Exports grow 36% YoY in August riding on RMG, home textiles

Exports grew by around 36% to $4.61 billion in August compared with the same month last year driven by a number of products including readymade garments, home textiles, leather and jute goods, according to the Export Promotion Bureau (EPB).

With the year-on-year export growth of more than 25% in the last two months, industry insiders say, the increased price of raw materials, increase in freight cost as well as shifting of some orders from China to Bangladesh are the main reasons behind the export growth.

Garment entrepreneurs say exports were relatively low in August of the last fiscal year 2021-22 due to the Covid-19 pandemic. However, they pointed out that this growth is likely to drop from November and December as the current flow of orders are low.

"In August last year there were some Covid-induced restrictions, due to which exports were low. As a result, the year-on-year export growth is high. But if we calculate month on month growth for ready-made garments, we will see that the export amount has decreased compared to July," Md Shahidullah Azim, vice president of Bangladesh Garment Manufacturers and exporters Association (BGMEA) told The Business Standard.

"Orders have started to decline and the clear impact of this will be seen in November and December," he added.

After the transition from the pandemic, the demand in Bangladesh's main export destination countries increased, and orders started to pour in. But after the Ukraine-Russia war started to drag on, they cut back on purchases, resulting in lower orders, which will be reflected in the next two to three months.

More than 80% of Bangladesh's exports come from the garment sector.

A section of apparel sector entrepreneurs and economists say that since Bangladesh produces more basic items of clothing and some buyers from China are coming to Bangladesh for various reasons, there may not be a major negative impact to orders in the coming days.

Shams Mahmud, an RMG exporter and former president of Dhaka Chamber of Commerce and Industry (DCCI) told The Business Standard that several buyers, for example who used to purchase one lakh pieces of clothing earlier, are now making inquiries for two lakh pieces.

"If such orders are confirmed, there may not be any major negative reaction to the order in the coming months," he said.

Bangladesh's emerging exports include home textiles after the ready-made garments and home textiles entrepreneurs are not seeing any negative impact on orders yet.

M Shahadat Hossain Sohel, managing director of Towel Tex Limited and president at Bangladesh Terry Towel and Linen Manufacturers and Exporters Association (BTTLMEA) told The Business Standard, "We have a lot of export orders. Several orders are coming to Bangladesh from Pakistan. There is a possibility of more orders due to fresh flooding there."

However, despite the orders, the fuel price hike and daily load shedding is eating away their profits, he said.

"Due to load shedding, I'm having to use Tk92,000 worth of diesels every day. If this problem is not solved, the orders will come but there will be no profits," he added.

Professor Mustafizur Rahman, distinguished fellow of the Center for Policy Dialogue (CPD) considers the current pace of Bangladesh's exports to be satisfactory.

"Orders from China are coming to Bangladesh. This is hopeful news. But our rate of value addition is very low. Attention should be paid to this," he said.

"Besides, we need to increase our focus on the non-RMG sector. Then good growth can be expected from those sectors," added Mustafizur Rahman.

AHM Ahsan, vice chairman of Export Promotion Bureau (EPB), however, thinks that Bangladesh would hold this export momentum for next two to three months also.

In the fiscal year 2021-22, Bangladesh's exports amounted to $52 billion, and the growth was more than 34%. In the current fiscal year, as part of some caution, the growth rate has been reduced to 11% and the target of exports of goods has been fixed at $58 billion.

According to EPB calculations, exports in the first two months of the fiscal year were more than $8.5 billion.

According to statistics, among the major export items, export of woven garments has seen a better growth (34%) than knitwear, although the revenue from knitwear is higher. Besides, Bangladesh has seen good growth in exports of home textiles, specialised textiles, leather and leather products, plastic products, jute and jute goods and engineering products.

At the same time, exports of frozen and live fish and agricultural products decreased.