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RMG sector's value addition 64.33pc

Experts for focusing more on non-cotton items


FE REPORT | October 04, 2019 00:00:00


Value addition of the country's ready-made garment (RMG) sector stood at 64.33 per cent in last fiscal year (FY), 2018-19, according to official data.

Value addition of the sector remained between 61 per cent and 64 per cent during the period ranging from FY 13 to FY 19, showing a mixed trend, it showed.

In FY 19 (from July 2018 to June 2019), total import price of RMG raw materials (raw cotton, synthetic/viscose fibre, synthetic/mixed yarn, cotton yarn, textile fabrics, and garments accessories) stood at USD 12.17 billion.

The amount is 35.68 per cent of the total export earnings from RMG sector, according to the Bangladesh Bank (BB) data.

"Therefore, the gross value addition from this sector stood at 64.32 per cent," it mentioned.

The country fetched $ 34.13 billion from RMG export in last fiscal. Of the total earnings, woven garments and knitwear garments brought $ 17.24 billion and $ 16.88 billion respectively.

Earnings from RMG sector accounted for 84.21 per cent of the total export in FY 19, showing the country's heavy dependency on the sector, according to the central bank report.

The BB report cited various factors for more than 11 per cent export earning growth of the sector despite high price fall of products in international market.

The factors include - political calmness throughout the year, exploration of new markets abroad, diversion of China from RMG production, increased productivity, entrepreneurs' resilience, improvement of workers' safety standards in factories, and easing export policy procedures.

Apparel sector leaders, however, expressed different opinions in this regard.

President of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) Dr. Rubana Huq said unit price of local RMG products is declining globally, while value addition of the sector is insignificant.

During the last four years, Bangladesh lost 1.62 per cent unit value of its apparel items, based on compound annual growth rate, she also said.

"It signifies Bangladesh's lack of capacity in value addition, whereas the priority is to go for high-end market."

Moreover, most of the RMG items of Bangladesh, exported to different countries of the world, are cotton-based.

About 74.14 per cent of RMG products, exported at a cost of $ 34.13 billion in last FY, are made of cotton, according to the BGMEA data.

It shows that the sector is largely dependent on cotton-based items, and there are poor efforts to grab and fulfil the demands for high value-added man-made fibres, the BGMEA chief noted.

In recent years, the use of non-cotton fibres has increased. But, so far, it is not as expected, industry people opined.

Dr. Khandaker Golam Moazzem, additional research director of the Centre for Policy Dialogue (CPD), said considering the present maturity of local RMG industry, its value addition growth rate is rather slow, while it is 'positive' comparing to that of last six years.

Fabric is one of the major portions where higher value addition is possible. Value addition is slower or same in some areas of woven segment, compared to that of knitwear.

As a result, value addition in product segment is not that much reflected due to less progress in textile backward industries, he opined.

Moreover, the European Union's (EU) Generalised Scheme of Preferences (GSP) flexibility might be one of the reasons behind entrepreneurs' unwillingness to invest in backward linkage industry, particularly in woven.

Dr. Moazzem suggested higher investment in both backward and forward linkage industries, especially in product and design development as well as technological upgradation, to increase value addition of RMG sector.

He also recommended manufacturing more non-cotton items for fulfilling their high global market demand, especially in Russia and Japan.

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