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Net export of readymade garments dropped for three consecutive quarters in the April-June period of 2021 amid slow demand for high value products during the Covid pandemic.
Bangladesh Bank data showed that net apparel export dropped to $4.17 billion in April-June as the country’s gross RMG export was $7.97 billion against the import of raw materials worth $3.8 billion.
In the July-September period of 2020, net RMG export was $5.28 billion when the country’s import of raw materials was $2.85 billion against gross export of $8.13 billion.
Exporters said that the country’s net RMG export or value addition had been on the decline since the Covid outbreak as customers all over the world had opted to follow austerity to tackle the economic fallout induced by the outbreak and that was why they had only purchased basic RMG items.
The coronavirus outbreak, which began in China in early 2020 and subsequently spread across the world, affected the country’s RMG export the most during the April-June quarter of 2020 when net export earnings against the product plunged to $1.55 billion.
During the quarter, Bangladesh’s gross RMG export was $3.85 billion against the import of raw materials worth $2.29 billion.
After an immediate bounce back in the July-September period, actual earnings against apparel export deteriorated in the subsequent three quarters.
In the October-December quarter of 2020, net RMG export dropped to $4.57 billion and fell further to $4.58 billion in the immediate next quarter.
Asked about the situation, Bangladesh Garment Manufacturers and Exporters Association vice-president Md Shahidullah Azim told New Age that global buyers had been purchasing basic items due to the Covid outbreak and that was why their value addition was on the decline.
Businesses across the globe have entered a recovery phase and demand for value-added products would increase gradually in the coming months, Shahidullah said.
In the April-June quarter, RMG export represented 81.15 per cent of the country’s $9.82 billion export.
Bangladesh’s woven garment export was $3.66 billion and the remaining $4.31 billion came from knitwear export.
The United States, Germany, the Unite Kingdom, Spain, France, Italy, Canada, the Netherlands and Belgium are the country’s major apparel export destinations.
Bangladesh’s export to the US was $1.64 billion during the April-June quarter in 2021 followed by $1.41 billion to the Germany, $800 million to the UK, $521 million to Spain, $491 million to France, $291 million to Italy, $250 million to the Netherlands, $283 million to Canada and $151 million to Belgium.
Following the Covid outbreak, the government initially announced a Tk 5,000-crore stimulus package for the apparel sector for payment of salaries to employees. Later, the size of the package was enhanced to above Tk 10,000 crore.
Besides, the exporters were receiving pre-shipment credit, cash incentive, export development fund, bonded warehouse facility and back-to-back letter of credit facilities, among other things, to maintain a strong foothold on the global market.
The BB’s quarterly review on the RMG sector said, ‘Total export earnings from RMG increased both quarterly and yearly compared to that of the previous quarter and that of the previous year respectively. However, it is still uneven because Bangladesh has already lost its position as the second top RMG exporter in the world to Vietnam.’
However, Bangladesh’s RMG export in the first seven months of 2021 was higher than that of Vietnam’s during the same period. The position would not be confirmed until it is maintained for the entire year of 2021.
The central bank, in its quarterly review, stressed that production of synthetic fibre-based products instead of cotton-based products, production of costly diversified products instead of basic and lowprice products, inviting the foreign investors to invest in Bangladesh, fast broad-based economic recovery from the impacts of the Covid outbreak, among other things, may help to regain the country’s position in sustainable RMG export growth in the near term.
(NA)
