In the April-June quarter of FY ’24, Bangladesh’s ready-made garment (RMG) industry saw its lowest value addition in 21 months, at only 57 per cent. According to data supplied by the Bangladesh Bank, factors that contributed to this reduction included rising fabric import costs and a persistent gas issue that negatively impacted domestic spinning output.
When net exports were at 51 per cent in the July–September quarter of FY ’23, the industry previously experienced such a large decline in value addition. According to the data, net exports were a much higher 72.20 per cent in the January-March quarter of FY ’24.
Concerns have been expressed by industry participants over the Bangladesh Bank’s methodology of contrasting the data from the current quarter with the exaggerated numbers from the prior quarter. The president of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), Muhammad Hatem, had doubts on the reliability of the export data from January to March.
The Bangladesh Bank report states that during the April–June quarter, the cost of importing raw materials totalled US $ 3.8 billion, or 43 per cent of RMG export revenue. As a result, net exports came to US $ 5.04 billion, down 14 per cent from the previous quarter’s US $ 5.89 billion and 10 per cent from the same quarter last year (US $ 5.61 billion).
In the April-June quarter, RMG exports totalled US $ 8.84 billion, a 36 per cent decline from the US $ 11.77 billion earned in the previous quarter and a 1.38 per cent decrease from the US $ 8.96 billion earned during the same time last year.
According to figures from the central bank, net export levels during the April–June quarters of FY ’21 and FY ’22 fell between 50 and 60 per cent. Hatem added that a drop in exports might continue in the upcoming months, mostly as a result of continued instability across the country that affects demand for goods that are normally in high demand in Europe in the winter and early summer. Additionally, the sector is being forced to rely on expensive imports for basic commodities like fabric and yarn, which are crucial for production.
Due to the Taka’s devaluation, the RMG industry has so far far fared very well, the research noted, despite global economic slowdowns associated with geopolitical crises. Although woven clothing accounted for 38 per cent of total export revenue, the sector’s performance declined in the April–June quarter when compared to the prior year.
The US, Germany, the UK, and other European countries were important export destinations for Bangladeshi RMGs, generating a total of US $ 6.98 billion for the quarter. But when compared to the same period last year, these markets had declines of 2.43 per cent and 6.56 per cent, respectively, from the previous quarter.
Hatem emphasised the necessity for the current government to reevaluate the policies of the previous administration, which were founded on false information and resulted in the termination of multiple incentives. In order to support constant production, he urged a renewed emphasis on guaranteeing a steady supply of gas and power for firms focused on exports.
