Despite a wave of garment factory closures in Bangladesh, export earnings from the sector continue to increase, as per the data from the Export Promotion Bureau (EPB).
In the first six months of the current fiscal year, Bangladesh’s export earnings from the garment sector increased by approximately 13 per cent compared to the same period last year. Exports in December increased by 18 per cent with exports of woven garments rising by 20 per cent.
At tributing the factory closures to labor unrest and banking difficulties, entrepreneurs also noted this paradoxical increase in export income. They observed a gradual decrease in the crisis of confidence among garment sector business owners. According to economic analysts, this export growth offers some relief to the country's economy, which has faced challenges like a dollar shortage.
Bangladesh's primary source of export earnings, the RMG sector has been struggling due to worker unrest and other issues. The sector experienced four months of instability following the August government change, leading to a crisis of confidence among foreign buyers.
Despite efforts by the interim government and the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) to rebuild trust, numerous factories closed down. Data indicates, over 100 factories closed operations in the last six months, with 83 companies shutting down completely and at least 10 others suspending operations. Businesses attribute these closures to the political transition.
Mohiuddin Rubel, Former Director, BGMEA explains, export earnings from the sector continue to increase due to a rise in the workers’ skilling which has boosted productivity in garment factories. While many small and medium-sized factories closed due to issues like lack of banking support, larger, more efficient factories have expanded production, states Rubel.
Other factors that contributed to the rise in export earnings include a rising US dollar against the Bangladeshi taka, scaling of production by larger factories, production of more value-added, premium garments, brands concentrating on fewer and larger facilities, diversification of raw material sources that helped manufacturers main production despite global disruptions.
