In the fiscal year 2020-21, Bangladesh earned US $ 31.45 billion from apparel exports, posting a 12.55 per cent growth, according to data by the country’s Export Promotion Bureau (EPB), which in the previous year was US $ 27.94 billion, even as on the other hand, the country’s overall export earnings stood at US $ 38.75 billion, up by 15.10 per cent, which was US $ 33.67 billion the year earlier.
Thanks to the COVID-19 pandemic and lockdowns worldwide across geographical locations, Bangladesh’s apparel exports in FY 2019-20 had declined by 18.84 per cent even as the sector fetched US $ 34.13 billion in FY 2018-19.
As per the BGMEA, in the month of June 2020, the earnings stood at US $ 1.99 billion, showing an 8.56 per cent decline over that of the corresponding month of previous calendar year even as RMG products fetched US $ 1.23 billion and US $ 374.67 million from export in the months of April and May respectively while during March to May of the calendar year, apparel exports recorded 54.79 per cent decline over that of the corresponding period of 2019.
Speaking to media, the then BGMEA President Dr Rubana Huq had said June export earnings represented an 8.5 per cent dip in year-on-year basis.
“This is a true reflection of the reality. The July-September period traditionally is the lean period for the industry. We will wait to see the impact,” even as explaining the overall negative growth over the fiscal, the BGMEA President then said there has been a fall in global consumption.
“We were already experiencing a slowdown, COVID-19 pandemic made it even worse,” Rubana added.
It may be mentioned here that in fiscal 2019-20, garment exports to non-traditional markets also took a significant hit to dip by 15.95 per cent to US $ 4.78 billion.
Meanwhile, speaking to the media, Managing Director of Narayanganj-based Plummy Fashions Limited and ex-President of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), Md Fazlul Hoque, maintained that local exporters were performing very strong in the non-traditional markets in the pre-pandemic time. However, the fallouts of the pandemic slowed down the growth of the earnings from the emerging markets.
“… The local exporters were busy with their own business, factories and the traditional markets and they did not notice the shipments to the non-traditional markets,” underlined Fazlul even as Managing Director of Snowtex Group, SM Khaled, while talking to the media, underlined the economy of the non-traditional market suffered due to pandemic, and consequently the growth of those markets was slower compared to the overall apparel exports.
However, with the restoration of normalcy in the global apparel supply chain, overall apparel shipments improved and so did shipments to non-traditional markets, which showed an encouraging trend in contributing towards this export revival with overall shipments to non-traditional markets growing by around 6.36 per cent to US $ 5.08 billion in fiscal year 2020-21. In the last fiscal year, the share of the non-traditional markets was 16.16 per cent, while in the fiscal year 2019-20, the share was 17.10 per cent and in 2018-19 it was 16.66 per cent, as per the data from the apex garment makers’ body, the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), while amongst all the non-traditional and emerging markets, Japan has been making a significant contribution.
For the uninitiated, Bangladesh considers all markets as non-traditional except for USA, Canada and the 27 member countries of the EU (namely Austria, Italy, Belgium, Latvia, Bulgaria, Lithuania, Croatia, Luxembourg, Cyprus, Malta, Czechia, Netherlands, Denmark, Poland, Estonia, Portugal, Finland, Romania, France, Slovakia, Germany, Slovenia, Greece, Spain Hungary, Sweden and Austria).
Bangladesh has been performing well in Australia even during the time of this pandemic and in the last fiscal year, earnings from garment shipment to Australia was US $ 731.13 million, a rise from that of US $ 601.14 million in fiscal year 2019-20 even as the amount was US $ 719.78 million in the 2018-19 fiscal year, as per the BGMEA data, while among the Latin American countries, Brazil and Chile have been showing promise for garment export even as in last fiscal year local exporters shipped US $ 70.73 million worth of goods to Brazil and US $ 82.56 million to Chile although in both of these destinations, the amount of garment shipment was more than US $ 103 million in fiscal year 2019-20.
Now, coming back to Japan, it is the only non-traditional and Asian destination where US $ 1 billion worth of garment shipments were made from Bangladesh in fiscal year 2018-19 whereas the total amount of goods to be shipped was worth US $ 1.09 billion even as the shipment of garments to Japan fell to US $ 961.94 million in fiscal year 2019-20 and US $ 944.82 million in fiscal year 2020-21 respectively because of the fallouts of the pandemic.
“I hope we can export more to Japan as the market is reviving from the fallouts of the COVID-19,” underlined Fazlul, who also exports to Japan even as industry people said Japan is the most promising market for Bangladesh in Asia.
Meanwhile, in Asia, apart from Japan, India and China are two promising garment export destinations for Bangladesh where shipments have been rising even though the pandemic has almost stalled the export growth to these promising Asian markets.
For instance, garment exports to China declined to US $ 271.28 million last fiscal year from what was US $ 329.96 million in the previous fiscal year, as per the BGMEA data even as Bangladesh was significantly utilising the Chinese tariff benefit for 97 per cent of its products before the pandemic, as the country exported US $ 506.51 million worth of goods in fiscal year 2018-19, said the data.
It may be mentioned here that as many as 97 per cent Bangladeshi products enjoy duty-free access in the Chinese market even as Bangladesh’s highest import is being done from China whereas Bangladesh is still lagging behind manifold in terms of exporting goods to China. According to the Federation of Bangladesh Chambers of Commerce and Industries, the trade volume between China and Bangladesh was around US $ 14.68 billion in 2018-19 fiscal year and, of the total trade count, there was import trade of US $ 13.86 billion and export of US $ 831 million while the benevolent Chinese offer to 97 per cent of Bangladesh’s exports, experts felt, would give the much needed boost to Bangladesh’s exports to China.
Meanwhile, Bangladesh’s garment shipments to India, one of the most promising markets, was performing well before the pandemic but took a hit due to the pandemic even as the shipment was US $ 421.86 million last fiscal year, which was US $ 420.76 million in the previous fiscal year while before the pandemic, the amount was almost US $ 500 million to Indian market, where Bangladesh enjoys duty-free facility but reportedly faces a 12.50 per cent countervailing duty.
“Non-traditional markets including China and India are also the manufacturers of clothing products and they meet local demands from own source, which sent imports down,” underlined Economist Mirza Azizul Islam, speaking to the media But shipments to those markets is being revived now and it is expected that the trend will continue, Fazlul said.
Meanwhile speaking to the media, BGMEA President Faruque Hassan reportedly said, “We are working to increase exports of clothing products to non-traditional markers as a part of our market diversification. As the exporters enjoy cash incentives in the non-traditional market, they will drive to export more to this market,” while also adding that he was planning to hold a road show in Dubai in December this year to grab a bigger share of the Middle Eastern markets even as the BGMEA has also been exploring the Russian and South African markets to grab more market shares.
However, in Russia and South Africa, high rates of tariff is a challenge for Bangladeshi garment exporters, he said.
It may be mentioned here that currently, apart from 1 per cent cash incentive for all the markets, the local exporters receive a 4 per cent cash incentive on garment export earnings in a year. So the exporters feel encouraged to export to the non-traditional markets when they receive the cash incentive even if garment export to the non-traditional markets reached to more than US $ 5 billion from only US $ 500 million in fiscal year 2007-08 while garment export to the emerging markets started taking a giant leap when the Government introduced cash incentives for those markets in 2009.
Now as the countries are coming out of the Covid glut, thanks to mass vaccinations and economic recoveries in many countries across the world, one can only expect that apart from the traditional apparel export strongholds, the non-traditional markets would also start contributing significantly to help Bangladesh make a strong export rebound.