What is happening with the RMG export ?

For the second consecutive month, the export of the readymade garment (RMG) has experienced a negative growth in April.

According to the data from the Export Promotion Bureau (EPB), the RMG sector, the highest export earner of the country, bagged $3.32 billion in April of FY23, fetching 15.48% negative growth from $3.93 billion in FY22, EPB data stated.

The target for the RMG sector for April was $4.07 billion, meaning 18.4% less than the target.

Responding the question of what is happening with the RMG exports, the manufacturers said that the negative growth was projected due to continuous fall in purchase orders.

Moreover, as a result of inflation and global economic turmoil, western countries have raised interest rates, causing consumer prices to rise excessively.

Faruque Hassan, president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), told the media that there isn’t enough UD, and the factories are operating at less than full capacity.

Inflation in the destinations has reached historic levels as a result of the ongoing geopolitical crisis which has curbed their clothing purchasing capacity which led to overstocks in the retail shops, he added.

The buyers are at a move-slow policy for which both the value and quantity of export declined.

Moreover, the domestic factors like hike in the price of gas, and electricity also impacted the production of factories.

He urged adequate governmental support at this moment and if they don’t get it, it will cause factories to shut down and create unemployment.

Mohiuddin Rubel, director of the BGMEA told the media that the target of exporting RMG products in FY23 is worth $46.80 billion, meaning Bangladesh has to export at least $4.3 billion monthly in the next two months.

Regarding achieving the target, he said that it cannot be said that there will be much improvement at this time.

However, they have to observe the next months.

Speaking to the media, Professor Mustafizur Rahman, a distinguished fellow of the CPD, said that three dimensions are impacting the export of the country.

The major destinations of the Bangladeshi shippers are taking various policies to tackle inflation which have curbed the purchasing capacity of them, meaning there is a shrink from the demand side, he added.

Moreover, the raw materials price is declining slowly, so, the value is also decreasing, he also said.

The third dimension is Bangladesh is less competitive as there is a lack of product diversification, market diversification, lead time issues, high cost of doing business and many more.

Regarding the solution, he said that Bangladesh has to fix all these – for both RMG and non-RMG products – to revive the growth, if not, it will be a worrying signal as negative growth in export will later create pressure on national reserves.

In the FY2021-22, the RMG sector bagged $42.61 billion by export apparel items to its global destinations.