The Bangladesh textile and garment industry has been plaguedby a lot of problems in the last one year. But this has not affected the sectorwhich is blazing new trails and setting new milestones in its apparel shipmentsin the last fiscal year, in the midst of rising energy and raw material costsand an ever growing labor unrest in its garment factories.


The fiscal year 2007-08 saw Bangladesh textile and garmentsector earning US $14.11 billion in export revenues, registering a growth of15.87 percent compared to the previous year. The largest contribution, asalways, came from the readymade garment (RMG) sector.


Garment exports from this small Asian country grew from$9.21 billion in the corresponding period of last year to touch a nadir of US$10.71 billion in the Bangladesh fiscal year July07-June08, to post a growth ofan astounding 16.18 percent.


The Bangladesh garment sector has none other than theChinese textile and garment industry to thank partly for the robust growthachieved in the last 12 months, and mainly due to the down trend witnessed bythe Chinese textile juggernaut in the last few months.


Chinese goods which at one time were the most price competitive in the global market, have lost their edge, because of ever increasing costsof raw materials, appreciation of the RMB and rising energy and labour costs.


This in turn has helped garment exporters from other Asiancountries like Bangladesh, India and Vietnam. Bangladesh is one of the fewcountries to have taken the maximum advantage from this situation.


While exports of woven garments grew from $4.65 billion inthe previous July06-June07 fiscal to $5.16 billion in July07-June08 fiscalto register a growth of 11.0 percent, shipments of knit apparels on the otherhand rose by an awesome 21.48 percent to touch $5.53 billion from $4.55 billionin the corresponding periods.


There is no doubt that the key driver in growth of garmentexports has been the contribution of shipments of knit garments.


During the fiscal under consideration, exports haveconsistently recorded growth in each month of the year, except for threemonths. Exports grew from $691.98 million in July07 to $1143.56 million inJune08 to register a growth of a remarkable 65.41 percent.


In comparison, shipments for the corresponding months ofJuly06 climbed from $904.89 million to just $961.24 million in June07 toclock a growth rate of a marginal 6.30 percent.


Bangladesh garment exports have no doubt been fueled by the Chinese slowdown, butother global factors have also contributed to this above average growth rates.


The continuous appreciation of the Indian rupee in 2007, dueto which exports of apparels and textiles from India had witnessed a slow down,in turn also helped exporters from Bangladesh to deliver such incredibleresults


The scorching growth rates achieved in the last fiscal hasemboldened the garment sector to set ambitious export targets for the next fewyears. It has set a target of $25 billion to be achieved by 2010.


 

The Bangladesh garment industry has achieved an appreciable level of self sufficiency, in its raw material requirements. Due to the rapid investments made in the downstream sectors, the knitwear sub-sector obtains 80 percent raw materials from the domestic market while woven sub-sector is able to source 40 percent of its requirements.


This has resulted in a massive savings in outgo of valuable foreign exchange which otherwise would have to be spent in importing of raw materials.


The growth of the garment industry in the economy has no doubt filled up the space left vacant by the once effervescent jute industry. But the continuous labor unrest and labor shortages could prove to be a dampener in its goal of reaching a target of $25 billion by 2010.


Infact at a recent meeting organized by the labor commissioner with members of the Bangladesh Garment Manufacturers Association to bring out a solution to the ever-growing labor unrest, it was suggested that strong motivational role of the owners, creating a sense of belonging among workers, timely intervention of management in case of agitation, would surely bring about a positive change.


In the coming months the garment sector also may not have the same global competitive advantages it has enjoyed in the last few months. The Chinese government has recently raised the tax rebate availed by exporters from 11 to 13 percent.


The Indian rupee has also seen a downtrend against the US dollar in the last few months and is showing signs of stability. The exporters will have do a lot more to retain the edge that helped the sector post record figures.


Garment Exports from Bangladesh (July-June)


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Source: Bangladesh Garment Manufacturers Export Association