Shipment to Turkey surges defying duty roadblock

Bangladesh's exports to Turkey, especially readymade garments (RMG), marked a significant increase in the just-concluded fiscal (2013-14) with indications that a new and potential market for the country's apparel industry is emerging.
Business circles are upbeat about the new market just on the gateway to Europe and the Middle East.
According to data from the Export Promotion Bureau (EPB), merchandise shipments to Turkey totaled US$ 856.198 million last fiscal (2013-14) with a growth of 34.32 per cent. In the previous year (2012-13), the amount was USD 637.815 million.
The apparel products constitute about 73 per cent of the total merchandise in the export basket, which, however, is small thus far for lack of expected diversification of the exportable.
Export of apparels made an encouraging jump to Turkey, a country that is not a traditional market like the European Union or the United States. According to the EPB statistics, RMG products worth about USD 622.37 million went to Turkey in the last fiscal, marking a growth of 49.85 per cent. The amount in the previous fiscal was USD 415.31 million.
Among the apparels, export of woven products jumped more than 67 percent to $ 440.41 million, against S 263.39 million in the previous year. Knitwear accounted for S181.96 million--a growth of 20 per cent.  The other exports to Turkey included ceramic products, jute and jute products, leather and tobacco.
Experts and exporters attribute the phenomenal surge to such factors as Turkey's growing economy and expansion of its local market for foreign products as well its decision to wind down RMG production at home.
According to sources, Turkey's economy has grown spectacularly for over a decade, which led to the rise in purchasing power of its people.
"Bangladeshi exporters have taken full advantage of this phenomenon," said Mohammad Hatem, acting president of Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA).
"Demand for our readymade garments has surged progressively in Turkey over the past few years and we've capitalized on their growing economy," he said, analyzing the trade prospects in the D-8 country.       
Until recently, he added, Turkey used to export garments to Europe after meeting its own domestic demand.
"But their rising production cost due to increased worker wages made it difficult for them to compete with others," said Hatem.
"It gave us double benefits. On the one hand, we are able to enter their market and on the other, we can replace them on the world market for RMG products."
In some cases, Turkish businessmen are buying garment products from Bangladesh directly and selling them in the local market by just adding print or embroidery in their factories and re-exporting after value addition, he further said.
Part of the reason for the surge in export of garment products, especially knitwear, has been the stepped-up efforts like holding road shows in various EU and Southeast Asian countries in search of new markets.
Although Bangladesh export increased substantially, the country still faces lot of problems to enter the Turkish market as Turkey imposed safeguard duty on readymade garment products in 2011 as a countervailing measure and Bangladesh's export reduced for the year and the next year.
Currently, all Least Developed Countries, including Bangladesh, have to pay 17 percent duty for exporting to Turkey. The upcoming FTA will lead to the lifting of that duty, sources said.
"Bangladesh export would be several times higher if there was no safeguard duty," said another exporter.
He expects higher volumes of export in the coming years, especially when the free-trade agreement (FTA) with Turkey will come into effect.