Wednesday, June 28, 2017
Bangla Apparel Desk
April 18, 2017
Apparel shipment to potential nontraditional markets declined sharply in the third quarter of the current fiscal year, in a blow to the country's effort to diversify exports base, officials said.
Exports to Brazil, Mexico, South Africa and Korea dropped by 26.97 per cent, 16.97 per cent, 16.86 per cent and 14.87 per cent respectively in July-March period of 2016-17 fiscal compared to the corresponding period of last fiscal, according to official data.
Shipment to Australia and India declined by more than 7.0 per cent, while exports to Japan and Turkey witnessed a meagre growth of 2.11 per cent and 0.29 per cent respectively in the same period.
The nontraditional emerging markets for apparels are Australia, Japan, China, Chile, Brazil, Japan, Russia, South Africa, New Zealand, Malaysia, Korea, India and Turkey.
The total exports of readymade garment products to the non-traditional markets grew by 1.57 per cent in the July-March period of the fiscal year 2016-17, according to data.
On the other hand, income from some traditional and major markets such as Belgium, the UK, the USA and Canada fell by 6.89 per cent, 6.85 per cent, 7.56 per cent and 6.41 per cent respectively during July-March of 2016-17 fiscal.
Recording a slow growth of 2.39 per cent, the country fetched $20.92 billion from apparel exports during July-March period of the current fiscal.
Apparel manufacturers attributed sluggish global demand followed by low unit price of garment items and high duty in the nontraditional markets to the dismal growth.
They also blamed internal issues such as an increase in cost of doing business and closure of a good number of factories due to compliance requirements to such a situation.
They also raised another factor that import from Bangladesh was getting costlier due to a strong local currency against the US dollar.
Moreover, the currencies are weaker in the importing countries, especially in Brazil, India, and Turkey, which contributed to sapping demand.
Exporters and experts blamed the high duty--33 per cent in Brazil, 30 per cent in both Turkey and Mexico and 40 to 50 per cent in South Africa for the poor exports to those countries.
The global demand for apparel is declining in the last couple of years putting a negative impact on local exports, Faruque Hassan, a vice president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), told the FE.
The price of apparel also fell while cost of doing business has significantly gone up, he added.
Currency devaluation in importing countries is another factor, Mahmud Hasan Khan, another BGMEA vice president, said adding local currency still remained stronger than US dollar.
Many factories have been shut due to compliance issues, which also left put an adverse impact on the production level, he said.
Khondaker Golam Moazzem, research director of the Centre for Policy Dialogue (CPD), recommended the government's measures for convincing the nontraditional markets to cut duty while reviewing the incentive package to enhance the sector's competitiveness.