RMG exports rise from the rubble
Garment exports to non-traditional markets have been showing an encouraging trend amid the ongoing Covid-19 pandemic as shipments grew 6.36 per cent to $5.08 billion in fiscal year 2020-21.
The receipts from garment exports to non-traditional markets have been rising from the rubble of fiscal 2019-20, when the country and global supply chain suffered severe impacts of the pandemic.
That year, garment exports to non-traditional markets dipped 15.95 per cent to $4.78 billion because of the pandemic, according to data from the Bangladesh Garment Manufacturers and Exporters Association (BGMEA).
However, with the restoration of normalcy in the global apparel supply chain, shipments to non-traditional markets was also being revived.
Bangladesh considers all markets as non-traditional ones except for that of the 27 member countries of the EU, US and Canada.
Last fiscal year, the share of the non-traditional markets was 16.16 per cent, in fiscal year 2019-20 the share was 17.10 per cent and in 2018-19 it was 16.66 per cent, the BGMEA data said. Of all the non-traditional or emerging markets, Japan is taking in the highest amount.
Japan is the only non-traditional and Asian destination where $1 billion worth of garment shipments were made from Bangladesh in fiscal year 2018-19 whereas the total amount of goods to be shipped was worth $1.09 billion.
However, the shipment of garments to Japan declined to $961.94 million in fiscal year 2019-20 and $944.82 million in fiscal year 2020-21 because of the fallouts of the pandemic.
China and India are two promising garment export destinations for Bangladesh as the shipments to the two have been rising.
However, the pandemic almost stalled the export growth to these promising Asian markets.
For instance, garment exports to China declined to $271.28 million last fiscal year from $329.96 million in the previous fiscal year, said the data.
Bangladesh was significantly utilising a benevolent Chinese tariff benefit for 97 per cent of its products before the pandemic, as the country exported $506.51 million worth of goods in fiscal year 2018-19, said the data.
Similarly, garment shipments to India, one of the most promising markets, was performing well before the pandemic.
However, the shipment was only $421.86 million last fiscal year, which was $420.76 million in the previous fiscal year.
Before the pandemic, the amount was almost $500 million to Indian markets, where Bangladesh enjoys duty-free facility but faces a 12.50 per cent countervailing duty.
Among the Latin American countries, Brazil and Chile have been showing promise for garment export.
Last fiscal year, local exporters shipped $70.73 million worth of goods to Brazil and $82.56 million to Chile.
In both of these destinations, the amount of garment shipment was more than $103 million in fiscal year 2019-20.
Bangladesh has been performing strong in Australia even in the time of this pandemic.
For instance, last fiscal year's earnings from garment shipment to Australia was $731.13 million, a rise from $601.14 million in fiscal year 2019-20.
The amount was $719.78 million in fiscal year 2018-19, said the BGMEA data.
Turkey, once a very promising garment export destination where the amount was almost $1 billion, is drying up now because of the imposition of high tariff at more than 17 per cent on Bangladeshi garment items aimed to protect its own apparel industry.
Last financial year the earnings from apparel shipments to Turkey were only $117.15 million, said the data.
Fazlul Hoque, managing director of Narayanganj-based Plummy Fashions, said the local exporters were performing very strong in the non-traditional markets in the pre-pandemic time.
However, the fallouts of the pandemic slowed down the growth of the earnings from the emerging markets, he said.
But shipments to those markets is being revived now and it is expected that the trend will continue, Hoque also said.
The local exporters were busy with their own business, factories and the traditional markets and they did not notice the shipments to the non-traditional markets, he said.
Japan is the most promising market for Bangladesh among the Asian markets. "I hope we can export more to Japan as the market is reviving from the fallouts of the Covid-19," said Hoque, who also exports to Japan.
Faruque Hassan, president of the BGMEA, said he was planning to hold a road show in Dubai in December this year to grab a bigger share of the Middle Eastern markets.
Moreover, the BGMEA has been exploring the Russian and South African markets to grab more market shares.
However, in Russia and South Africa, high rates of tariff is a challenge for Bangladeshi garment exporters, he said.
Currently, apart from 1 per cent cash incentive for all the markets, the local exporters receive a 4 per cent cash incentive on garment export earnings in a year.
So, the exporters feel encouraged to export to the non-traditional markets when they receive the cash incentive.
Garment export to the non-traditional markets reached to more than $5 billion from only $500 million in fiscal year 2007-08.
However, garment export to emerging markets started taking a giant step when the government introduced cash incentives for those markets in 2009.
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