Dhaka, Tuesday, 04 October 2022

Don’t Give Knee-jerk Reaction to the Development

Don’t Give Knee-jerk Reaction to the Development

To go by the report on negative growth experienced by readymade garments (RMG) export to some major destinations in the first quarter of the current fiscal year, there is no reason to give a knee-jerk reaction to the development.

Developments beyond Bangladesh’s shores may indeed negatively affect the country’s export, particularly when it is overwhelmingly dependent on RMG trade; competitors are fast scrambling for their shares and trade war between the US and China is stifling the international trade regime. Of the major destinations, the European Union is in turmoil over Brexit deal and its likely negative impact on economies of most members. Canada, another major destination, has just emerged from the election as the incumbent Trudeau government gets a second term but with a reduced majority. Evidently, not all is lost for the country’s RMG. Also, the first quarter may not follow the proverb, “Morning shows the day”. Yet the message from the export fall of RMG to some major countries should be taken seriously. The matter should give the garments associations like the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) and the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) enough cause for introspection. Even the commerce ministry should feel prompted to review its export policy in order to decide the future course of action for diversifying the country’s export basket and also looking for non-traditional export destinations. As for the manufacturers and exporters of apparel, the task is challenging because countries like Vietnam have outpaced Bangladesh in developing their garments industry by adopting advanced technology and augmenting production. In this respect, Bangladesh still has an option open to it - it must switch over to manufacture and export of high-end apparels instead of those meant for low-end market abroad.

The fact that the largest exporter of RMG, China that is, has been off-loading some of its export volumes in the face of trade war with the USA leaves a vacuum for others to step in. Bangladesh has a real opportunity here to take a substantial share in the off-loaded volumes.
Even if RMG can, however, make some inroads into the upmarket abroad through value addition, there is no alternative to diversifying apparel manufacture and the export basket to maintain a lead in the field. In fact a competitive edge has to be lent to the export environment of which energetic negotiations with retail giants will be an important part. Maybe Bangladesh needs to restrategise to cope with new competitors with policy backing and incentives repackaging here and there. Fluctuations on account of new entrants on the scene like Laos - which is set to enjoy facilities of a free trade agreement (FTA) with the EU - pose a challenge. The RGM sector has to measure up to it. Overall, the country should prudently select more export items within a short time to counterbalance any loss because of decline in RMG export.