Bangladesh Institute of Development Studies (BIDS) has expressed concern that Bangladesh's overall exports in the global market may decline by 6 per cent after the country's transition from a least developed country to a developing country.
Researchers presented this information on the second day of BIDS's four-day 'Annual BIDS Conference on Development (ABCD) 2024'.
The findings were revealed in a study titled 'Supply Chain Dynamics for Sustainable RMG Growth in Bangladesh'.
The organization conducted this survey on 63 medium and large garment factories to identify obstacles and solutions for efficient, cost-effective supply chains in Bangladesh's RMG sector in the post-LDC environment.
A negative balance of trade can affect GDP. If developed countries impose tariffs on Bangladeshi products after graduation (except the United States), then real GDP could decline by about 0.38 per cent.
According to the survey results, Bangladesh's total exports may decline by about 6 per cent and the garment sector by about 14 per cent. In the first five months of the current fiscal year, Bangladesh's export revenue increased by 15.63 per cent to $19.90 billion, which was $17.81 billion last year. In November 2024, export revenue increased by 15.63 per cent to $4.11 billion.
In November last year, the revenue was $3.56 billion. The Export Promotion Bureau released this information on Wednesday. Garment exports may decline by 10.8 per cent by 2031 due to the loss of customs duties that Bangladesh enjoys. Customs duties ranging from 7 to 14 per cent may be imposed instead of duty-free and quota-free benefits.
In addition, the potential 9.6 per cent tariff could reduce total textile and garment exports to the European Union market by about 6.1 per cent. The RMG sector, the single largest contributor to national exports, earned $16.11 billion, compared to $14.34 billion in the same period last year.
However, the growth rate of the ready-made garment industry is relatively low compared to overall exports, at 12.34 per cent.
Overall export growth in the first five months of the current fiscal year was 15.63 per cent.
After LDC graduation, Bangladesh will not enjoy duty-free preferences in most developed markets under the World Trade Organization (WTO) duty-free, quota-free arrangement.
The European Union may impose a tariff of about 4 per cent on fabrics, 8 per cent for semi-finished garments and 12 per cent for most-favoured-nations for garments.
After LDC graduation, garment manufacturers will have to face challenges to stay in the global market. 32 per cent of the survey respondents said that more investment will be required to introduce new machinery. 25 per cent opined that profits will be very low. 21 per cent of the respondents said that there will be more competition in the market. 21 per cent said that production costs will be higher and buyers may move to other countries. 19 per cent of the respondents said that work orders will decrease.
