Garment exports to new markets on the rise

Garment exports to new destinations are increasing substantially though shipments to traditional markets have been on a downward curve.

The new markets are promising mainly due to the government's stimulus package, aggressive marketing by exporters and relaxation of the "rules of origin" by some countries.

Rules of origin are the criteria that are used to define where a product was made. The origin of a product is important because it will determine how it is treated at the border of an importing country and the origin may impact the import duty payable and admissibility into the country.

Apparel exports to new destinations -- all markets except the EU, the US and Canada -- rose 15.47 percent year-on-year to $1.87 billion in the first six months (July-December) of the current fiscal year, according to Export Promotion Bureau.

The major new export destinations are Australia, Brazil, Chile, China, India, Japan, South Korea, Mexico, Russia, South Africa and Turkey.

During the six-month period, Bangladesh's garment exports to the US declined 5.18 percent, to EU 3.53 percent, and to Canada 14.60 percent.

Garment exports to non-traditional markets got a boost when the government offered an incentive package to businesses in fiscal 2008-09 to offset the impact of the global financial crisis on the sector.

Under the scheme, the government gave 5 percent cash incentive to garment exporters in fiscal 2009-10, 4 percent in fiscal 2010-11 and 2 percent in fiscal 2011-12. The exporters are still receiving 2 percent cash incentive for exporting to the new destinations.

Generally, Bangladesh's 60 percent garment items are destined to the EU, 23 percent to the US, 6 percent to Canada and the rest to other countries.

Reaz-Bin-Mahmood, vice-president of Bangladesh Garment Manufacturers and Exporters Association, said exporters were efficient in exploring new markets. As a result, exports to South American countries such as Brazil, Mexico and Chile are growing at a faster rate, he added.

Garment exports to Japan, India and China have been increasing substantially due to the relaxation of the rules of origin by the governments of those countries in recent years, Mahmood said.