Value addition in export-oriented readymade garment products fell further in the first quarter (July-September) of the current financial year 2022-23 after posting a record low in the third quarter of FY 2021-22, due to a price hike of raw materials and a high freight cost.
According to a Bangladesh Bank report titled ‘Quarterly Review on RMG: July-September, FY22’, the value addition in RMG products dropped to 51.49 per cent in the first quarter of FY23.
Earlier, the value addition in apparel products dropped to a record low of 52.24 per cent in the third quarter (January-March) of FY22.
The value addition in RMG products in the July-September period of FY23 fell by 1.93 parentage points from 53.42 per cent in the same period of FY22, the data showed.
The net export earnings from readymade garments in the first quarter of FY23 fell by 12.49 per cent to $5.29 billion from $6.04 billion in the preceding quarter.
In terms of volume, the net RMG exports in the first quarter of FY23, however, increased by 9.31 per cent from $4.84 billion in the same period of FY22.
The net exports were determined by subtracting the RMG raw material import value from the total RMG export value.
Exporters said that the net export earnings from the RMG had decreased in recent times as the prices of raw materials increased abnormally due to the Russia-Ukraine war.
At the same time, unit prices of products increased a little, but the share of net exports did not increase due to the high freight cost, they said.
The BB data showed that the import value of raw materials (raw cotton, synthetic/viscose fibre, synthetic/mixed yarn, cotton yarn and textile fabrics and accessories for garments) was $4.98 billion in July-September of FY23, accounting for 48.51 per cent of the total RMG export earnings.
The value addition in readymade garment products dropped to 54.38 per cent in FY22 from 59 per cent in FY21.
‘The total unit price of apparel products increased on the global market, but the net export decreased due to high prices of raw materials and increased freight costs caused by the Russia-Ukraine war,’ Bangladesh Garment Manufacturers and Exporters association president Faruque Hassan told New Age on Monday.
He said that although the global economy was going through turmoil, Bangladesh apparels sector was performing well.
The BB data showed that the total export earnings from the RMG stood at $10.27 billion in July-September of FY23, 8.14 per cent lower than that of the previous quarter but 13.41 per cent higher than that in the same quarter of the past year.
Earnings from RMG export in July-September FY23 were 2.52 per cent higher than the quarterly target of $10.02 billion.
The data also showed that the United States, Germany, the United Kingdom, Spain, France, the Netherlands, Italy, Canada and Belgium were the top destinations for Bangladesh’s RMG exports and the earnings from the nine countries were $7.42 billion, accounting for 72.25 per cent of the total RMG exports in the first quarter of FY23.
According to the BB data, the value addition in RMG products has started declining since the financial year 2019-20.
The value addition in FY20 decreased to 56.84 per cent from 64.32 per cent in FY19.
The BB data also showed that the value addition in RMG products was 60.94 per cent in FY18, 61.78 in FY17, 63.66 in FY16, 62.37 in FY15, 60.51 in FY14 and 61.76 in FY13.