RMG export signaling red?
Friday, 7 September 2007
THE uneasy development until now forbids telling the last word on the ultimate fate of the local readymade garment (RMG) industry. But it now confronts some ominous signals, exposing the whole sector to new uncertainties about export earnings. A relatively dull export market for its products now has already sent cold shivers across spines of many entrepreneurs. According to several recent reports, the evolving scenario is not encouraging for the industry players to gather guts for laughing away the cold shivers as a passing phenomenon. Why? One report said growth in the RMG industry has evidently retarded for the first time. It has failed to reach the export targets and is facing a sharp decline in new orders. Some foreign importers, it indicated, have partly shifted orders to Vietnam, Cambodia, China and India for varying reasons, like sporadic labour unrest in the industry and uncertainty about future political development.
Another report said a probe body formed by the government in its preliminary investigation found that several Indian and Chinese firms in connivance with some local businessmen and government officials had been involved in Generalised System of Preference (GSP) certification forgery in RMG export to the Europe Union (EU). Call it a nail driven in the heel of the local industry and a rapturous blow to the reputation of this country. Alas! It could occur after -- long after, dirt had been thrown at this country from within by foul certification of origin of many RMG export consignments to the same destination. Those consignments, upon false certification, wrongly qualified for duty waiver in the EU under the GSP. One report from Nepal by the Chinese news agency -- Xinhua, said that country's RMG export to the US had suffered badly for yet another month in last August declining by 27 per cent. It stated, 'The RMG industry in Nepal is on the verge of complete collapse as the global markets have already been opened to all competitors without quota restrictions'.
The message of the report is that the Chinese have begun to receive forward orders for RMG export having delivery dates beyond this waning year. Its expiry would see the safeguard restrictions on the Chinese textile export to the EU and the US gone. The ominous indication could be that the decline of RMG export from Bangladesh, as hinted by the local Export Promotion Bureau's record of export of woven items having registered a dismal 0.16 per cent growth and that of knitwear having slid down to a negative growth of 6.03 per cent in the last fiscal year, may be endless.
The first report quoted a thoughtful remark of the immediate past president of the pertinent manufacturers' and exporters' association. In a non-committal forecast that excludes total hopelessness, he said, "The buyers appreciate the anti-corruption drive, stable political situation and improvement in areas like the port, electricity and customs. But they are also concerned about where does the country go? Where does it end?" If what he mentioned as a consideration impacting adversely upon RMG export, the future alone will unfold the fate of the local industry. The government may, however, take serious note of it. Other factors, like the Indian competition and the expiry of the safeguard restriction on Chinese export, may not eventually prove too restrictive to RMG export from this country. Their national currencies in this era of floating exchange rate will gain fat and become costlier with their fast and further economic growth against the currencies of major RMG importing nations. The likely concomitant wage increases will also emerge as their another challenging problem. As the RMG, broadly, is a relatively cheap item, the narrow passage in terms of value addition in its manufacturing and export trade is too slim to permit economically giant nations, like emergent India and China, to negotiate it in the future. All hopes for local RMG have not faded. The industry can still be saved through concerted actions.
Another report said a probe body formed by the government in its preliminary investigation found that several Indian and Chinese firms in connivance with some local businessmen and government officials had been involved in Generalised System of Preference (GSP) certification forgery in RMG export to the Europe Union (EU). Call it a nail driven in the heel of the local industry and a rapturous blow to the reputation of this country. Alas! It could occur after -- long after, dirt had been thrown at this country from within by foul certification of origin of many RMG export consignments to the same destination. Those consignments, upon false certification, wrongly qualified for duty waiver in the EU under the GSP. One report from Nepal by the Chinese news agency -- Xinhua, said that country's RMG export to the US had suffered badly for yet another month in last August declining by 27 per cent. It stated, 'The RMG industry in Nepal is on the verge of complete collapse as the global markets have already been opened to all competitors without quota restrictions'.
The message of the report is that the Chinese have begun to receive forward orders for RMG export having delivery dates beyond this waning year. Its expiry would see the safeguard restrictions on the Chinese textile export to the EU and the US gone. The ominous indication could be that the decline of RMG export from Bangladesh, as hinted by the local Export Promotion Bureau's record of export of woven items having registered a dismal 0.16 per cent growth and that of knitwear having slid down to a negative growth of 6.03 per cent in the last fiscal year, may be endless.
The first report quoted a thoughtful remark of the immediate past president of the pertinent manufacturers' and exporters' association. In a non-committal forecast that excludes total hopelessness, he said, "The buyers appreciate the anti-corruption drive, stable political situation and improvement in areas like the port, electricity and customs. But they are also concerned about where does the country go? Where does it end?" If what he mentioned as a consideration impacting adversely upon RMG export, the future alone will unfold the fate of the local industry. The government may, however, take serious note of it. Other factors, like the Indian competition and the expiry of the safeguard restriction on Chinese export, may not eventually prove too restrictive to RMG export from this country. Their national currencies in this era of floating exchange rate will gain fat and become costlier with their fast and further economic growth against the currencies of major RMG importing nations. The likely concomitant wage increases will also emerge as their another challenging problem. As the RMG, broadly, is a relatively cheap item, the narrow passage in terms of value addition in its manufacturing and export trade is too slim to permit economically giant nations, like emergent India and China, to negotiate it in the future. All hopes for local RMG have not faded. The industry can still be saved through concerted actions.