Weaker yen bites into exports to Japan

Exports to Japan dropped by 4.36 per cent during the first quarter of the current fiscal year, the first in five years, as industrial tragedies and yen devaluation ate into export earning.
Shipment to the market of the Asian economic giant amounted to $230.72 million in July-September of the current fiscal year (2014-15), compared with $241.26 million a year earlier, the government data said.
Apparel and footwear are the major items being exported to the Japanese market and shipment of garment items reached $159.57 million, marking a 0.44 per cent negative growth in the same period.
Exporters attributed the recent tragic industrial accidents and last year's political turmoil to the decline.
But a trade analyst said devaluation of Japanese currency against US dollar and a hike in consumer tax in the country have impinged on Japan's imports.
In the clothing segment, woven export fell by 4.79 per cent with the earnings at $90 million, although knit products witnessed 5.17 per cent growth during the first quarter, according to official data.
Bangladesh's apparel export to Japan reached $572.27 million in 2013-14 fiscal year, from just a $74.37 million five years ago.
Similarly, footwear products fetched $ 27.29 million during the first quarter of current fiscal, which was $36.04 million in the corresponding period of the last fiscal.
In 2013-14 fiscal, Bangladesh earned $138.24 million by exporting leather goods and footwear to Japan, posting a 65.35 per cent growth.
Bangladesh witnessed an impressive growth in the Japan market in the last couple of years.
The country made merchandise shipments worth $862.07 million in FY 2013-14, $ 750.26 million in FY 2012-13, $ 600.52 million in 2011-12, $ 434.12 million in 2010-11 and $330.55 million in 2009-10 respectively.
Abdus Salam Murshedy, managing director of Envoy Group, said the negative growth in apparel export to Japan is the reflection of recent political turmoil and industrial disaster in the sector.
 "Japan is a very potential market for us as they import high-end products," he said adding entering this market means Bangladesh has the capacity to meet the international standards.
Echoing Mr Murshedy, Md Shahidullah Azim, vice president of Bangladesh Garment Manufacturers and Exporters Association (BGMEA), said the Japanese buyers are at a 'wait and watch' position due to the safety and compliance issues. But he expressed the hope that with the improvement of the safety in the country's $24 billion apparel sector, Bangladesh's export to Japan will increase in the coming days.
 "Due to last year's political instability, many buyers have shifted their orders to other competiting countries, especially to India and Vietnam," said Nazmul Hassan, former vice president of Leather Goods and Footwear Manufacturers and Exporters Association of Bangladesh.
He, however, said, Japanese buyers will come back if Bangladesh can improve security and port efficiency as they  are very much conscious about lead time.
Khondaker Golam Moazzem, additional director of Center for Policy Dialogue (CPD) said the Japanese currency lost its value by 5.0 per cent against the greenback in July to October period, making Japanese import costlier not only for Bangladesh, but also for other countries.
Moreover, the Japanese government has recently increased the consumer tax rate, which has also affected the consumers purchasing capacity and resulted in a slow demand, he added.

munni_fe@yahoo.com