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The Financial Express
Swasti Lankabangla Swasti Lankabangla

Pandemic impact

RMG exports to major markets plunge in H1

| Updated: August 10, 2020 13:58:01


FE file photo FE file photo

The country's apparel exports to its major destinations, including the US, Germany, Italy and the UK, witnessed a drastic fall during the first half (H1) of current calendar year, mainly due to the ongoing Covid-19 pandemic.

Bangladesh's ready-made garment (RMG) exports to its single largest destination - the US - dropped by nearly 20 per cent to US$ 2.47 billion during the January-June period of 2020. The amount was $3.07 billion in the corresponding period of 2019, according to data of the Office of Textiles and Apparel (OTEXA), affiliated with the US Department of Commerce.

During the H1 of 2020, Bangladesh shipped 891 million square metres of apparel items, which was 1.08 billion square metres in the same period of last year.

The OTEXA data also showed that the total apparel imports of the US in the first six months of this calendar year declined by 30.37 per cent to $27.88 billion, which was $40.04 billion in the same period of last year.

China, the largest exporter to the US, also witnessed a 49.09 per cent negative growth with earnings of $5.76 billion during the H1 of 2020. The country shipped apparel items worth $11.33 billion during the same period of 2019.

Vietnam's RMG exports to the US declined by 11.12 per cent to $5.65 billion during the January-June period of 2020, which was $6.36 billion in the corresponding period of 2019.

The US RMG imports from Cambodia, however, increased by 3.44 per cent to $1.24 billion.

The US apparel imports from India fell by 32.09 per cent to $1.53 billion in the first half of the current calendar year.

Indonesian exports to the US also decreased by 20.33 per cent to $1.81 billion, data showed.

A latest study of the US revealed that Bangladesh faced more cancellation or postponement of work orders by the US buyers than one of its major competitors - Vietnam - during the coronavirus pandemic.

It also revealed that the study respondents, who were the executives of 25 US-based leading fashion brands, retailers, importers and wholesalers, were found more "careful" about cancelling orders coming from Vietnam, which is widely regarded as the "Next China" for apparel sourcing.

Some 65 per cent respondents said they cancelled or postponed sourcing orders from Bangladesh, while the ratio is only 45 per cent for Vietnam, about 60 per cent for India, and 70 per cent for China.

The report related two factors to the phenomenon. One is the size effect, as Bangladesh, China and India were often used to fulfill large quantity sourcing orders.

In the current situation, however, fashion brands and retailers are most likely to cancel these large orders.

"Covid-19 and the trade war between the US and China have increased the US fashion companies' sourcing costs, especially regarding shipping and logistics," it added.

Apart from the US, France, Germany, Italy, the Netherlands, Spain, the UK and Poland are the destinations, where Bangladesh annually shipped RMG products worth more than billion dollars.

But due to the ongoing coronavirus outbreak, exports to these European Union (EU) destinations also declined at rates ranging from 26 per cent to 39 per cent, according to data compiled by Bangladesh

Garment Manufacturers and Exporters Association (BGMEA).

Overall RMG exports to the 27-member EU declined by 30.91 per cent to $7.32 billion in January-June period, which was $10.59 billion last year, it showed.

Besides, the country's exports to Canada, another billion dollar market, dropped 38.68 per cent to $378.14 million in the first six months of 2020 against $616.64 million over the corresponding period of last year.

The EU accounted for 61.41 per cent of the country's total RMG export earnings, followed by the US 18.17 per cent, and Canada 3.17 per cent.

Apart from the major traditional markets, like - the US, the EU and Canada, local apparel exports also witnessed 26.33 per cent decline on an average to $2.05 billion during the January-June period of this year.

Bangladesh fetched $2.79 billion during the first half of 2019, according to BGMEA data.

The country's garment exports to its various destinations witnessed negative growth during the first three months of this calendar year also, while the ongoing coronavirus outbreak has dipped the negative growth further, exporters noted.

munni_fe@yahoo.com

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