Very high export growth of RMG in current fiscal unlikely
Wednesday, 4 January 2012
Kamrun Nahar
Apparel sector leaders have expressed their doubt over the prediction of 19 per cent export growth in garment sector in FY 2011-2012 mentioned in the sixth five year plan.
According to the Export Promotion Bureau, garments exports rose by 43 percent to more than $17.9 billion in FY 2010-11 and in the current FY the export target for garments has been fixed at some $20.29 billion.
AK Azad, chairman & managing director of Ha-Meem Group told the FE that the government had set a target of 19 per cent growth for the current fiscal in the 6th five-year plan which would not be achieved with the present infrastructure.
"The target of achieving 19 per cent growth is only possible if certain conditions are met," he said.
He said these include establishment of 11 special economic zones, which was in the budget for the last two fiscal years without being implemented, ensuring smooth electricity and gas supply, improvement of communication system between Dhaka and Chittagong by starting Newmooring and Pangaon container terminals as the alternative of Dhaka-Chittagong highway, improvement of capacity of the Chittagong port, political stability, minimising of liquidity crisis at banks, cut in interest rates and reducing of bank borrowing by the government.
Mr Azad, also president of Federation of Bangladesh Chambers of Commerce and Industry (FBCCI), is hopeful about the prospect of the Bangladeshi readymade garments export though there is apprehension of decline in exports to some old markets in the context of ongoing global economic recession.
"Our labour price and other infrastructure cost are still lower compared to India and China. That's why we are still competitive in the world apparel market," he said, adding, the Eurozone crisis will not hamper the growth of garments export.
Contrary to his view, Exporters Association of Bangladesh president Abdus Salam Murshedy thinks the first six months of 2012 will be really challenging for the apparel sector both internationally and nationally.
"We have seen the average growth from July to October was around 21 per cent whereas it declined to 2.40 per cent in November. I do not see very positive signs in this sector from December to June next," said Mr Murshedy, also managing director of Envoy Group.
He said there are both national and international challenges in the year that has just begun as Eurozone countries and single-largest export destination the USA, where 90 per cent of the garment products go, are in economic crisis.
"As they fell in the second round economic recession before they fully recovered from the first round crisis, the demand for our garments products fell down, which made them reduce their buying prices resulting in less orders," said Mr Murshedy.
About the national challenges he expressed his frustration over the less improvement in gas and power supply situation. Besides, prices of fuel oil was hiked four times pushing up the production cost further, he said.
"In addition to higher production cost, high interest rate of the banks and devaluation of taka against dollar contributed to inflation and increase in commodity prices and rise in transportation cost. All these will contribute to losing our competitiveness despite various opportunities in hand," Mr Murshedy said further.
Mr Musrshedy, also the immediate past president of Bangladesh Garment Manufacturers and Exporters Association (BGMEA), said Bangladesh has already established itself as an export brand country for which image is very important.
"Political stability is very much required to protect the image of a brand country," he said.
He said though India has been opened as a new market Bangladesh needs to create its customer-base there by arranging single country fairs there with the help of the government to let the Indian buyers know about the products, prices and their quality.
"The Indian market will not start working miraculously without any preparation and programme," he said.
Anwarul Alam Chowdhury Parvez, managing director of Evince Group, said the growth in the RMG sector in next six months will not exceed seven per cent due to the sales block in the international market and may increase in July-August next.
"Our RMG export is mainly aimed at European countries and the US that are now in economic crisis. Their people are now maintaining austerity measures and have curtailed their expenditure," said Mr Parvez, also former president of BGMEA.
He contradicted some opinions of some experts that Bangladesh would be able to continue the growth as it produce low-cost garment items.
"If the demand falls and people stop buying things then how can we make export to those countries?" he asked adding, the exports from India and China have dropped since last September and it is also obvious for Bangladesh.
"Though India has opened as a new market we cannot start exporting there overnight which many have mentioned as an opportunity. It will take another one year to grab the opportunity there," Mr Parvez said.
According to a report published on fibre2fashion.com Tuesday quoting some experts, Bangladesh readymade garment (RMG) exports are likely to grow by around 15 per cent in 2011-12 over the last fiscal.
Apparel sector leaders have expressed their doubt over the prediction of 19 per cent export growth in garment sector in FY 2011-2012 mentioned in the sixth five year plan.
According to the Export Promotion Bureau, garments exports rose by 43 percent to more than $17.9 billion in FY 2010-11 and in the current FY the export target for garments has been fixed at some $20.29 billion.
AK Azad, chairman & managing director of Ha-Meem Group told the FE that the government had set a target of 19 per cent growth for the current fiscal in the 6th five-year plan which would not be achieved with the present infrastructure.
"The target of achieving 19 per cent growth is only possible if certain conditions are met," he said.
He said these include establishment of 11 special economic zones, which was in the budget for the last two fiscal years without being implemented, ensuring smooth electricity and gas supply, improvement of communication system between Dhaka and Chittagong by starting Newmooring and Pangaon container terminals as the alternative of Dhaka-Chittagong highway, improvement of capacity of the Chittagong port, political stability, minimising of liquidity crisis at banks, cut in interest rates and reducing of bank borrowing by the government.
Mr Azad, also president of Federation of Bangladesh Chambers of Commerce and Industry (FBCCI), is hopeful about the prospect of the Bangladeshi readymade garments export though there is apprehension of decline in exports to some old markets in the context of ongoing global economic recession.
"Our labour price and other infrastructure cost are still lower compared to India and China. That's why we are still competitive in the world apparel market," he said, adding, the Eurozone crisis will not hamper the growth of garments export.
Contrary to his view, Exporters Association of Bangladesh president Abdus Salam Murshedy thinks the first six months of 2012 will be really challenging for the apparel sector both internationally and nationally.
"We have seen the average growth from July to October was around 21 per cent whereas it declined to 2.40 per cent in November. I do not see very positive signs in this sector from December to June next," said Mr Murshedy, also managing director of Envoy Group.
He said there are both national and international challenges in the year that has just begun as Eurozone countries and single-largest export destination the USA, where 90 per cent of the garment products go, are in economic crisis.
"As they fell in the second round economic recession before they fully recovered from the first round crisis, the demand for our garments products fell down, which made them reduce their buying prices resulting in less orders," said Mr Murshedy.
About the national challenges he expressed his frustration over the less improvement in gas and power supply situation. Besides, prices of fuel oil was hiked four times pushing up the production cost further, he said.
"In addition to higher production cost, high interest rate of the banks and devaluation of taka against dollar contributed to inflation and increase in commodity prices and rise in transportation cost. All these will contribute to losing our competitiveness despite various opportunities in hand," Mr Murshedy said further.
Mr Musrshedy, also the immediate past president of Bangladesh Garment Manufacturers and Exporters Association (BGMEA), said Bangladesh has already established itself as an export brand country for which image is very important.
"Political stability is very much required to protect the image of a brand country," he said.
He said though India has been opened as a new market Bangladesh needs to create its customer-base there by arranging single country fairs there with the help of the government to let the Indian buyers know about the products, prices and their quality.
"The Indian market will not start working miraculously without any preparation and programme," he said.
Anwarul Alam Chowdhury Parvez, managing director of Evince Group, said the growth in the RMG sector in next six months will not exceed seven per cent due to the sales block in the international market and may increase in July-August next.
"Our RMG export is mainly aimed at European countries and the US that are now in economic crisis. Their people are now maintaining austerity measures and have curtailed their expenditure," said Mr Parvez, also former president of BGMEA.
He contradicted some opinions of some experts that Bangladesh would be able to continue the growth as it produce low-cost garment items.
"If the demand falls and people stop buying things then how can we make export to those countries?" he asked adding, the exports from India and China have dropped since last September and it is also obvious for Bangladesh.
"Though India has opened as a new market we cannot start exporting there overnight which many have mentioned as an opportunity. It will take another one year to grab the opportunity there," Mr Parvez said.
According to a report published on fibre2fashion.com Tuesday quoting some experts, Bangladesh readymade garment (RMG) exports are likely to grow by around 15 per cent in 2011-12 over the last fiscal.