Oncoming political unrest over polls begins hurting ready-made garment (RMG) trade as Bangladesh's main export sector is getting lesser work orders in recent months, insiders said.
Industrialists and economists anticipate the worse to come if the political situation gathers steam further in the coming months, as the main players on two sides of the political divide stand worlds apart over election issues.
Utilization Declaration (UD) for export of the local apparel dropped 13.29 per cent month on month in June this year, Bangladesh Garment Manufacturers and Exporters Association (BGMEA) said.
According to the BGMEA, the number of UD orders declined to 2,029 in June from 2,340 in the previous month of May.
Usually, the garment makers first take the UD from the BGMEA or Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) for procuring necessary raw materials of garments and later make shipment to consumer countries.
The UD is a government-prescribed system which exhibits the possible use of the cloths and other raw materials for making the apparel products to be exported to overseas markets.
After receiving export orders, the local RMG makers take the UD from the BGMEA to import the raw material with zero-rated tax and bonded-warehouse facilities.
An FE analysis has found UD for RMG export in the first half of the current calendar year having been in a volatile trend. After January 2023, the numbers of UD during February-to-June period had fallen.
According to BGMEA officials, the UDs in January were the highest at 2,706 which later went on a month-on-month fall.
In February, the number of UDs dropped to 2,112 although it recovered in the following month, March, with an order of 2,459.
But the number of utilization-declaration orders fell again in April, to 2,200, which increased a bit to 2340 in May. But in June it dropped by 13.29 per cent to 2,029.
Meanwhile, the number of UDs in June 2022 was higher (2,169) than 2,029 in June this year, the BGMEA data showed.
Apparel makers and economists say although the export in the last fiscal year (FY) 2022-23 had a positive growth, its volume waned.
The BGMEA President, Faruk Hasan, told the FE it is true that the quantity of export orders had dropped in recent months. "But we are trying to produce high-value products."
"However, we fear probable political unrest. It might affect our overall export earnings in the coming months," says Mr Hasan.
The BGMEA mentions that some buyers sometimes put pressure on Bangladeshi garment makers to reduce the prices of different items. "On the other hand, we are getting better price in some emerging markets like Australia, Japan, and Korea."
They are trying their best to recoup the reduced orders in terms of quantity through producing high-value products for different destinations.
Policy Research Institute (PRI) Executive Director Dr Ahsan H Mansur says since the political uncertainty is there, the buyers might reduce placement of work orders to Bangladesh.
"In the coming months, especially from October, the situation may turn for the worse. So, there is strong possibility of fall in the exports of RMG products," Dr Mansur told the FE.
Former BGMEA president Md. Siddiqur Rahman says they hope that the government would facilitate production and shipment of the exportable products through special arrangement even during probable political unrest.
In the last FY2023, Bangladeshi RMG makers made shipment of US$46.99 billion worth of apparel products, Export Promotion Bureau (EPB) data showed.
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