 2025. The United States and EU countries import the lion's share of home textile products, which is 60 to 70 percent of the global market. 

The main exporters of these products are China, India, Pakistan, Turkey and Bangladesh. 

In 2016, the global market for textiles and apparels was 743 billion US dollars, but the market share of other categories such as fibre, yarn and fabric has decreased since then. However, home textiles has maintained its 6 percent share of the market over the past five years.