Bangladesh RMG adds more value to products

Bangladesh's garments sector is on the rise as low imports have led to an increase in value addition.

Value addition in the readymade garment (RMG) industry reached 62.78% during the second quarter (October-December) of the current fiscal 2022-23, improving 11.39 percentage points over the previous quarter, according to central bank data.

During the October-December quarter, the import value of raw materials was $4.11 billion, accounting for 32.31% of total RMG export earnings. As a result, the net exports from this sector stood at over $8.61 billion, which is 62.79% higher than the previous quarter and 37.43% higher than the same quarter of the previous year.

The improvement that followed gradual fall for eight quarters from July-September FY21 has been attributed to export growth with better price and decline in raw material imports.

The central bank data mentioned that the apparel sector observed the lowest value addition at 51.39%, reaching $5.29 billion in the first quarter (July-September) of the current financial year.

The amount rose to $8.61 billion in the October-December quarter when exports were recorded at $12.72 billion against $4.11 billion in important payments. Exports were $10.27 billion while imports totalled $4.98 billion.

The value addition represents the net export value after deducting import bills from gross export proceeds.

Apparel exporters said that the central bank value addition data does not reflect the actual scenario of net export earnings as they usually export at least 45 days after receiving orders – a period required to procure raw materials.

They also mentioned the sector witnessed a good growth in the last quarter after a month of negative growth in export earnings and at the same time their import of raw materials also dropped as the global apparel demand fell as an impact of the Russia-Ukraine war driven global inflation.

Talking with The Business Standard, Cute Dress Industry's Managing Director Sheikh HM Mustafiz said, "During the last quarter, raw material prices fell while our exports continued to grow after a month of negative growth in September."

Previously, raw materials were procured at high cost, leading to lower value-addition, he said.

Mustafiz expressed fear that the apparel sector might see a negative growth in February onwards due to falling export orders.

DBL Group Managing Director MA Jabbar said in the last quarter exports were better which was reflected in overall net export  earnings.

Jabbar also mentioned that exporters were facing order shortage in terms of their capacity.