In FY22, Bangladesh bagged $46.99bn in export earnings by exporting RMG items
Locally produced raw material use in manufacturing increasing, says BGMEA chief
Value addition in the readymade garment (RMG) exports increased by 11.59 percentage points over a one-year period, according to the latest report published by Bangladesh Bank.
According to the report, titled “Quarterly Report on RMG”, the value addition in the RMG export was 54.38% in FY2021-22, which climbed to 65.97% in FY2022-23.
In FY22, Bangladesh bagged export earnings worth $46.99 billion by exporting RMG items.
For this export, Bangladesh imported raw materials like cotton, yarn, fabric, equipment and others worth $15.99 billion, meaning the net export of the RMG was $31.0 billion-dollar, accounting for 65.97% of value addition.
In FY21, Bangladesh exported RMG worth $42.61 billion, and of that, $19.44 billion was spent on importing raw materials, meaning the export of net RMG was $23.17 billion and the value addition in apparel exports stood at 54.38% in that financial year.
The central bank took these export figures from the Export Promotion Bureau (EPB) and the raw material import information has been taken from Bangladesh Bank’s Foreign Exchange Operations Department, which is mainly collected from back-to-back letters of credit.
“We considered the value of the components -raw cotton, synthetic/viscose fibre, synthetic/mixed yarn, cotton yarn and textile fabrics and accessories for garments instead of back-to-back L/Cs raw materials as reported by the FEOD of Bangladesh Bank. The values in parenthesis denote the Net export in RMG percentage of Total RMG Export,” the report said.
In the April-June quarter (fourth quarter) of FY23, the import value of raw materials (raw cotton, synthetic/viscose fibre, synthetic/mixed yarn, cotton yarn and textile fabrics and accessories for garments) was $3.35 billion, accounting for 28.52% of total RMG export earnings of $11.73 billion, meaning the net exports from this sector stood at $8.39 billion or 71.48% of the total RMG export.
According to the central bank data, the value addition to the export item remained almost static between 60.51%-64.32% from FY2012-13 till FY2018-19.
However, the rate fell to 56.49% in FY20 and again climbed up to 59.13% in FY21 but further fell to 54.38% in FY22.
Regarding the BB report, Faruque Hassan, president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), told the media that the use of locally produced raw materials in the garment manufacturing process is increasing.
“We are also exporting high-value garments, which is why value addition in apparel exports is increasing. However, value addition can fluctuate due to many reasons. So, the matter should be monitored for a year or two and only then can a final decision be made in this regard,” he added.
The report also stated that the United States, Germany, the United Kingdom, Spain, France, Italy, the Netherlands, Canada and Belgium were the top destinations for Bangladesh’s RMG exports during April-June of FY23.
From these nine countries, Bangladesh earned $8.33 billion from RMG, accounting for 70.95% of total RMG exports.
The report also mentioned that the government and the Bangladesh Bank have taken a number of measures, especially for facilitating the production and export of the RMG sector.
The report said that the RMG sector in Bangladesh has shown signs of recovery after the Covid-19 pandemic. However, challenges like the ongoing Russian-Ukraine war and its resultant impact of supply chain disruptions, global inflation hikes and monetary policy tightening by the Fed may badly impact the progress of this sector.
To overcome these challenges and boost export earnings growth, the report suggested focusing on inter-apparel diversification, increasing productivity and efficiency, product innovation, exploring new global markets, and skill development of RMG workers.