Bangladesh’s exports are on a high!
Coming back strongly from the Covid-induced fallouts of last couple of years when the industry suffered major setbacks as buyers cancelled orders en masse forcing many factories to close down on want of work orders even if thousands of workers, if not lakhs, were rendered jobless, exports have made a strong rebound.
The country’s export earnings surged by 33.41 per cent to US $ 38.60 billion in the July-March period of the current financial year 2021-22 compared to what was US $ 28.93 billion in the same period of the previous fiscal year (FY) even if export earnings in March 2022 shot up by 54.82 per cent to US $ 4.76 billion from that of US $ 3.07 billion in the same month of 2021.
As Bangladesh continues its dream run on the export front, it is the Export Promotion Bureau (EPB), which stands at the forefront towards helping apparel industry and other export-oriented sectors achieve the desired growth trajectory through its various endeavours.
On one hand, it works as a bridge between buyers and suppliers to ensure fruitful trade interaction in a healthy business environment, while on the other, EPB provides advocacy support to the exporters by collecting information related to foreign business and sharing those with the stakeholders to devise effective strategies.
In light of EPB’s relevance towards furthering the larger goals of the apparel manufacturing industry, which has now set an ambitious target of US 100 billion in exports by 2030, Apparel Resources (AR) caught up with Vice-Chairman & CEO of the Export Promotion Bureau, A. H. M. Ahsan, to know more on EPB, its role, deliverables, etc., to give that much-needed boost to apparel exports.
Here are the excerpts…
Apparel Resources (AR): Garment industry has almost achieved US $ 50 billion export target despite the pandemic-induced challenges. The Government has now set overall target of US $ 80 billion by 2024, to achieve which, apparel sector will play a vital role. What’s the roadmap for the industry to attain higher goals?
AHM Ahsan: The pandemic has hit hard the export-oriented sectors. It caused almost 18 per cent export shortfall during FY 2019-20 over the past FY.
However, some pragmatic initiatives of the Government — US $ 590 million loan for RMG sector for the payment of salary and wages as granted by Prime Minister Sheikh Hasina, increase in the size of Export Development Fund (EDF) along with lower interest rate, reduction of interest rate on Pre-Shipment Guarantee Scheme Loan, increase of loan repayment period, etc. — played a significant role in effectively tackling the overall impacts.
Thanks to such efforts, we have not only been able to handle the situation successfully, but also registered a growth of almost 15 per cent in FY 2020-2021 (with total export of US $ 45.37 billion).
The apparel sector played the most crucial role in the export rebound by registering more than 32 per cent growth during the first 9 months (July-March) of the current FY 2021-2022 even if Bangladesh recorded its highest ever single-month export earnings (from goods) amounting to US $ 4.91 billion in December last, owing to a strong rebound in demand for apparels in the Western markets despite the Omicron spread.
Keeping in mind the current export scenario, overall economic growth and the existing business outlook, EPB considers the US $ 80 billion export target by 2024 is realistic and achievable.
The roadmap for the industry is also very clear; to achieve higher goals, the industry has undertaken a multi-pronged approach with emphasis on producing high value-added apparel product like synthetic garments while on the other hand, focus is also laid on fast emerging market of protective attires (masks, PPEs, gloves and gowns, etc.) to boost earnings.
Increased business and production cost have nevertheless emerged as new challenges after the pandemic but to address this, we are also negotiating with the buyers to bargain better price points as we continue to work on our competitive advantages of affordable labour and production capacities.
The apparel sector is now contemplating to achieve US $ 100 billion in exports by 2030 and given the sector’s competency with focus on sustainability, workplace safety and labour rights, I am very much hopeful the industry would be able to reach the US $ 100 billion goal.
AR: Commerce Ministry has recently issued the Export Policy Order for 2021-24. What are its salient features and how would it help boost apparel exports further?
AHM Ahsan: Extending more policy and fiscal support, rationalising corporate tax and offering bonded warehouse facilities are amongst the major features of Export Policy Order for 2021-24, the main objective of which is to encourage exploration of new markets and products so as to give that much-needed boost.
In the new export policy, the Government has laid emphasis on growing an export-led economy and generating more employment to offset the impacts of COVID-19, while also prepare the export sectors to face the challenges of LDC graduation with focus on fourth industrial revolution (4IR), trade and environmental issues.
Keeping with the broader objectives, the Export Policy 2021-2024 has added two categories to expand the country’s export market by taking advantage of the 4IR, which are highest priority sectors and the special development sectors, products that have untapped export potential and apparel items with highest value addition (denim, clothes made from man-made fibre) along with garment accessories, etc., are included in the list of highest priority sector.
We are also providing cash incentives, subsidies, priority at the port and tax rebate apart from support to attract foreign investment, support for research and development, support to explore new markets, and so on to give further boost to apparel export.
Further, we have also simplified the process of issuance of preferential Certificate of Origin and put emphasis on participating in more trade fairs across the globe to consolidate our position in existing markets and get into new markets.
AR: EPB always laid special emphasis on emerging markets for export growth. With reference to the same, which are the focus countries that you think can accelerate the export growth and how do you intend to promote the garment industry there?
AHM Ahsan: Business is always challenging and is dependent on consumer preferences and demand. If the demands of the importers and customers are high, and the producers can complement the same by supplying quality products at competitive rates, export will increase.
However, in view of the LDC graduation, retaining duty-free market access has become very important for Bangladesh, for which we need to conclude trade agreement with existing and potential trading partners in Asia, Africa and South America. Initially we can target India, China, Japan, Canada, Thailand, Singapore, Malaysia, Indonesia, Nepal, etc., and then try to negotiate with regional blocks such as ASEAN, EEU (Eurasian Economic Union) and Mercosur (trade block of South American Countries) to get preferential market access to the member states of these trading blocks.
We are also planning to send high-level trade delegations to non-traditional markets to explore opportunities, while at the same time, look forward to extending all possible support to the Ministry of Commerce during the FTA negotiations to ensure apparels continue to enjoy duty-free market access.
To keep the growth momentum going, we have targeted to retain our existing markets (for RMG) while also explore the new markets. Hence initiatives will be taken to expand and consolidate our position in the above-mentioned countries through ensuring duty-free market access while also promoting ‘Made in Bangladesh’ apparels by participating in international trade fairs, sending high level trade delegations and marketing missions, organising single country textile and garment fairs, providing support to participate in international trade fairs, providing market intelligence, providing training to increase productivity of the labour and efficiency of mid-level managers.
We have plans to participate in Apparel Textile Sourcing Canada; Texworld Paris; Pure London; International Sourcing Expo Australia; Brazil International Apparel Sourcing Fair; Asia Apparel Expo Berlin; Morocco International Textile Fair; Fashion SVP London; Fashion World Tokyo; Apparel Textile Sourcing Miami; Sourcing at MAGIC Las Vegas; International Apparel & Textile Fair Dubai; Textile Berlin, and so on.
AR: India’s fast-growing fashion retail market is expected to reach a staggering US $ 106.93 billion by 2026. Any special thrust towards increasing footprints there?
AHM Ahsan: India is Bangladesh’s largest trade partner in South Asia.
Bilateral trade between the two countries has grown steadily over the last decade; Bangladesh’s export to India during FY 2020-21 was US $ 1.28 billion while import from India was US $ 8.60 billion.
India ranks second in terms of sourcing for Bangladesh, but exports from Bangladesh to India is not significantly high though it has been steadily increasing in the recent past mainly due to preferential market access under SAFTA.
Apparel export from Bangladesh to India in FY 2020-2021 was US $ 421.86 million which is very less when compared to the total RMG market in India.
The closest neighbour of Bangladesh as it is, India with its high economic growth is emerging as a major market for Bangladesh with very high potential and we need to tap the opportunities.
In terms of apparel products, shirts, tops, denim trousers, undergarments, polo shirts, T-shirts and trousers (for men and women) have already become popular in India even if garment exporters in Bangladesh credit popularity of ‘Made in Bangladesh’ apparels and increasing exports to the growing middle-income groups in India.
To further increase exports and bilateral trade, steps like elimination of all sorts of non-tariff barriers, improving physical infrastructure facilities (such as warehouses, truck yard, road network, cold storage at Land Customs Stations) across the borders, establishing product testing facilities at land ports, exchange of trade delegation between the two countries (at Government and private level), organising Buyer-Seller meet have been initiated which will pave the way for exchanging ideas amongst the business communities of the two countries, extending support from India’s end for developing human resources in the trade sectors in Bangladesh (as India has many experts, trade institutes and training centres), participating in more trade fairs in India.
