RMG exports may hit negative growth in September

Bangladesh’s readymade garment (RMG) industry has been witnessing a steady growth in exports since August last year, but the lucky streak might be coming to an end as the country’s top earner registered negative growth in the first 18 days of this September.

National Board of Revenue (NBR) data – compiled by the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) – show that the sector’s earnings dipped 12.36 per cent to $1.72 billion in this 18-day period, which was $1.97 billion compared year-on-year.

Last time the RMG industry posted a negative growth was in July 2021. In this period, the industry’s export earnings had dropped by 11.02 per cent to $2.89 billion, compared to $3.24 billion recorded during the same month a year ago, show Export Promotion Bureau (EPB) data.

Local manufacturers blamed the decline of overseas sales on the Russia-Ukraine war, global economic crisis, high transportation costs, and increased bank interest rates in their export destination countries.

The crisis worldwide has severely impacted the sale of clothing brands, and this is why they still have a large volume of apparel items in stock. Buyers have been reducing their orders due to their large stock and a decline in consumer demand, industry insiders say.

Besides, many buyers are deferring shipment schedules and putting orders on hold. These are the key factors contributing to the RMG industry’s possible negative growth in September.

Commenting on the matter, BGMEA President Faruque Hassan said, “Buyers have asked us to slow down production since the last two months, and many orders have been put on hold due to the global economic crisis.

“For this reason, we are likely to witness negative export growth in this month.” EPB data shows that Bangladesh exported $42.61 billion in apparel goods – with a year-on-year 35.47 per cent growth – during the last FY.

However, due to the Russia-Ukraine war, the global economy is facing a tough situation, even more so than the Covid-19 pandemic, which steadily depleted the overseas consumers’ purchase capacity.

The war has nearly halted Bangladesh’s overall exports to Russia as well.

Energy crisis a factor too

Bangladesh’s RMG industry was already facing a downward trend in orders from abroad when the country began facing an energy crisis, which exacerbated the sector’s difficulties, business leaders say.

“Because of the power cuts, apparel manufacturers faced load shedding in almost half of their production hours. The factory owners then started relying on diesel generators, which increased their production costs,” said Nipa Group Managing Director Md Khosru Chowdhury.

Besides, most dyeing and washing factories could not run production uninterrupted due to low pressure of gas, causing a disruption in the raw material supply chain.

These issues forced exporters to defer shipments.

Bangladesh Knitwear Manufacturers and Exporters Association Executive President Mohammad Hatem said, “Although we received a good number of orders amid the global crisis, we failed to deliver on time due to the country’s energy crisis.

“The ongoing energy crisis in Bangladesh is demotivating buyers from placing orders here.

The government should ensure uninterrupted power and energy supply in the export-oriented industries to facilitate smooth exports of goods.”

 Exporters eye non-traditional markets

Industry insiders point out that the country is almost entirely dependent on the United States, United Kingdom, and European Union markets. Bangladesh’s apparel exports suffer greatly whenever these countries face difficulties.

To avoid the crisis, Bangladesh’s apparel exporters are eyeing non-traditional markets, especially those in India, Japan, South Korea, and Australia, to boost exports. They are also focusing on Middle Eastern and Latin American markets to increase the number of orders.

BGMEA plans to raise its share in these markets, and become a billion-dollar export club there.

Bangladesh is already exporting goods worth over one billion to Japan annually.

BGMEA’s Faruque Hassan said, “To recover from ongoing export crises and increase our earnings in the non-traditional markets, we will organise several road shows in selected countries in the coming days.

“Thanks to our marketing across the world, especially in non-traditional markets, the number of our orders is improving. We believe that the dark cloud of uncertainty will disappear after this November,” said Bangladesh Apparel Exchange Managing Director Mohiuddin Rubel.