RMG: Eluding export target  

Shamsul Huq Zahid   | Published: January 03, 2019 22:29:07 | Updated: January 04, 2019 21:51:59

When the BGMEA honchos some years back had set the $50 billion export earnings target for the year 2021, they knew it was ambitious. Yet they aired high expectation and the relevant ministry became convinced later and accepted the target officially in 2014.

However, it is hard to blame the apparel exporters since when the target was set, the annual growth rate of both knit and woven exports was very healthy. But like other sectors of the economy, the RMG got the first jolt from the global financial meltdown in 2008-10. The collapse of the Rana Plaza that claimed more than 1,100 lives of garment workers dealt a severe blow in 2013. The deadly Tazreen fire only added to the woes of the industry. Yet the government officially set the $50 billion apparel export target and announced it at the Dhaka Apparel Summit in 2014.

The industrial accidents did hurt the international image of the Bangladesh apparel industry. Yet the buyers were found sympathetic towards the Bangladesh cause. They extended cooperation to the remediation work of hundreds of factories for safety and security of workers. Though the factory owners have expressed resentment at the remediation work from time to time, most apparel units in Bangladesh are now safer than before for workers.

Bangladesh is still the second largest exporter of apparels in the world. But the fact remains that the country failed to penetrate much into the non-traditional markets in recent years and exports to the traditional markets did not also record any notable increase.

It is now projected that Bangladesh could at best earn around US$39 billion by the year 2021.

Even in very favourable environment, Bangladesh might not have achieved the target of $50 billion, but it could well go close to it.

Businesses do very often blame the government policies and lack of necessary support. But, in the case of RMG, the government has been very supportive, particularly in fiscal matters. It has reduced corporate and export taxes for the apparel factory owners.

But the shortcomings have been from the apparel exporters' side. Side by side their failure to find new markets they could hardly make any meaningful entry into the high-end apparel market. Bangladesh RMG makers could not make any notable progress in product diversification. Its exports are still dominated by T-shirts, trousers, short jackets and sweaters. And 70 per cent of its exports go to only 10 traditional destinations that include the USA and EU countries.

The Ministry of Textiles and Jute, according to newspaper reports, in a meeting recently reviewed the overall apparel export situation and found the $50 billion target not achievable. Now it expects to meet the target by adding the export earnings of RMG backward industries and home textile and terry towel units.

Some late entrants are now doing better than Bangladesh in the global market, Vietnam being in the forefront. The export growth of Vietnamese apparels is better and it is fast becoming a force to reckon with in the international market.

Bangladesh could be facing even tougher challenges in the coming days when it graduates to the middle-income country (MIC) status. The challenges will be in both aid and trade matters.

The country's economic growth rate has been healthy in recent years. But there has not been any real assessment of the situation concerning the businesses' preparedness in tackling challenges in areas of international trade following its graduation to MIC status. Both the government and the private sector should make such an assessment using the expertise of think tanks and relevant others. The assessment results do also need to be followed up by necessary measures to help the country meet the challenges efficiently.



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