Garment exports to Germany rising fast

Germany is fast catching up with the US as the leading destination of Bangladesh's garment products on the back of higher demand and duty benefits.

Last fiscal year, some $4.38 billion worth of garment products were shipped to Germany, up 19.02 percent year-on-year. In contrast, garment exports to the US stood at $5.15 billion, an increase of just 3 percent over fiscal 2012-13.

“I am exporting to too many German retailers right now. Not that Germany wasn't important to our scheme of things already, but its stature is rising exponentially,” MA Jabbar, managing director of DBL Group, a leading garment company, said.

DBL Group is currently supplying garment items to H&M, Puma, Gerry Webber and Bonita in Germany.

The reason for the spike in orders, he says, is that German retailers are diverting their custom from China, where production costs are escalating.

Furthermore, the country's exporters enjoy duty-free access to the European Union -- of which Germany is a part -- owing to the Generalised System of Preferences scheme introduced in 1971, a privilege not enjoyed in the American market.

In the absence of any duty benefits, garment exporters pay 15.61 percent duty upon entry to the US market. Around $828 million was paid to the US customs last year and $3.41 billion over the last five years, according to the commerce ministry.

Jabbar, however, expects the orders from the US to rise as well in the coming days, given the clean chit given to the majority of the factories following inspections.

“Even a month ago we were worried, but after the completion of inspections, the retailers are coming with higher volume of work orders. We have already proved the safety of our factories.”

Atiqul Islam, president of Bangladesh Garment Manufacturers and Exporters Association, echoed the same.

“The retailers and customers worldwide now know that the garment factories in Bangladesh are safe,” he said, while tipping garment exports to the US to pick up with rebounding American economy.

The Accord on Fire and Building Safety in Bangladesh, the platform of mainly EU-based retailers, recommended closure of only two factories after inspecting 1,600 of them, while its American counterpart, the Alliance for Bangladesh Worker Safety, shut only one factory of the 587 it inspected.

“So, this is a good message for Bangladesh, one which will prompt international retailers to place higher work orders in our factories,” Islam added.