Good news for RMG as buyers increase orders
Things are looking up for the readymade garment sector despite the precarious state of the global economy, as international buyers have considerably increased their orders from Bangladesh this year.
“The confidence of international buyers in Bangladeshi products is increasing,” said a German buyer who preferred not to be named.
Thanks to price competitiveness, improvement in labour laws and skills and upgraded production facilities, many clothing retailers have increased their order volumes from Bangladesh by 15 percent to 25 percent.
“The orders from the European buyers are increasing and it will be higher once the Eurozone financial crisis looks to be under control,” said David Hasanat, chairman and managing director of Viyellatex Group.
Hasanat particularly cited a recent jump in sportswear orders from the EU, thanks to the European Football Championships and the Summer Olympic Games.
While the EU comprises 55 percent of the sector's annual export volumes, the USA is an important market too, and Hasanat is hopeful of a pick-up in the near future.
“Orders from the USA are increasing, proportionate to the country's economic recovery,” said Mohammad Abdullah, managing director of Nassa Group, which has annual turnover upwards of $250 million.
“Therefore, achieving 15 percent annual export growth target will not be difficult this year,” said Abdullah, whose 80 percent of garment products are for export to the USA.
This comes as a boon for the garment sector, which has been unable to meet the export targets for the past few fiscal years, as the retailers have been sitting on large inventories.
Other than the global recession, climate change, which has shortened the winter period, has been held responsible.
Shorter winters mean longer summers, meaning there should be an increase in the volume of woven items, sufficiently to offset the fall in knitwear volume.
According to data from Export Promotion Bureau, woven items, by raking in $9.60 billion in fiscal 2011-12, just about met its target the previous fiscal year, exceeding it by 0.45 percent.
But knitwear missed its export target by 12.16 percent, fetching $9.49 billion.
Owing to major upgrades in production facilities, Bangladesh can now compete in the higher segment of the garment market.
Another development, which has played into Bangladesh's advantage, is the eroding price competitiveness of China, the world's largest apparel supplying country.
“Almost all international giant retailers are increasing their purchase volumes from Bangladesh as the country has become a decent, competitive sourcing option,” a Spanish buyer who preferred to remain unnamed told The Daily Star.
But for continued higher export growth, the international buyers have stressed the need for political stability, strong political relationship with major economies, exploring new export destinations, continued lobbying to major countries through diplomatic channels and adequate gas and power supply to the industrial units.