We want to diversify. We have to assess the areas with more production and what kind of market demand is there. We must think of diversifying our products and what difference it makes. What is the global demand? Just don’t look at one or two countries. We have to look at every side. We will do whatever we want to do for the sake of economic development…Remember these words from Prime Minister Sheikh Hasina at the inauguration of ‘Destination Bangladesh’ in 2018.
This focus on diversification seems to be paying off for the Bangladesh garment industry now!
As per data released by the Export Promotion Bureau (EPB), Bangladesh’s apparel exports to non-traditional markets have posted a sharp growth by 21.77 per cent to US$ 5.68 billion in the just concluded fiscal year, with overall apparel export to both traditional and non-traditional destinations hitting US$ 34.13 billion during the period.
Apart from USA and Europe, most other countries are considered non-traditional destinations including Australia, Brazil, Chile, China, India, Japan, Korea, Mexico, Russia, South Africa and Turkey.
As per the EPB data, Japan imported apparel goods worth US$ 1.09 billion, which is 28.90 per cent higher from the previous year while China, the second largest non-traditional market for the country’s RMG offerings, imported products worth US$ 506.51 million, up by 29.33 per cent from the previous year.
Bangladesh’s apparel exports to India (which has emerged as a strong export destination owing to multiple reasons) rose by 79.09 per cent to US$ 499.09 million during the period, the highest growth of apparel registered in the just concluded fiscal year.
Knitwear exports to India earned US $ 369.43 million while woven items fetched US $ 129.66 million.
As per experts, there are a slew of reasons behind this spurt in exports, primary amongst which are the so-called ease of non-trade barriers, duty-free market access to India, incentives for non-traditional markets (as provided by Bangladesh), rise in production cost in India due to implementation of Goods and Services Tax (GST), and the ever-increasing presence of global retailers in the neighbouring country, which all have contributed to this sharp rise.
“India is a growing market for Bangladesh, where non-tariff barriers were hindering exports. In recent times, these barriers are relaxed to some extent,” explained World Bank Lead Economist in Bangladesh Zahid Hussain speaking to the media, while former Vice-President of BGMEA Shahidullah Azim on his part maintained, “Bangladesh offers apparel goods at reasonable prices, while global retailers are opening more outlets in India, who buy products from here. Production costs in India also increased due to implementation of the GST.”
The overall performance in non-traditional markets, experts believe is largely due to the Government’s initiative towards market diversification and incentivising the garment makers to motivate them to venture out to the unchartered territories.
“Bangladesh’s export earnings from new markets are increasing faster due to market diversification initiatives from the Government and the apparel manufacturers,” explained former BGMEA Senior Vice-President Faruque Hassan while speaking to the media, who went on to add that BGMEA in collaboration with the Government has created opportunities for the manufacturers to participate in the global expositions to connect new buyers, which contributed a lot to enhanced exports to new markets.
Besides, safety improvement in the apparel sector expedited the export growth as it boosted investors’ confidence, leading to more work orders, sector people say.
As a part of the Government’s market diversification step, the Government increased cash incentive from 3 per cent to 4 per cent for the last fiscal year, which encouraged exporters to go for new destinations, former Commerce Minister Tofail Ahmed underlined.