• Saturday, September 20, 2014

RMG export fell in July

Last year's political unrest, industrial disasters key factors

Refayet Ullah Mirdha

The country's garment exports fell in July from a year earlier mainly due to the lack of retailer confidence following political crises and industrial disasters last year.

In the first month of the current fiscal year, the export of woven items declined by 4.14 percent to $1.21 billion compared with the same month last year, according to data from Export Promotion Bureau (EPB).

Bangladesh's garment industry performed well even in the global financial crisis in 2007 and 2008 with higher exports of basic garment items worldwide.

But in August 2012, exports of woven items declined by 12 percent and knitwear products by 24 percent.

The declining trend is the impact of last year's prolonged political unrest and industrial disasters that dented the confidence of international retailers, said Atiqul Islam, president of Bangladesh Garment Manufacturers and Exporters Association (BGMEA).

 

Garment exports were badly hampered in October, November, December and January.

The garment sector experienced two massive disasters -- the Tazreen Fashions fire and Rana Plaza building collapse -- which hogged headlines all over the world.

“But at the same time the production cost increased by nearly 15 percent with appreciation of local currency against the dollar,” he said.

“We need to address the issues of inadequate supply of gas and power in the industrial units, poor condition of Dhaka-Chittagong highway and the overall political crisis to overcome the situation.”

He observed that workers' efficiency had remained unchanged for decades, while it was much higher in competing countries like China, Vietnam and Cambodia.

Another cause of concern for the Bangladeshi garment sector is the higher bank interest rate which has been eating up the marginal profit of the garment makers, Islam said.

“But the buyers are not increasing the prices per unit of garment item. In some cases the buyers bargain for squeezing the prices further,” the BGMEA chief said.

Mohammad Hatem, acting president of Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), said political crises had a major impact on the sector in the last quarter of 2013.

He, however, said the situation would improve in the coming months.

Inspections by European brands' Accord on Fire and Building Safety and North American retailers' Alliance for Bangladesh Worker Safety boosted buyer confidence as less than 2 percent factories were found vulnerable, he said.

On the other hand, the export of knitwear products rose by 4.32 percent only to $1.30 billion in July.

In July last year, woven exports grew by 27.02 percent and knitwear products by 25.24 percent from the previous year.

But this July, overall export earnings went down by 1.37 percent and stood at $2.99 billion -- 2.03 percent less than the targeted $3.04 billion.

The fiscal year 2013-14 ended with export earnings of $24.50 billion, maintaining 13.86 percent growth.

For FY 2014-15 beginning last month, the government set a target at $26.90 billion.

Published: 12:01 am Tuesday, August 12, 2014

Last modified: 9:32 pm Tuesday, August 12, 2014

TAGS: garment exports industrial disasters Export Promotion Bureau (EPB).

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