Apparel industry faces new challenge of taka appreciation

FE Team | Published: July 30, 2008 00:00:00 | Updated: February 01, 2018 00:00:00

The country's apparel industry is exposed to a new threat with the taka strengthening against US dollar, reports UNB.

If the appreciation of taka continues for long, it may weaken the recent rebound in apparel exports, exporters said.

They said that dollar fell by over 4.0 per cent to an average of Tk 67 (depending on the terms of exports) at present, compared to Tk 70 plus they negotiated at the end of 2006.

The new challenge emerged after the exporters survived increased production cost around 10-15 per cent due to rise in prices of fuel and of other inputs.

Moreover, many of them are still struggling with how the wages for the workers can be increased from the already marginalised profits to at least support the price of rice that almost doubled in last one year.

"It will be extremely difficult to maintain the export growth if dollar falls further, even by only one taka," said President of Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) Fazlul Hoque.

The main export sector suffered a negative growth in the first half of 2007-08 due to political unrest and anti-corruption drive, but recovered in the second half with gradual improvement in political situation and a weakening taka against dollar.

During July-May period of 2007-08, knitwear exports registered 21 per cent growth to $4.9 billion US dollars over the same period in the previous fiscal, while woven garments grew 11 per cent to $4.6 billion. The overall export growth was recorded at 16 per cent to $9.6 billion.

The productivity and efficiency of the industry, supported by absence of strikes and hartals as well as improved port efficiency, helped attain the growth, Mr Hoque said.

Despite negative signals like slowdown in consumption in the major export destinations, he said the prospect for export growth was still bright with Chinese production becoming expensive. He was expecting a shift of orders from China to countries like Bangladesh.

Mr Hoque, however, raised concerns about negative aspects like disruption in supply of gas and electricity to tap the potentials.

"Expansion of production capacity is being affected seriously for lack of uninterrupted gas and electricity supply," he said adding, "It's not possible to maintain export growth without increasing production capacity."