Export to US won't fall, rather there will be fast growth: ADB
Thursday, 18 September 2008
FHM Humayan Kabir
The Asian Development Bank (ADB) said Bangladesh's export to the US market would not be hindered rather there would be a fast growth although the US safeguard against its major competitor China would be eliminated from first of January next year.
"Although the US safeguard quota on China is set to expire at the end of this year, the appreciating yuan and the China's move out of the low-end of the garment market could allow fast export growth for Bangladesh given its sound track record in this market segment," said the Asian Development Outlook 2008 Update, launched Tuesday.
The US government after phasing out of multi-fibre arrangement (MFA) for garment and textile exports in December 2005 imposed embargo on the Chinese apparels. Under the safeguard, the US importers are allowed to import limited products from the emerging Asian country.
China, world's largest apparel exporter, has a total market share of 40 per cent in the globe. On the other hand, Bangladesh has only two per cent market share.
Both Bangladesh and China compete in the same markets such as EU and the US.
Bangladesh's export earnings of garments including woven and knitwear items from the US market is nearly 30 per cent of the country's export income while the rest comes from the EU and other markets in the world.
Trade experts and garment exporters felt that lifting of US safeguard on China from January 1 next year would not lessen garment export to the US market.
Executive director of the Centre for Policy Dialogue (CPD) Mustafizur Rahman said: "I am optimistic about the garment export growth to US market despite phasing out of the US safeguard on China from December 31."
"As Chinese currency yuan has appreciated and the country has taken move to produce more fashionable garments targeting the high-value market segment in the world moving out from its low-end of the market, Bangladesh's export would not be hampered," he said.
Bangladesh mainly targets the low-end market segment in the US and other countries in the world.
Mr. Mustafizur Rahman, also a trade expert, suggested that the local garment exporters take preparation for producing high-value and fashionable garments to grab the high segment of the markets in the US and the European countries as the prices of low-value products had already declined much.
Salam Murshedy, managing director of the Envoy Group, said the apparel export growth like the last couple of years could not be achieved in the first year of lifting of US embargo on China but in the long-run the export would not be hindered much.
"Next year, Bangladesh might face a tough competition from China in the US market. But I think the export will post a fast growth like previous years after a couple of years as our backward linkage industry is growing fast," said Mr, Murshedy who exported nearly US$100 million worth of garments last fiscal.
Forecasting higher trade growth in the current fiscal, the ADB outlook said imports are expected to grow by 21 per cent with higher bills for oil, foodgrain and other raw materials in the FY09, while exports are expected to grow by 16.5 per cent mainly owing to stronger growth in knitwear and garments.
The ADB, however, warns Bangladesh saying: "Yet in the face of rising labour and raw material costs, garment producers need guaranteed access to electricity and programme to address labour shortage, especially at the supervisory and mid-management levels to retain their competitiveness."
The Asian Development Bank (ADB) said Bangladesh's export to the US market would not be hindered rather there would be a fast growth although the US safeguard against its major competitor China would be eliminated from first of January next year.
"Although the US safeguard quota on China is set to expire at the end of this year, the appreciating yuan and the China's move out of the low-end of the garment market could allow fast export growth for Bangladesh given its sound track record in this market segment," said the Asian Development Outlook 2008 Update, launched Tuesday.
The US government after phasing out of multi-fibre arrangement (MFA) for garment and textile exports in December 2005 imposed embargo on the Chinese apparels. Under the safeguard, the US importers are allowed to import limited products from the emerging Asian country.
China, world's largest apparel exporter, has a total market share of 40 per cent in the globe. On the other hand, Bangladesh has only two per cent market share.
Both Bangladesh and China compete in the same markets such as EU and the US.
Bangladesh's export earnings of garments including woven and knitwear items from the US market is nearly 30 per cent of the country's export income while the rest comes from the EU and other markets in the world.
Trade experts and garment exporters felt that lifting of US safeguard on China from January 1 next year would not lessen garment export to the US market.
Executive director of the Centre for Policy Dialogue (CPD) Mustafizur Rahman said: "I am optimistic about the garment export growth to US market despite phasing out of the US safeguard on China from December 31."
"As Chinese currency yuan has appreciated and the country has taken move to produce more fashionable garments targeting the high-value market segment in the world moving out from its low-end of the market, Bangladesh's export would not be hampered," he said.
Bangladesh mainly targets the low-end market segment in the US and other countries in the world.
Mr. Mustafizur Rahman, also a trade expert, suggested that the local garment exporters take preparation for producing high-value and fashionable garments to grab the high segment of the markets in the US and the European countries as the prices of low-value products had already declined much.
Salam Murshedy, managing director of the Envoy Group, said the apparel export growth like the last couple of years could not be achieved in the first year of lifting of US embargo on China but in the long-run the export would not be hindered much.
"Next year, Bangladesh might face a tough competition from China in the US market. But I think the export will post a fast growth like previous years after a couple of years as our backward linkage industry is growing fast," said Mr, Murshedy who exported nearly US$100 million worth of garments last fiscal.
Forecasting higher trade growth in the current fiscal, the ADB outlook said imports are expected to grow by 21 per cent with higher bills for oil, foodgrain and other raw materials in the FY09, while exports are expected to grow by 16.5 per cent mainly owing to stronger growth in knitwear and garments.
The ADB, however, warns Bangladesh saying: "Yet in the face of rising labour and raw material costs, garment producers need guaranteed access to electricity and programme to address labour shortage, especially at the supervisory and mid-management levels to retain their competitiveness."