Mr Siddique, Fibre2Fashion extends a warm welcome to you. Thanks for joining the talk on Face2Face! Let us start with the GDP figures for 2008; it marked 6.30% real growth rate. What has been the contribution of Textile & Garment industry in this count and what significance it holds in country’s economy?
According to the estimates of Bangladesh Bureau of Statistics (BBS), the GDP growth rate, estimated to be 6.21% in the financial year 2007-08, which is slightly lower compared to 6.43% of the previous fiscal year, due to slow down of the growth in agriculture sector particularly in the crops and horticulture sub - sector. Textiles and Export-oriented Ready Made Garment (RMG) industry play an important role in the economic development of Bangladesh and contributed 80% of national foreign exchange earning in addition of meeting the lion portion of the domestic demand for textile and apparel products in the last financial year 2008-09. The textile and garments industry provides employment to about 4.5 million people, majority of them are women. Textile and garment sub-sectors account for the second highest position in terms of employment only after agriculture sector. This sub-sector has been making a significant contribution towards the growth of the economy during the last two decades in terms of employment generation, manufacturing value addition and foreign exchange earnings.
Well that definitely makes it a vital sector for economy. So, in your opinion, how is Global Textile & Garment performing these days, and Bangladesh making its way into it?
This is highly encouraging to note that the textile and export-oriented garment industry of Bangladesh has achieved a burgeoning growth during the last two and a half decades. Bangladesh being an LDC had been enjoying quota free market access facilities for export of Textile and Garment (T&G) to many countries until phasing out of Multi Fibre Arrangements (MFA) from January 2005. It was apprehended that export of textile and garments might face a set back after phase out of quota free market access under MFA. But the export of T&G, even after phasing out of MFA quota experienced an unprecedented growth during the post- MFA period showing export value of US$ 5.68 billion in 2004 to US $9.80 billion in 2006-07. The share of knit-wear export in 2003-04 was 38%, which increased to 50% in terms of value but in terms of quantity, knit-wear export surpassed the woven garments mainly due to the strong backward linkage developed in the knitting sector of the country in the recent years. This was also possible mainly due to the EU – GSP facilities under EBA and EU safeguard measures against China and duty free market access of Canada, Australia, Japan, New Zealand and Norway. Another phenomenon of post MFA situation that global garment export increased but fabric movement declined and supply sources have been reduced due to end of guaranteed market survival of the competitive suppliers and gains for sources having full value chain facilities.
But the global economic recession started in the recent years created a negative impact on the overall demand of T&G products. This has also affected the export market situation of T&G products of Bangladesh in the following ways:
(i) export order reduced to a considerable level,
(ii) the buyers are offering unusually low price to the manufacturers / exporters and
(iii) the profit margin for T&G export now reached to a minimum or even lower than the break-even level.
Under the above mentioned situation, Bangladesh is now facing severe competition with the textile rich countries like China, Pakistan, India, Indonesia and many other countries in respect of export of T&G products. Bangladesh is now trying to overcome the marketing crisis of T&G by enhancing financial package, rescheduling of loan and repayment of overdue interest at a reasonably reduced rate, strengthening human resource development programme etc.
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