The growth in readymade garments export has been decreasing in recent months. In the July-October period of the current fiscal year the export of readymade garments fell by 6.67 percent whereas the target for growth is 11.9 percent. The information available suggests that garments export may fall to 11.68 percent in November.
By reviewing the purchase order of buyers, we apprehend that the sluggish trend in export will continue till December this year. This situation has arisen because the country's garments sector has been failing to survive in the price-based competition.
The strong position of the Taka against the US dollar is the main cause of lagging behind in competitiveness. The value of the Taka against the Dollar remained strong and stable in the last seven years, whereas the Indian Rupee was devalued by 29.32 percent, the Chinese Yuan by 11.71 percent, the Vietnamese Dong by 5.85 percent and the Turkish Lira by 222 percent.
Moreover, the Indian government has announced an incentive package in favour of their export-oriented textile and garments sectors. Rupees 50,000 crore has been allocated for the package. In the same way the Vietnam and Pakistan governments have given corporate tax waivers and bank loans at low interest for their garments sector.
Taking some immediate steps has become urgent for maintaining the growth of the garments sector which earns the lion's share of the foreign currency, and for safeguarding the jobs of crores of people directly or indirectly working for this sector. If the present trend in garments export continues and seven percent negative growth is achieved after the end of the current fiscal year, garments exports will stand at $31.9 billion. Accordingly, the amount of 25 percent local VAT will be $7.98 billion.
If an extra Tk5 is added to the current exchange rate against the US Dollar on that amount, it will require about Tk3,988 crore.
We urge the government to introduce "RMG Foreign Currency Realisation Program (RFCRP)" to safeguard the garments sector in the current crisis situation.