After a rather forgettable and rollercoaster 2020, marked by mass disruptions spanning across markets and supply chains, Bangladesh made a strong turnaround in 2021, in terms of exports, especially towards the end of the year.
Thanks to the grit and determination of the garment makers, ably supported by the Government — which decided against long-drawn lockdowns and allowed apparel units to carry on with business notwithstanding the pandemic while also extending the much-needed support through stimulus loans — helped the country (Bangladesh) register export earnings of US $ 33.6 billion even as overall export marked 16.46 per cent growth.
As expected, apparels contributed to about US $ 20 billion, more than 80 per cent of the earning, growing over 28 per cent and exceeding the target by nearly 15.2 per cent in the July-December period.
When many of Bangladesh’s competitors have been struggling to come to terms with COVID-19 and its fallouts, Bangladesh ended the year (2021) with a bang- recording US $ 4.04 billion in apparel exports in December noting 52.5 per cent year-on-year growth! This is according to the data published by the country’s Export Promotion Bureau (EPB) and analysed by Team Apparel Resources (AR) even as exporters claimed they have never shipped as many products in a calendar year as they did in the past year.
“…this is the result of long-term preparations; we believe this trend will continue in the future,” claimed an upbeat President of Bangladesh Garment Manufacturers and Exporters Association (BGMEA), Faruque Hassan adding the records are an indication of robust export sector, including the garment industry.
In December, the country’s overall exports grew 48.27 per cent year-on-year, exceeding the target by 25.45 per cent after a steady overall export performances in the preceding months – US $ 4.04 billion in November, US $ 4.73 billion in October and US $ 4.16 billion in September.
Shipment increase in major markets rekindles optimism…
After suffering the worst of the downturns during the peak of the pandemic earlier in 2020, the industry is rather optimistic now as it has won orders from new buyers in the Western markets.
According to data analysed by Team AR, Bangladesh’s apparel exports to the US (the top export destination for the country) in July-December of FY ’22 grew by 45.91 per cent to US $ 4.23 billion from US $ 2.9 billion in the same period of the previous fiscal year.
Bangladesh’s apparel export to Germany (the second largest export destination) increased by 21.20 per cent to US $ 3.33 billion in the said period; earnings from garment export to the UK (the third largest export destination for Bangladesh) in the first half of FY ’22 also grew by 20.65 per cent to US $ 2.14 billion from US $ 1.77 billion in the same period of the past fiscal year.
Likewise, Bangladesh’s apparel export to Spain in the first half of FY ’22 grew by 30.78 per cent to US $ 1.45 billion; that to France grew by 21.52 per cent to US $ 1.06 billion in July-December period of FY ’22 even as apparel exports to Canada grew by 23.78 per cent to US $ 602.82 million in the said period of FY ’22.
“Bangladesh will be able to maintain the growth if it can retain new buyers and orders for new products,” stated BGMEA Vice-President Shahidullah Azim, underlining new buyers aside, orders for value-added products also helped Bangladesh’s cause in terms of increasing export earnings.
Besides, Vietnam and India imposed Coronavirus lockdowns in this period that led the buyers to look at Bangladesh, claimed the BGMEA VP even if the general opinion within the industry is US-China trade war which further led a good number of Western buyers to shift their sourcing from China while political instability in Myanmar and Ethiopia also created opportunities for Bangladesh to grab additional work orders.
“We got orders for many expensive products apart from shirts, trousers, polo shirts and sweaters,” observed Shahidullah, making clear it was now time to shift gears and focus on grabbing more such orders as buyers are now looking for diversity in terms of product offerings.
BGMEA President Faruque Hassan said, “…it is high time we shifted our focus to non-cotton-based textile and apparel to realign our product mix in line with global sourcing trends,” expressing satisfaction that more and more factories were now embracing value addition.
Globally the share of cotton textile and clothing consumption is 25 per cent whereas 75 per cent of Bangladesh’s apparel product is concentrated within cotton.
Encouraging outlook for 2022?
The spread of Omicron variant and a slump in demand seem more of a speculation than reality as Western countries have not imposed harsh restrictions as the variant has been proved to be less severe.
The supercharged demand is likely to continue, remarked Fazlee Shamim Ehsan, Vice-President of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) even if Faruque Hassan expressed hope apparel export would be able to add another US $ 7- US $ 8 billion by the end of this fiscal year (in June 2022).
“The annual export target for the current financial year is US $ 43.5 billion; export earning is expected to reach US $ 46 billion,” noted Vice-Chairman of the Export Promotion Bureau (EPB) AHM Ahsan.
Last year’s decision to strike a balance between life and livelihood with the help of the Government was a wise one, felt the BGMEA President, adding, “We will move forward this year too by tackling any situation through strenuous efforts and necessary policies of the Government.”
Call it the new-found confidence, thanks to the robust export performance, which has exceeded the pre-pandemic level, the Government has now set an export earning target of US $ 80 billion by 2024.
The proposed export policy for 2021-24 has targeted US $ 80 billion export income amid challenges of shrinking trade benefits following Bangladesh’s graduation from the least developed status.
The target has been fixed after consultations between the Commerce Ministry, businesses, research bodies and other stakeholders.
US $ 8 billion monthly apparel export on the horizon!
Coming at the back of Bangladesh consolidating its position in the global supply chain by remaining open for businesses even during the pandemic, garment manufacturers are now confident of supplying garment products worth US $ 8 billion a month to the global buyers.
“Bangladesh is gradually getting ready to cater garment work orders worth US $ 7 billion to US $ 8 billion every month,” claimed the BGMEA President even as he conceded the industry is not capable to touch the monthly eight billion mark as yet but could do so soon. “We are expanding our capacities,” stated Faruque adding, in Asia, Japan has already turned into a US $ 1-billion market for Bangladesh even as many other countries including China, South Korea and the likes would follow suit.
The rise in apparel export is also expected to bring in lot of investment in the spinning, weaving, dyeing and other primary textile sectors this year — spinning sector has already witnessed a major jump in investment last year as entrepreneurs set up 26 new mills to meet rising demand and businesses pumped in around Taka 5,970 crore in new manufacturing plants — according to the industry insiders.
Keeping with the export growth plan, the BGMEA is carrying out three studies on technical garment products, fibre diversification and the post-pandemic roadmap to take the industry to level next.
It will not be cakewalk though as most industry leaders believe there will be challenges going forward, some of which have already started manifesting including rising raw material cost and shrinking profit margins. But stress on value-addition, diversifying offerings and focusing on sustainability would be the keys to prevail over the challenges, they feel, making a strong resolution to make a sustainable, energy-efficient, and eco-friendly apparel sector this year.
“Our carbon emissions rate is very low, yet we are trying to figure out ways to reduce it further and become energy-efficient,” said the BGMEA President underlining the industry’s desire to do more in terms of recycling, circular economy, and innovation, which will help build a clean and green society.
It may be mentioned here, at the very onset of 2022, Bangladesh added yet another feather to its cap after the United States Green Building Council (USGBC) recognised two more readymade garment factories as green, thereby raising the total number of environment-friendly establishments in the apparel sector to 155!
The country is already the global leader having the highest number of green garment buildings- 46 Platinum rated, 95 Gold rated, 10 Silver, and 4 have no rating even as dozens more units are waiting on the wings to make the cut following LEED certifications.
Further, out of the top 10 USGBC LEED certified factories, 7 are in Bangladesh.
The apparel manufacturers have also agreed to form a joint committee to set a minimum price and manufacturing cost of apparel items with the BGMEA President calling upon garment manufacturers to pay more attention towards price negotiations and price calculation, as they try and take the industry to new heights in 2022.