RMG faces tough time; export order drops by 20-30pc

AKM Moinuddin
UNB Staff Writer

Dhaka, Aug 5 (UNB) – The country’s export that saw a record growth in the last fiscal seems to face a serious setback in the current fiscal, as the key export-driver RMG sector is facing a stiff challenge due to ‘economic worries’ in the European Union and the USA.
The RMG (readymade garment) export order came down to 20 to 30 percent in recent months and most of the factories remained idle or semi-idle due to declining work orders.
Further growth in the export sector is apparently impossible, even it will be difficult to maintain the growth that was seen in the last fiscal, according to readymade garment factory owners.
“The downtrend in export order may shrink further in the coming months. But we hope something better by November depending on the recovery of European Union and USA economies,” BGMEA president Shafiul Islam Mohiuddin told UNB over phone on Friday.
He said they are working to figure out the exact percent of decline in export order. “Roughly, we think, the export order declines by 20 to 30 percent.”
Mohiuddin, also managing director of Onus Garments Ltd, said the pace of infrastructure development should get a momentum to help survive the RMG sector in the competitive global market.
“We’ll have to reduce the cost of production to survive,” he added.
Exporters’ Association of Bangladesh (EAB) president Abdus Salam Murshedy also sees bad times for the export sector in the coming days.
“Export order has significantly slowed down in recent months. In the last two months, the order declined sharply. Most factories are sitting idle,” Murshedy, also the former BGMEA president told UNB Correspondent AKM Moinuddin.
He said they have been monitoring each and every month, but they are getting confirmation over export order very slowly.
“The sale of RMG products sharply declined in the European Union and the USA. I predict a ‘shaken recession’ in the coming days,” he said.
Replying to a question, Murshedy said: “It’ll be really tough to maintain the growth of the last fiscal…forget about further growth since the world market is shrinking.”
He said uninterrupted supply of gas and electricity would have to be ensured for the survival of the sector. “[Increased prices of] diesel and furnace oil will raise the cost of production.”
Murshedy observed that the development of Mongla Port is very slow. “Since imports and exports are gradually increasing, the efficiency of Chittagong Port will have to be enhanced.”
Lastly, he said, political stability is a must for overcoming the challenges.
The government has set a new export target of US$ 26.37 billion for the current fiscal (2011-2012), a 15 percent rise compared to a year ago.
Bangladesh exported goods worth $22.93 billion in fiscal 2010-11, registering a 41.47 percent growth, according to the Export Promotion Bureau.
The export earnings surpassed the yearly target of $18.5 billion, buoyed by shipments of readymade garments and jute and jute goods. In fiscal 2009-10, Bangladesh exported goods worth $16.20 billion.
Last year's 41.47 percent growth was boosted by the higher prices of raw materials of imported garment items.
Of the major exportables, the target for knitwear has been set at US$ 10.77 billion, up 13.5 percent, while woven products at US$ 9.52 billion, up 13 percent, jute and jute goods at US$ 1.39 billion, an increase by 23.81 percent, and oceangoing vessels at US$ 256 million, up by 533.04 percent, from the last year.
END/UNB/AKM/