Over Valuation Of Currency Hinders RMG Exports
Brands shifting to Bangladesh competitors for cheaper products
Published : Wednesday, 9 October, 2019 at 12:00 AM Count : 140
Export orders of readymade garment (RMG) by overseas buyers are steadily slipping out of the country to competitors of Bangladesh garments which have devalued their currencies to offer at lower price making their produce competitive.
The switching of orders is increasingly taking place over the past few months while the demands of the Bangladesh garment manufacturers and exports for local currency devaluation to overcome the challenge is going unheeded.
RMG exports suffered steady loss during the last three months as export data of Export Promotion Bureau (EPB) released on Sunday showed.
Rubana Haq, President of the Bangladesh Garment Manufacture and Exporter Association (BGMEA) told The Daily Observer, "The number of buyers is going to alternative market like Vietnam, India, Pakistan, China and other countries due to low price."
He said that export order declined in the last three consecutive months to show a steady fall in export. She feared the trend may continue for the next three to four months.
According to sources, RMG export orders, which is the country's main export sector; have declined by an average of 20 percent over the past six months? Demand for Bangladeshi garment products in the world market has decreased also due to the longer lead time to execute export orders.
According to data provided by BGMEA a total of 46 apparel factories were closed in the last six months. In those closed factories, a total of 25,453 workers were employed mostly women who lost their jobs.
Meanwhile, the Bangladeshi businessmen said overseas buyers were withdrawing work orders from Bangladesh and giving them mainly to Indian exporters. They said despite prevalence of a peaceful working environment in the country, production cost of apparels in Bangladesh is rising aving way for Indian apparel sector to benefit from Chinese setback.
Export figure released by EPB said the country earned USD $2.92 billion from overall exports in September, which is down from $3.15 billion during the same period last year.
However, the exports earnings during July-September, the first quarter of the current fiscal year, plunged by 2.94 percent to $9.65 billion down from $9.94 billion during the same period of last year.
In August, the second month of the current fiscal year, Bangladesh earned $2.84 billion, down by 11.49 percent from the same period last year.
EPB sources said export earnings grew by 10.55 percent year-on-year to $40.53 billion in FY 19 riding on a high volume of garment shipment in favourable external business environment.
The earnings were 3.94 percent higher than the annual target of $39 billion in FY 19.
Meanwhile, the overall export target for FY 20 has been set at $44.40 billion, with a 6.76 percent growth target. It can be easily achieved, the business sources said. But the currency issue may really hit the country's RMG export if it is not quickly addressed.
Md. Rezwan Selim, Director, BGMEA and Managing Director, Softex Sweater Inds. (Pvt) Ltd told the Daily Observer, "Vietnam, Cambodia, Pakistan, India and other countries have devalued their currencies against dollar to make their produce competitive. As a result, buyers are getting RMG products at lower price in those markets."