The effect of two-year long pandemic, followed by Russian-Ukraine war and how Western countries are slipping into recession and tightening their purse strings on non-essential items such as clothing. Whilst Bangladesh went all out during the pandemic to maintain uninterrupted supply to the West by not shutting operations, in the end the valiant effort didn’t quite pay off as orders started drying up, leaving the country’s readymade garment exporters high and dry.
Bangladesh’s single largest market US registered a dismal 1.11 per cent growth and the EU showed a 16.61 per cent growth in the first six months of the fiscal year 2022-23. When every penny counted, Bangladesh also saw growth drying up in its exports to Russia with its economy taking a beating. Exporters fetched $180.64 million in the first half of FY23, which was $341.21 million during the same period a year ago, a decline of 47.06 per cent.
Owing to the war, Bangladesh has been missing out on the promising market where shipments nearly touched $1 billion just before the conflict erupted in February. Things turned worse when in early March 2022, due to US sanctions on Russia, SWIFT exited the latter. Payments from buyers in Russia to Bangladesh’s exporters became difficult as both parties were caught unawares. It was a dire situation as industry insiders realised that the traditional Western markets were not only saturated with Bangladesh-produced readymade garments but also a significant increase in demand was quite unlikely.
Asia rescues its own
Based on feasibility studies and reports, Bangladesh’s exporters realised their own region would be their sector’s savior. Whilst the going with the West was good, Asian countries were termed as non-traditional markets for Bangladesh as Vietnam and Cambodia enjoyed better tariff rates from their sister countries. In an interview with a Dhaka-based publication, the president of Bangladesh Garment Manufacturers and Exporters Association (BGMEA) Faruque Hassan said, “We are studying the Asian markets very seriously as part of our roadmap. This is not a normal time for the garment business as consumers in Bangladesh's traditional export markets such as the US, Canada, the UK and the European Union are going through a tough time owing to higher consumer prices driven by the global energy shortage and supply disruptions. So, we are trying to ship more goods to Asia and other emerging markets like those in Latin America, Africa and Australia.”
Exports to non-traditional markets save the day
During this tough time, Asia and other non-traditional markets have kept Bangladesh’s RMG exports afloat with good yields, and as Asia grows richer, Bangladesh feels assured it will experience growth the West can no longer afford to give. Year-on-year, exports to Japan yielded a growth of 42.54 per cent at a value of $754.72 million between July and December 2022. Turkey had started drying up since 2017 when it imposed 11 per cent tariff on garments exported from Bangladesh but rebounded between July and December 2022 with 83.70 per cent growth valued at $117.43 million.
Exports to India surged around 50 per cent to $548.87 million and it climbed 35.66 per cent to $255.49 million to South Korea and 97.52 per cent to $164.85 million in Malaysia, Saudi Arabia was up 41.62 per cent to $104.31 million and exports to the United Arab Emirates by 22.28 per cent to $155.35 million. The shipment advanced was 15.27 per cent to $127.24 million in China, which itself is the largest apparel supplier in the world.
With Asia Pacific region predicted to account for 40 per cent of global men’s and women’s wear, Bangladesh has set its sights in the right direction.