January exports rise nearly 6% riding on high-value RMG items

Infographic: TBS

Bangladesh's merchandise exports rose 5.89% to $5.13 billion year-on-year this January despite a drop in shipments by major non-RMG sectors, according to the Export Promotion Bureau (EPB) data released on Thursday.

With this, the country earned over $5 billion in each of the last three months, a development that may boost the country's foreign exchange reserves and ease volatility in the dollar market.

Nonetheless, January's exports fell slightly short of the strategic target of $5.24 billion.

Apparel products continued their dominance as they led the growth with an 8.2% increase in exports in January, while exports of jute, leather, and agricultural products saw negative growth.

Industry people said RMG exports grew mainly because of the shipment of high-value apparel products, orders for which were shifted from China.

Bangladesh Garment Manufacturers and Exporters Association (BGMEA) President Faruque Hassan said In January that the apparel sector experienced a growth in apparel shipment which was better than their expectations.

"We are going for high-value and new products which are helping us achieve such growth despite a slowdown of global demand. This is a positive sign for the industry," he added.

"At the same time, we are producing diversified products within our existing product lines, and new market growth also is helping us maintain growth," said the BGMEA president.  

He, however, expressed fear that this growth may not continue in February as raw material prices were going down and this might have a reflection on the overall export value, he added.

He further said apparel exporters have increased their production capacity in view of a growth in demand post-Covid pandemic recovery, but the additional capacity now remains unused due to order shortages.

TAD Group Managing Director Ashikur Rahman Tuhin told TBS that it is a good sign that RMG exports increased slightly in January.

"But we need more orders as this is peak business season," he said, adding that his company's annual turnover reached $186m including manufacturing and merchandising last year.

The former BGMEA director, however, also said it was important to note that growth numbers in the month of January had been higher earlier as well.

According to EPB data, earnings from apparel shipments in January this year stood at $4.42 billion, up from $4.08 billion in the same month last year.

Exports of knitwear garments in the same period grew by 8.9% to $2.30 billion while earnings from the woven segment increased by 7.50% to $2.12 billion.

"As an individual exporter, we saw the growth is based on some high-value apparel shipment, but we are struggling for price margin," MA Rahim Feroz, vice chairman of DBL Group, a leading apparel exporter having $870 million annual turnover.

He further explained that a number of USA brands have been shifting from China with some orders of high-value products but they are not offering the same prices in Bangladesh.

Earlier, DBL Group had not enough US orders in the knit garments segment but in the last 4-5 months they successfully attracted some US retailers of high-value products, he added.

He also mentioned that the prices of those items are up to six times higher than their conventional products. The prices of raw materials of the high-value products are also high, he added.

Feroz, also a director of the BGMEA, went on to say that uninterrupted power supply is needed for industries but the recent hikes in gas and electricity prices – scheduled to take effect in February – will put them in a very challenging position, he added.

Among the other major export-earning sectors, exports of leather products posted a 3.1% YoY growth to $34.3 million in January, while pharmaceuticals and bicycles export grew by 20.2% to $13.95 million and 36.4% to $14.45 million, respectively.

Shrimp exports also saw a surprise growth of 248% to $30.48 million in January.    

Export growth in Jul-Jan FY23

The country's merchandise exports increased by 9.81% to $31.44 billion YoY in the first seven months of FY23.

The bulk of the growth came from readymade garments as RMG exports in the July-January period grew by 14.32% to $27.41 billion.

During the same period, exports of woven garments grew by 16.30% to $12.45 billion. Earnings from knitwear increased by 12.70% to $14.96 billion.

Among other sectors, export earnings from leather and leather goods during July-January of FY23 increased by 7.37%, leather footwear by 4.12%, and other leather products by 22.23% growth, according to the EPB.

But there were also notable dips in export earnings by some major export sectors.

Agriculture products found fewer buyers as export earnings dropped by 25.86% to $555.27 million YoY in the first seven months of FY23.

Exports of jute and jute goods fell by 21.22% to $548.10 million, while frozen and live fish exports dipped by 22.83% in the first seven months of FY23, the EPB data show.

Earnings from home textile exports fell by 16.65% to $692.86 million compared.