RMG value addition up to 71% in Q3 FY23

Value addition in Bangladesh’s readymade garment (RMG) sector rose by 18.82 per cent to 71.06 per cent in the third quarter of FY2022-23, compared to 52.24 per cent documented in the same January-March period of FY2021-22, according to the latest Bangladesh Bank (BB) data.

However, taking Q1, Q2 and Q3 of FY23 into account shows that the value addition on average was at 64.15 per cent. It was 54.5 per cent for the first three quarters of FY22, showed BB data.

Industry insiders said exporting high values items has helped increase the net export earnings. RMG manufacturing costs also rose due to the back-to-back energy price hikes and the rising inflation, but the buyers are somewhat adjusting to those. These helped increase value addition as well.

They, however, said that the apparel sector’s order situation has not been good since the end of 2022 due to the ongoing global economic crisis and that is why demand for raw materials has also fallen. The net export earning is appearing high in Q3 of FY23 as goods ordered in the second quarter were exported in the third quarter.

Bangladesh Garment Manufacturers and Exporters Association (BGMEA) President Faruque Hassan said the industry is now manufacturing high-value clothes and it helped achieve tremendous value addition.

“We are also focusing on using domestic materials, especially for knitwear items and accessories. Buyers are adjusting to our rising production costs a little bit. That’s why we have been able to achieve record value addition,” he added.

According to BB’s quarterly review of the RMG sector, the country earned $11.26 billion in the third quarter of FY23, where the exporters expensed $3.55 billion to import raw materials such as cotton, yarn, fabrics, accessories, chemicals, etc.

This means the country’s net export stood at $8.71 billion in January-March of FY23, which is 71.06 per cent of total RMG export during that period.

In the third quarter of FY22, Bangladesh exported apparel products worth $11.53 billion, where $5.51 billion was spent to import raw materials. The net export had reached $6.02 billion, which was 52.24 per cent of total RMG export.

The central bank data showed that the country achieved 44.61 per cent year-on-year growth in terms of value addition in the third quarter of FY23.