Kazi Zahidul Hasan :
Garments exporters are seeing a gradual fall in fresh orders from global brands amid global economic uncertainty, caused by Russia’s invasion of Ukraine.
“Export orders are falling gradually from slowing global demand, due to Russia-Ukraine war that unfolds global economic uncertainty,” Abdus Salam Murshedy, Managing Director of Envoy Group told The New Nation yesterday.
Envoy Group is one of the country’s leading apparel manufacturers and exporters.
“Bangladeshi apparel exporters are now facing challenges with falling orders and rising production costs,” said Salam Murshedy, a former President of Bangladesh Garments Manufacturers and Exporters Association (BGMEA).
He mentioned that a gradual hike in primary raw material prices, sky-high freight charges and increase in domestic utility tariffs and fuel prices hike are mainly responsible for the rising cost of production.
“When we are struggling to keep our production afloat, buyers are pressing us for price cut of garment items excusing the falling global demand. Actually, our business is rapidly turning unviable as a result of soaring production cost. It also eats up our profit margin,” he said.
Bangladesh is the world’s second-largest apparel exporter after China. The domestic garment industry makes up 10 per cent of gross domestic product (GDP) and employs 4.4 million people.
As per the Export Promotion Bureau (EPB) data, Bangladesh fetched record high US $ 42.61 billion apparel export revenues in the fiscal year 2021-22, the highest in the country’s history.
The apparel export growth was also phenomenal in FY ’22 as Bangladesh witnessed 35.47 per cent surge in garments shipment over the FY ’21.
“Europe and America are the two major markers for Bangladeshi apparel products. But high inflation in European nations and the US took a bigger toll on their economies as well as consumers. It also leaves adverse impact on consumers’ spending leading to drop in clothing sales. In this situation, retailers in both European and US markets delaying to place new orders,” said Murshedy.
The United States remained the top apparel export destination for Bangladesh, fetching $9.03 billion in the fiscal year 2021-22 with 51.57 per cent growth compared to the previous fiscal year (FY), according to Export Promotion Bureau (EPB) data.
In FY 2021-22, the total export of garments to European Union (EU) countries was 21.41 billion, which is about 50.22 per cent of the total export of the garment sector of Bangladesh.
The country’s total garment exports to EU countries increased by 33.87 per cent in FY 22.
“Our apparel export showed tremendous growth in the USA and the EU markets last fiscal year taking advantage of surge in demand following the pandemic recovery. But the growth may not be sustained this year because of falling orders from western buyers,” he feared.
Responding to a question, Salam Murshedy, who is also a ruling party MP, said, “Uninterrupted power supply is necessary for smooth factory production, maintain productivity and ensure timely shipment. So, the ongoing power cut is causing harm to the country’s largest export-oriented industry.”
He also mentioned that we have to depend on generators for at least three hours a day to electrify apparel manufacturing units. But the cost of electricity from generators is three times higher than we get it from the national grid. “It also pushed our cost of doing business.”
Salam Murshedy asked for state support to defense domestic apparel industry from global headwind as well as reduce its cost of production.
“The industry was on recovery track with the ebbing of Covid-19 pandemic, which forced buyers to cancel billions of dollars orders. But the current global situation has made the industry vulnerable once again,” he commented.
