During July-Mar 23-24, Bangladesh reported a 16 percentage points decline in value addition in the readymade garment (RMG) sector to 55.4 per cent. This decline raises concerns among exporters regarding Bangladesh's eligibility for the Generalised System of Preferences (GSP) Plus facility in the European Union (EU) market following its graduation from Least Developed Country (LDC) status.
According to recent data from the central bank, Bangladesh's apparel exports totaled $27.30 billion in the last three quarters of FY24, significantly lower than the previously reported $37.20 billion. This revision includes a substantial decrease of $6.49 billion in knitwear exports and $3.41 billion in woven exports.
The discrepancy between the central bank's data and the Export Promotion Bureau (EPB) stands at $10.81 billion for July to April of FY2024. Additionally, RMG-related import payments have been revised upwards to $12.17 billion, highlighting one of the lowest recorded value additions in recent years, significantly lower than the previously reported 71.5 per cent.
In response, industry leaders have urged the government to reconsider its export targets, arguing that the FY24 fell short due to inaccuracies in export figures. Concerns have been raised about meeting the double-stage value addition requirements for the GSP Plus facility in the EU market, given the declining value addition in Bangladesh's apparel sector.
Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) points out, a close competitor, Vietnam may now be far ahead following the revision of export data. This disparity underscores challenges such as gas and electricity shortages affecting local fabric and yarn supplies, potentially leading to increased reliance on imported raw materials and impacting local value addition efforts.
Dr. Ahsan H Mansur, Policy Research Institute, emphasises on the need for comprehensive government support, including improved port facilities, simplified customs procedures, and uninterrupted energy supplies, to help achieve ambitious export targets by 2027. He stressed diversifying the export basket to boost export volumes and competitiveness.
Exporters remain concerned about Bangladesh's standing in the global apparel market, particularly with Vietnam's competitive gains and the challenges posed by local infrastructure and value addition constraints. Efforts to address these issues will be crucial in maintaining Bangladesh's position as a leading apparel exporter and securing future market advantages.
