Currently,
Bangladeshi manufacturers mostly producebasic
fabrics, which is not for higher-end products.Increased dependence on fabrics import and a lack of proper
policy on energy supply are negatively impacting the competitiveness of
Bangladesh’s woven garment exports in the global market.Industry insiders and
trade analysts have blamed longer lead time, poor backward linkage, the absence
of value addition and modern technology and lack of proper policy support on
gas and electricity connection for the decline.
According to the Export Promotion Bureau (EPB), export earnings from the woven
garment products have seen a 2.35% fall in the last fiscal year to $14.39
billion.It has, however, posted a 4% growth in the first half of the current
fiscal to $7.17 billion. During the same period, knitwear products earning has
seen an 11.47% rise to $7.6 billion.The woven sector has also seen negative
growth in major export destinations including Germany and the US, two of the
largest export destinations.Experts have suggested new investments in backward
linkage to reduce import dependence and technology upgradation for value
addition in order to make a comeback.
To boost export of woven
garments, the issue of longer lead time caused by import dependence is a key
factor while the price edge is another important element.“Bangladesh is doing
better in knit products exports. This is because of we have strong backward
linkage industry,” Faruque Hassan, BGMEA senior vice president told the Dhaka
Tribune.“However, woven products manufacturers are highly dependent on import for
fabrics, which costs more. As a result, export earnings from woven goods have
seen slower growth and it is losing its strength in the global market,” he
added.On the other hand, value addition of woven products is less than the knit
products which led to lower prices, Hassan said.
“We do not have manmade fibre, polyester and petrochemical, which we have to
import. We will be competitive if we can meet the demand from the local
sources,” he added.“Stakeholders are investing
to upgrade machinery to go value addition. This will boost the buyers’
confidence and they will place orders for higher end woven products in
Bangladesh,” the BGMEA senior vice president said.Shorter lead time is the key
to remaining competitive in the global market. To reduce the lead time, Bangladesh
has to improve its backward linkage industry to meet the demands locally.
It takes about 35 days to ship goods to the US from Bangladesh. But shipping
from China takes 20 days and it is 15 days for Turkey, Exporters Association of
Bangladesh presidentAbdus Salam Murshedy noted.“As a result, Bangladesh cannot
take urgent orders from buyers due to longer lead time,” he told the Dhaka
Tribune.While getting a gas
connection is a big challenge, business will not be viable if the manufacturers
have to run a factory with diesel instead of gas.“Only using gas can make the production less expensive, which will help us be
competitive,” he said, urging a proper energy policy for the sector.The size of
investment and costs of land are two other challenges. “Setting up woven fabric
factories cost two to three times more than establishing a knit composite
factory,” Salam said. “It also needs more land.”
Bangladesh
can only meet 30% to 35% of local demands of woven fabrics. So, there is a huge
gap between the supply and demand of woven fabrics. It is clear that there is
big opportunity to grow by making new investments.“First, we have to try to
meet the demands locally to reduce lead time as it takes so many days to import
fabrics. For this, new investment is a must to increase production capacity in
line with the demands,” said Salam, also managing director of Envoy Textile.“Then,
the government should ensure infrastructure to ship finished goods within a
possible shorter time as it is the key to success to grab more orders and
remain competitive in the global market,” he added.The former BGMEA president
said there were many capable investors but they were unwilling to make
investments due to lack of proper policy support and utility services.
“Losing
market share of woven garments is alarming for Bangladesh as over 82% export
earnings come from apparel sector and the woven sector contributes almost half
of it,” former caretaker government adviser AB Mirza Azizul Islam told the
Dhaka Tribune.“We
have to ensure balanced export earnings to attain a sustainable exports
growth,” he said. “The government, along with the stakeholders, should jointly
take steps to overcome the challenges.”He
said he believed that new investment could improve the industry capacity to
meet the demand of fabrics locally.Currently,
Bangladeshi manufacturers mostly produce basic fabrics, which is not for
higher-end products.“Since
the fashion trend is changing every day and the consumers want latest fashion
products, the clothing retailers are looking for more technical fabrics instead
of basic ones. To cope up with the latest demand, we should focus on
multifunctional fabrics to diversify products,” Md Mostafiz Uddin, managing
director of Denim Expert Limited, told the Dhaka Tribune.He
also suggested product development by research and innovation as well as
introducing technology in manufacturing to get higher prices.
Source: The Daily Star, Bangladesh Saturday, 27 January 2018