RMG value addition declines marginally

FE Report | August 28, 2017 12:28:54

Gross value addition (GVA) in the country's biggest export earning sector --clothing sector -- fell by 0.28 percentage point to 75.07 per cent in the immediate past fiscal year.


Analysts and garment exporters opined that such fall was the reflection of a slump in demand for clothing products in the global market, especially in Europe.


However, average value addition from the fiscal year 2010 to FY 17 remained at around 75.0 per cent.


In the fiscal year 2014-15, value addition peaked at 75.67 per cent during past eight years beginning from FY 2009-10, according to a Bangladesh Bank's report.


The central bank prepares report on value addition considering yearly data on RMG exports and back-to-back raw material imports.


In the FY'17, import prices of raw materials stood at over $7.0 billion through back-to-back L/Cs which was 24.93 per cent of total RMG export value.


Value addition of knit products is believed to be around 90 per cent and that of woven products around 50 per cent. In some cases, value addition of both clothing products vary.


Dr Nazneen Ahmed, a senior research fellow at the state-owned Bangladesh Institute of Development Studies, told the FE that this is the reflection of a slump in demand for clothing in the global market.


"In my opinion, European market remains volatile and this is one of the main reasons behind the fall in value addition."

Dr Nazneen also said export growth fell significantly in the past fiscal year to June 30 adding: "This falling trend shows that the demand for garment was thin".


The country's overall exports grew by 1.16 per cent to US$ 34.65 billion in the past fiscal year where knitwear registered just 3.0 per cent growth while woven fell 2.36 per cent during the year under review.


Echoing the same view, BGMEA president Md Siddiqur Rahman said the prices of clothing products are falling for slowdown in demand.


"I don't know about the statistics prepared by the central bank, but I assure you that the prices of RMG products fell in the last fiscal year," Rahman told the FE.


Mr Rahman said many clothing factories have been running with very marginal profits. "Some keep running just to retain their customers."


However, the central bank's report said in context of some major accidents in RMG factories, the USA and the EU countries have shown their reservation about importing apparels from Bangladesh. Besides, in some cases they imposed certain conditions on apparel factories.


It noted that the government and the BGMEA have signed various contracts with some international organisations and taken a number of measures for ensuring workplace safety of workers and modernising the RMG factories.


The report suggested engaging strong lobbyist in markets in the USA in order to secure favourable treatment from the US administration for Bangladeshi RMG.


"The measures should also include building good relationship between the employers and the employees," the report said.


RMG exports fetched $28.09 billion in the last financial year, of which woven $14.73 billion and knitwear $13.35 billion.


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