Two distinctly opposing reports have done the rounds recently in the newspapers. One, a substantial increase in export of garments to new and non-traditional markets in the past months; and the other, a marked fall of export to the traditional markets. Of the two, the former seems to have received more focus, as an admirable feat in diversifying export markets.
The recent surge in export to new markets is believed to be the result of some incentives that the government announced for the garment exporters by way of cash benefit, coupled with the drive of the exporters to penetrate those markets in a big way. Relaxation of rules of origin (RoO) in some of these markets may have also contributed to the growth. According to Export Promotion Bureau sources, export of garments to new destinations rose 15.47 per cent to $1.87 billion, on year-on-year basis, in the first six months (July-December) of the current fiscal. These markets include Australia, Brazil, Chile, China, India, Japan, South Korea, Russia, South Africa and Turkey. Markets that witnessed the highest growth are China (24 per cent), Australia (13.5 per cent), Korea (12.75 per cent) and India (10.14 per cent). No matter whether the export orders were procured in the last half of the current fiscal year or shipped out during the same period, the fact that export to these markets has picked up substantially feels refreshing.
What is more significant about the penetration into non-traditional apparel markets is not the growth itself but the opening up of alternative avenues for Bangladesh's apparel products. The overwhelming concentration on the main markets of the European Union (EU) and the US for decades has, despite consistent growth, been foreshadowed by uncertainties lately. Although these uncertainties stemming from labour rights issues, workplace environment etc., caused a damper on the sector's future, promises to make amends, coupled with some initiatives taken so far, appear to be supportive to shield the sector from any major dent. In this situation, seeking out alternative export destinations like China and Russia is indeed a success for the local entrepreneurs.
In fact, efforts for diversifying the markets were on for a while, and exports of apparel did take place to a large number of markets across the continents, but sustaining the market presence for a longer term did not seem very convincing. This was because exporters were more focused on bulk orders from their familiar markets - the US and the EU. With the current levels of growth, prospects to export to newer markets on a more and more increased scale should be equally rewarding. The potential that China and Russia, among others, offer because of their enormous domestic consumption pattern, is by all means promises to provide the Bangladesh garment sector with the much needed breather.
Industry insiders are hopeful, who believe that dependence, albeit excessively, on selected traditional markets may be risk-prone in the days ahead as competition is mounting from a number of exporting nations. Opening up of alternative markets in that case could serve as a safeguard, and at the same time these can provide opportunities for an extensively diversified base for exporting apparels.
While there is every reason to be happy about the increasing exports to non-traditional destinations, the flip side is the considerable decline in exports to the major export destinations. Reports say that fall of export of garments to the EU and the US has been 3.53 and 5.18 per cent respectably. Given the huge volume of garments that Bangladesh exports to these countries, this slide far outweighs the growth in non-traditional markets. One may find the picture far from rosy, and may attribute the growth to export diversion. It may be mentioned that around 60 per cent of garment items from Bangladesh goes to the EU and 23 per cent to the US. The remaining 6.0 per cent goes to the rest of the world.
The slump in the major markets also warrants the fear that Bangladesh might lose out to some of its competitors in these markets. A temporary setback or not, a fear looms large that Bangladesh is apparently losing its edge in the US market to Vietnam, Cambodia, India and Pakistan. According to Bangladesh Garments Manufacturers and Exporters Association (BGMEA) sources, exports from Vietnam to the US have increased by about 22.88 per cent, Cambodia by 25.41 per cent, Pakistan by 28.26 per cent and India by 11.58 per cent during January-October, 2014.
Given the overall scenario, Bangladesh needs to penetrate vigorously into the non-traditional markets but at the same time it is critically important for the country's garment sector to retain its predominant position in the EU and US markets.
wasiahmed.bd@hotmail.com
RMG – the opposites of market fall and rise
Wasi Ahmed | Published: March 03, 2015 00:00:00 | Updated: November 30, 2026 06:01:00
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