Market share of local woven fabrics in RMG export stagnating

Shamsul Huda | Published: February 07, 2014 00:00:00 | Updated: November 30, 2024 06:01:00

The market share of local woven fabrics in RMG export is stagnating for the last three years despite rising demand every year, data shows.
Though the mills have expanded their production capacity in line with export growth but their market share is stagnating at 35 per cent, textile industry sources said.
Bangladesh Textile Mills Association (BTMA) President Jahangir Alamin said with 35 per cent local market share, Bangladesh is meeting more than 70 per cent denim demand.
He said, "We are yet to manufacture high-tech and other woven fabrics and such types of fabrics are being imported by our exporters."
Former BGMEA office bearer Abdus Salam Murshedy said it is possible for Bangladesh to increase local share to 40 per cent at the most and the country is unlikely to exceed the figure soon.
Describing the reason he said a high-tech woven mill requires at least Tk2.0 to Tk3.0 billion investment and currently the investors and the financial institutions are reluctant in this regard.
Mr. Murshedy said if local fabric production is not encouraged the country may lose its existing backward linkage base and face hard competition combined with import dominance.
Â "Already our RMG is in competition with India, Cambodia, Vietnam, Pakistan and other countries," he added.
"Increased wages and transport costs, costlier utility services, high bank rates and other problems are making our RMG export less competitive."
He said, "RMG export growth here did not take place in comparison with India, Cambodia, Vietnam and other countries in the last several years though Bangladesh is still holding the second largest RMG exporter position."
A BTMA source said many mills are utilising their full capacity and some have extended factory volume as they are getting more fabric orders.
He said as the export volume of both woven and knit RMG have increased to $20.5 billion in the last fiscal, so demand for fabrics has also increased.
But import is still dominating and the 35 per cent local share figure is still the same.
Explaining the stagnation he said except some renovation and BMRE (balancing, modernisation, rehabilitation and expansion), fresh investment did not take place in the last three years as per demand.
He also pointed to the financial institutions' and the new investors' unwillingness to put their money in textile mills.
Mr. Murshedy said at this moment big overseas companies may avail the opportunity grab a market share in the textile industry by investing in a big way as they are capable of investing the required amount of money.
As per data available from different sources, the local millers could meet 35 per cent demand four years back when export for overall readymade garment was less than $16 billion.
The sources said in the last fiscal RMG export was more than $20 billion and the current fiscal target is $23 billion but local woven contribution is not increasing.
The sources said in the current situation investors here will not take this risk and the local financial institutions are also not showing their keenness to invest in the sector.
A source in the textile industry said foreign direct investments in textile industry could be a solution as the solvent foreign companies can bring their money to manufacture high-tech woven textile products.
Another BGMEA source said government's poor vigilance over bonded warehouse facilities is ruining the local textile products as people can buy high quality fabrics at cheaper prices.