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Sunday, September 24, 2017


$50b RMG export target seems more challenging

Bangla Apparel Desk

March 20, 2017

Achieving the $50 billion export target by 2021 from readymade garment sector is becoming more challenging due to slow growth in RMG exports and other external factors, analysts and exporters said.Movements of buyers to Vietnam and other neighbouring countries, increased facilities to RMG sector in several Asian nations, gradual fall in prices and some domestic factors are affecting the competitive edge of Bangladeshi garment manufacturers in the international market.

Moreover, while the government is targeting to take RMG exports to $50 billion by 2021, the export growth has not been adequate and even missed the target in the July-February period of the current fiscal.According to Export Promotion Bureau (EPB) data, RMG exports in the first eight months of the current fiscal stood at $28.09 billion, which is 5.64 percent lower than the target of $30.38 billion. Achieving the $50 billion target would require the export growth at more than 12 percent, but the growth currently hovers around 3 percent.

Bangladesh Garment Manufacturers and Exporters Association (BGMEA) President Md Siddiqur Rahman said, “In the last two years, production cost has increased by up to 17 percent due to gas crisis, devaluation of euro, price fall in EU and US market on the back of the US election and Brexit.As a result, we are gradually losing competitiveness in the global market.”

Bangladeshi exporters have lost 7 percent market share in Canada, and 6 percent in the UK market in last one year.

According to BGMEA data, prices of apparel products plunged by 3.81 percent and 0.76 percent respectively in the US and EU countries in 2015. In 2016, the prices of Bangladeshi RMG items came down by more than 1 percent in the US market and 3.19 percent in the EU countries.

Dr Nazneen Ahmed, senior research fellow at Bangladesh Institute of Development Studies (BIDS), said if the current growth rate maintained by the readymade garment sector will not suffice to achieve the $50 billion export target by 2021.“It will require more than 12 percent export growth to achieve the dream,” she said, adding that maintaining last fiscal’s growth will take RMG exports to $45 billion by 2021.

She also blamed internal factors including infrastructure deficiency and lack of smooth energy supply for the sluggish growth in RMG exports, arguing that there is no immediate solution to the infrastructure issue. The researcher, however, said addressing the electricity and gas supply shortage will be helpful to reach the target by the stipulated time.

Exporters Association of Bangladesh (EAB) President Abdus Salam Murshedy said the global apparel market is shrinking gradually. “The size of the global apparel market was $483 billion in 2015, which came down to $443 now,” he said.

He also said Bangladesh’s RMG sector has been facing a series of challenges including lack of competitiveness advantages, currency devaluation in the EU Zone, and the impacts of Brexit and US election.“The whole world is doing business in US dollars and Bangladeshi currency remains very strong against the US currency over the last 4 -5 years,” he said, adding that the competitors are taking the full advantage of devaluation their currencies against the greenbacks.

Turkish currency has been devalued by around 68 percent while India and Vietnam devalued their currencies by 40 percent, which is helping their export growth.“We have quality electricity, but we need quality supply of gas and electricity,” Salam Murshedy said.

The EAB president also said the government has set a rather conservative export target for FY 2016-17. “We still lag far behind from the dream,” he said.

Regarding the remediation process in apparel sector after the Rana Plaza incident, he said though remediation involves huge cost, the process is moving ahead.“The government is giving a lot of support to the sector, but this is not enough compared to the facilities being provided in other countries. Our competitors are maintaining double-digit export growth while we are stuck in around 3 percent,” he said.

Mentioning that the RMG sector currently employs nearly 4.4 million people of whom 80 percent are women, Salam Murshedy urged the government to establish special industrial zones for the RMG sector out of Dhaka on a priority basis to help boost the production.“The Prime Minister has announced establishing 100 industrial zones and that might take some time. So we would request the government to set up four industrial zones for apparel sector on a priority basis,” Salam Murshedy said.

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