When would the export woes end?

The continuing fluctuation and inconsistency is now becoming a concern for the industry!

“After the freefall of garment export during March-May and the struggle through June and July, shipments saw meagre growth in August and September. While we were hoping the situation would improve, with the emergence of the second wave, the rhythm that we got back is broken,” lamented BGMEA President, Dr. Rubana Huq even as former BGMEA President, Anwar-Ul-Alam Chowdhury Parvez on his part underlined, “We had thought that we would be able to make a total turnaround ahead of Christmas, but it won’t be possible now. The second wave of Coronavirus has thrown all our calculations out of the window…”

Inconsistency is perhaps one word that best exemplifies Bangladesh’s apparel export performance of late! No matter the efforts put in by the stakeholders, the constantly changing market dynamics, thanks to the Coronavirus pandemic – which seems to lose steam only to come back strongly again, is not allowing things to settle down, and is reflected in Bangladesh’s fluctuating exports.

Bangladesh’s overall export performance in November rekindled some hopes though afterwards it posted 0.76 per cent year-on-year growth even as the country missed the target by 8.2 per cent.

Exports in November fetched around US $ 3.1 billion, slightly up from a year earlier, however, what is a matter of real concern is that readymade garments, which fetches more than 84 per cent of total export receipts posted a decline. As per EPB figures, earnings from apparel exports in the five months of FY ’21, fell by 1.48 per cent to US $ 12.89 billion from US $ 13.08 billion in the same period of FY ’20 even as the country’s garment exporters underlined that consequent to reinstatement of cancelled orders by global buyers, exports witnessed a meagre growth in August and September before marking a decline again in October due to the second wave of the Coronavirus pandemic.

Bangladesh’s consolation is perhaps it’s faring better than its neighbour India, whose exports in November fell 9.07 per cent, in a second straight month of decline.

Since the recovery from Covid-19 may take longer than expected and may prolong until the middle of next year, the industry needs continuity of the support received to stay afloat in the upcoming days along with additional support to withstand any adverse impact, maintained the BGMEA supremo.

“If the exporters need any support the Government should provide that for the sake of a speedy recovery of exports from the shocking fallouts of the Covid-19,” stated the Executive Director of the Policy Research Institute, Ahsan H Mansur who reportedly added the magnitude of the second wave might not be like that seen during the first one.

It may be mentioned here that even as the West continues to battle against the second wave of the Coronavirus pandemic, its repercussions are felt equally strongly in Bangladesh. As the crisis wrought by the second wave of the pandemic gains in severity, the clamour for another rescue package (fresh stimulus) to offset the Covid-19 fallouts is growing stronger in Bangladesh with the country’s apparel exporters on 7 December requesting the Government to come up with a fresh package to help pay wages of workers for a few more months.

Considering the fallouts of the pandemic, the Government has assured it would consider a fresh round of stimulus plan for the sector. Inaugurating an event on 12 December, Tipu Munshi, who is also an ex-President of the of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), said that the Government would consider offering another stimulus package for the garment industry if the situation deteriorates due to the second wave of the Covid-19 pandemic.

We have to protect the apparel trade and it is for the country’s economy, underlined the Commerce Minister.

It may be mentioned here that earnings from woven garments decreased by 8.29 per cent to US $ 5.75 billion in July-November of FY ’21 from US $ 6.28 billion in the same period of FY ’20 but earnings from knitwear in the five months of FY ’21 increased by 4.80 per cent to US $ 7.13 billion from US $ 6.81 billion in the same period of FY ’20.

Further, in November the growth of knitwear export was 4.9 per cent while export of woven garments fell by 10.48 per cent.

“This is the 16th consecutive month for woven garment having a downfall in export. One of the reasons why knitwear could have retained some growth is the demand for clothing for home use and the peak season of sweaters which ended in September,” said Rubana while adding the sales in Europe and the United States had dropped by 13 per cent in October as a consequence of the resurgence of the virus and its impact is apparently visible in global retail sales.

“Such trend in retail is obviously alarming for the industry, particularly seeing the worrying context of global economy, trade, unemployment, and resulting impact on disposable income and spending; solid recovery may still be far away,” underlined the BGMEA President.

Explaining the reason behind the export growth of knitwear, Anwar-Ul-Alam Chowdhury Parvez said, “We are exporting cheap products now. The buyers are purchasing only the extremely necessary products. That’s why knitwear export has increased but the sale of woven products has dropped.”

Meanwhile, speaking to the media, Managing Director of Denim Expert Limited, Mostafiz Uddin, reportedly maintained that global demand for apparel would not spring back overnight, adding the buyers are in a conservative mode when it comes to placing work orders. “Apparel export growth will not get any momentum until the global economy recovers from the pandemic. The situation may turn from bad to worse if the second wave turns out to be more lethal than the first wave,” Mostafiz quipped even as Commerce Secretary Md Jafaruddin on his part expressed hopes that Bangladesh’s apparel exports would continue to hold up amid the pandemic as the country mostly manufactures low-end products.

“I hope the demand for this segment will not dip much. I am optimistic of a turnaround in exports,” added Commerce Secretary while Mustafizur Rahman, a distinguished fellow at the Centre for Policy Dialogue (CPD), blamed the overvalued exchange rate for the slower growth and negative growth in some key sectors.

“Our competitors are enjoying benefits due to this. We are doing better in sectors where there is higher local value addition such as jute and knitwear,” said Mustafizur while underlining that Bangladesh’s competitors such as Vietnam and Cambodia were doing better in the USA, and added, “So, to survive amid the pandemic, Bangladesh needs to improve its competitiveness, cut the cost of production and increase productivity until the global economy takes off.”

The CPD distinguished fellow also proposed Bangladesh should ink free trade agreements (FTAs) to avail duty-free market access, which would give an advantage in grabbing more market share in exports destinations even as the Commerce Secretary said the Government is working on signing FTAs and preferential trade agreements (PTAs).

“It appears that the Coronavirus vaccine will come quickly. Everyone is hoping that the situation will normalise. We also hope so,” said Vice-President of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), Mohammad Hatem, who credited knitwear for helping the overall export grow in November.

So, as the UK became the first country to authorise Covid-19 vaccine thereby marking a significant breakthrough in the global fight against Coronavirus, other countries in the West are expected to follow suit. Bangladesh’s apparel exports can therefore hope for better performance in the coming days.