According to the most recent report released by Bangladesh Bank, there has been a significant increase in value addition within the readymade garment (RMG) export sector over the course of one year.
The report, titled Quarterly Report on RMG, revealed value addition in RMG exports rose by 11.59 percentage points.
In the fiscal year 2021-22 (FY ’21-22), the value addition in RMG exports stood at 54.38 per cent even if in the subsequent fiscal year, 2022-23 (FY ’22-23), this figure surged to 65.97 per cent. This substantial increase in value addition reflects the growing value created within Bangladesh’s RMG export industry.
In FY ’22, Bangladesh achieved export earnings of US $ 46.99 billion through RMG exports. To facilitate this export, Bangladesh imported raw materials such as cotton, yarn, fabric, equipment, and other resources worth US $ 15.99 billion. As a result, the net export value of RMG reached US $ 31.0 billion, accounting for 65.97 per cent of the total value addition.
Comparatively, in FY ’21, Bangladesh exported RMG products worth US $ 42.61 billion. Out of this, US $ 19.44 billion was allocated for importing raw materials. Consequently, the net export value for RMG amounted to US $ 23.17 billion, and the value addition in apparel exports was recorded at 54.38 per cent for that fiscal year.
These export figures were sourced from the Export Promotion Bureau (EPB), while data on raw material imports was obtained from the Foreign Exchange Operations Department of Bangladesh Bank, primarily derived from back-to-back letters of credit.
The report explained that the values reported represent the net export in RMG as a percentage of the total RMG export, considering the value of raw components such as raw cotton, synthetic/viscose fiber, synthetic/mixed yarn, cotton yarn, textile fabrics, and accessories for garments, rather than back-to-back L/Cs raw materials.
In the fourth quarter (April-June) of FY ’22-23, the import value of raw materials (including raw cotton, synthetic/viscose fiber, synthetic/mixed yarn, cotton yarn, textile fabrics, and accessories for garments) amounted to US $ 3.35 billion. This accounted for 28.52 per cent of the total RMG export earnings of US $ 11.73 billion during the same period. Consequently, the net exports from this sector reached US $ 8.39 billion, constituting 71.48 per cent of the total RMG export during this quarter.
The central bank’s data reveals that the value addition rate in RMG exports remained relatively stable, ranging between 60.51 per cent and 64.32 per cent from FY ’12-13 to FY ’18-19. However, it dipped to 56.49 per cent in FY ’20, subsequently rising to 59.13 per cent in FY ’21, before declining to 54.38 per cent in FY ’22.
