Bangladesh’s remarkable export turnaround (in July-December period of ’21) is well known by now — Bangladesh earned US $24 billion in overall export marking 16.46 per cent growth with apparels alone accounting for US 20 billion in the same — and so is the contribution of the major export bastions in this extraordinary performance.
However, the role played by the new and non-traditional markets in the growth trajectory has somewhat been overshadowed by the likes of USA and Europe.
According to the figures made available by Bangladesh’s Export Promotion Bureau (EPB) and analysed by Team Apparel Resources (Team AR), in the July-December period of FY ’22, Bangladesh fetched US $ 3.05 billion by exporting garment products in the non-traditional markets, wherein shipment of apparel items in the first six months of fiscal year 2021-22, increased by 24.26 per cent.
During the same period of the previous fiscal year (FY ’21), apparel items worth US $2.46 were shipped to non-traditional markets.
The United States, Canada and European countries are generally known as the traditional markets for Bangladesh’s garment exports, while all other countries including Chile, China, Japan, India, Australia, Brazil, Mexico, Turkey, South Africa, Russia, etc., are categorised as non-traditional markets.
“Exports to non-tradition markets are growing rapidly…,” corroborated Faruque Hassan, the President of BGMEA, the apex garment makers’ body of Bangladesh adding entrepreneurs are very much interested in exporting garments to the new markets even as Senior Secretary to the Commerce Ministry attributed this growth in the unconventional markets to overall improvement in the COVID-19 situation.
“…sales of readymade garments have been on the rise in most of the countries. As a result, the demand for clothes has increased globally and Bangladesh is getting its benefits,” underlined Tapan Kanti Ghosh.
What is interesting to note is that in this export earning of US$ 3.05 billion, four countries, namely Australia, Japan, India and Russia, contributed around 54 per cent ,while the remaining of the non-traditional countries’ collective share accounted for 46 per cent.
Market break-up…
Amongst the non-traditional bastions, Japan alone accounted US$ 529.46 million of exports (for Bangladesh) in the July-December period of FY 2021-22 from what was US$ 445.18 million in the corresponding period of 2020-21, registering 18.93 per cent increase.
Amongst the nonconventional countries, Japan is considered one of the most potential, in terms of apparel exports, from Bangladesh’s perspective.
“…in Asia, only Japan has turned into a US $ 1 billion market,” opined the BGMEA President even as he expressed hope that India, China and South Korea would soon follow suit.
The BGMEA President along with Vice-Presidents Shahidullah Azim and Miran Ali and Director Asif Ashraf recently held a view-exchange meeting with Japanese Ambassador in Dhaka ITO Naoki to discuss possible ways to further expand the mutual trade.
Following Japan closely is Australia, contributing US$ 398.89 million in Bangladesh’s apparel export earnings from the non-traditional markets in the first six months of FY ’22, from what was US $ 364.54 million in the same period of FY ’21, registering 9.42 per cent increase.
Accounting for US$ 365.95 million in Bangladesh’s apparel export earnings in this period, India was next only to Australia as it recorded 58.07 per cent increase from what was US$ 231.52 million in the corresponding period of FY ’21.
Next comes Russia contributing US$ 341.21 million and recording 38.10 per cent increase.
In the July-December period of FY ’21, Bangladesh had earned US $ 247.06 million from apparel exports to Russia.
According to experts, trade relation with Russia is all set to get a further boost after Bangladesh Bank, which is the central bank of Bangladesh, took an initiative to sign currency swap agreement with Russia even as the BGMEA has already sought cooperation from Russia to remove the bilateral trade barriers and facilitate exports of readymade garments.
“…barriers to transactions through banking channels and tariff complications are stumbling blocks to apparel exports to the country,” explained the BGMEA President but not before adding Russia is a promising market where in lies a great demand for ‘Made in Bangladesh’apparels.
The BGMEA chair, as such, recently held a meeting with Russian Ambassador to Bangladesh Alexander Vikentyevich Mantytskiy to discuss various trade-related issues, including how to enhance bilateral trade even if Commerce Minister Tipu Munshi sought support from the Russian Government for direct export of apparels and other products from Bangladesh to the Russian market.
“Bangladesh-made garments are being exported to the Russian market through other countries due to various complications despite there being a huge demand for various Bangladeshi products including garments in that country,”underlined the Commerce Minister during his meeting with the Russian envoy.
The contribution of Mexico and the Korean Republic in Bangladesh’s apparel export earning in this period was US $ 123.08 million and US $ 188.33 million, increasing by 68.38 per cent and 24.90 per cent, respectively, from the same period of previous year.
Export to China, Turkey loses steam; Chile hogs the limelight!
China for one has been under the limelight for some time now following its offer of duty holiday to 97 per cent of goods from Bangladesh, effective from 1st July 2020, which touched 98 per cent recently after the former decided to add 383 new ‘Made in Bangladesh’ products to the zero-tariff list.
Expectations were high that apparel exports to the Chinese domestic market would make further inroads given Bangladesh’s focus to cash in on the opportunities that lie therein.
As of 2019, Chinese domestic market was said to be around US $ 330 billion and second only to USA.
However, if Bangladesh’s apparel export earnings in the first six months of FY ’22 from China is something to go by, it will not be an understatement to maintain the Red Dragon has failed to live up to the expectations.
In the July-December period of FY ’22, Bangladesh’s apparel export earnings from China stood at US$110.39 million, falling 21.04 per cent from what was US$ 139.81 million in the corresponding period of FY ’21.
Similarly, amongst Bangladesh’s apparel export earnings from non-traditional in the said period, Turkey accounted for US$ 63.93million, from what was US$ 67.89 million in the matching period of previous fiscal year, registering a negative growth of -5.84 per cent.
The icing on the cake,however,has been Chile, hitherto unknown as an export destination that could evoke much interest amongst the Bangladesh garment exporters.
The Latin American country imported apparels worth US$ 81.77 million from Bangladesh in the first six months of FY ’22 from what was US$ 38.83 million in the corresponding period of FY ’21.
In a span of just one year, the apparel export growth to Chile increased by an astounding 110.59 per cent!
Trend continuing from FY ’21, to persist going ahead…
The growth in apparel exports to the nonconventional markets is being witnessed from FY ’21 when garment shipment to the non-traditional market rose by 6.36 per cent, before picking further pace in FY ’22.
As per the EPB data analysed by Team AR, apparel shipments to non-traditional markets rose by 6.36 per cent to US$ 5.08 billion in the fiscal year 2020-21, compared to what was US $ 4.78 billion in the previous fiscal year.
The slower export growth in non-traditional in FY ’20 was mainly due to the impacts of the pandemic, say industry insiders.
“As the economy of the non-traditional market suffered due to the pandemic, the growth was slower…,” explained Managing Director of Snowtex Group SM Khaled about the somewhat slower apparel export to the new and nonconventional markets in fiscal year 2019-20.
Given the increased focus of the garment makers towards market diversification, industry insiders maintained apparel export in the non-traditional markets will keep the increasing trend going forward. What’s more, considering the opportunities that still remain untapped in many of these countries including Russia, India and China, Bangladesh is sure to make further inroads in those markets they feel even if the Bangladesh Government on its part continues to promote the garment makers to explore and exploit the unchartered territories.
“…cash incentives and duty-free market facilities are also playing a significant role in boosting RMG exports to the new markets,” claimed the Senior Secretary to the Commerce Ministry even as the President of the apex garment makers’ body called for increasing the cash incentive by a per cent more from the existing four so as to motivate further the garment makers to consolidate their position in the new and nonconventional export hubs.
