11.45% growth key to attaining $100b RMG exports by 2030

Bangladesh’s apparel exporters will have to attain an average annual export growth of 11.45 per cent in the global markets to meet the $100 billion target by 2030, says a study.

Research and Policy Integration for Development (RAPID) Chairman Dr Mohammad Abdur Razzaque presented the report “Bangladesh’s Export Prospects in Europe.” The Bangladesh Garment Manufacturers and Exporters Association (BGMEA) had earlier set the target.

The study – released on Sunday – mentions that the $100 billion goal can only be achieved by doubling exports, and it is possible to export apparel products worth $90 billion in the US, EU and UK markets. However, this endeavour would be a challenging one for Bangladesh, it adds.

According to the recent RAPID report, the global apparel market size stood at $440.5 billion based on data collected in 2021. Of the figure, $200 billion belongs to UK and EU markets, while the US market size is $87.3 billion.

Bangladesh exported apparel goods worth $26 billion to the UK and EU last FY. If exports to these markets manage to achieve a compound growth of 11.61 per cent in the next eight years, the figure could reach $65 billion.

Meanwhile, RMG exports in the US market reached $9.01 billion in FY22. There is a possibility to increase exports in this market by 15 per cent to $25 billion.

Speaking to The Business Post, RAPID Chairman Dr Mohammad Abdur Razzaque said, “In order to hit the apparel export target of $100 billion, Bangladesh has the opportunity to earn $85 billion to $90 billion from the US and EU markets.

“Bangladesh will be able to boost RMG exports to the European market by $20 billion with existing capacity. The new target set by the BGMEA aligns with the trend in export growth.”

Bangladesh’s apparel sector exports reached $42.61 billion in FY22. Entrepreneurs say the country will be able to achieve the $100 billion export target by maintaining the RMG industry’s growth recorded in the last few years, and expanding the markets.

Industry insiders say the growth recorded amid adverse situations – especially amid the Covid pandemic and global financial crises – has given the apparel makers confidence to set up a high target.  

To achieve this eight-year goal, the BGMEA is working on a roadmap which will include plans on boosting exports, and sustainable and environmentally friendly production processes.

RAPID says Bangladesh will face a big challenge centring on the issue of preferential trade, especially duty free market access. The country is currently close to graduating from the LDC (least developed country) status.

Bangladesh’s competitors in the apparel sector have been making free trade agreements (FTAs) with different countries and regions that have big markets for RMG products. Vietnam has signed a FTA with the EU, which will grant the country full duty-free access for the next few years.

India’s FTA with the UK is also at the final level. This will pose another challenge to Bangladesh’s apparel sector – which is the country’s primary source of earning foreign currency.

Besides, a country has to fulfill 32 conventions to avail the GSP+ scheme in the EU market, but Bangladesh has fulfilled only 20 such conversions.

The 12 conventions that Bangladesh is yet to fulfill include – civilian and political rights, taking action against torture and other brutalities, establishing the financial, social and cultural rights, and elimination of all forms of discrimination against women.

Bangladesh is set to graduate from LDC in 2026.

The country will continue to get duty free market access in 27 countries of the EU till 2029, under the Everything but Arms (EBA) scheme. This will help Bangladesh achieve the new export goal for RMG products.

Bangladesh has also been exporting RMG products to the USA competitively even after paying all duties. Abdur Razzaque believes that Bangladesh has the potential to boost RMG exports in these two regions.

He then said, “Bangladesh – after its LDC graduation – will face the pressure of duties in high-potential markets such as Canada and Japan. This will impact exports. So, Bangladesh will have to reduce the cost of doing business, and boost its capacity.

“The country will have to automate the sector in order to increase a more capital-intensive production process. Besides, Bangladesh must put an emphasis on capturing the market that China has lost.”

Razzaque added, “Bangladesh must expand its non-cotton production capacity. Aside from boosting the capacity of factories, expansion of the country’s roads, ports, transportation, and fuel capacity will play a major role in meeting the $100 billion export target.”