Apparel exports rise amid political calm

Utilisation Declaration Certificates

Garment makers expect robust export growth this year due to continuity of political stability, a shift in work orders from China to Bangladesh and economic recovery in major export destinations.

They brim with confidence as exports grew significantly in the last three months compared to the same period a year ago.

In December last year apparel shipments rose 14.56 percent year-on-year to $2.67 billion, in November 14.74 percent to $2.22 billion, and in October 18.40 percent to $1.79 billion, according to Export Promotion Bureau.

“Exports are on an upward curve due to an improved economic situation in major export markets. Another important factor is political stability at home,” said Faruque Hassan, vice-president of Bangladesh Garment Manufacturers and Exporters Association (BGMEA).

“We have a lot of work orders as buyers now prefer Bangladesh to China because of higher production cost and a shortage of skilled workers there,” Hassan said.

Political unrest in the first few months of 2015 took a toll on exports, as many international retailers could not visit Bangladesh and exporters had to delay or cancel shipments. “But the situation is different now,” Hassan said.

Retailers also voiced optimism about Bangladesh’s garment exports. “Brands are cautiously optimistic that the initiated upgrading of factory and workers safety will continue. Based on that assessment, I would describe the trend as positive,” said a senior official of a major European retailer, asking not to be named.

The number of “utilisation declaration” certificates, which BGMEA issues against work orders of its member factories, also shows exports are robust.

In December last year, the trade body issued 2,382 UD certificates compared to 2,227 in the same month of 2014.

Hassan, however, said their cost of production is rising rapidly due to the poor transport system and higher energy prices.

“Transport of garment items depends mainly on road communication. So the government should improve railways and waterways to offer cheaper and easier modes of transport,” he said.

“Though we are bagging a lot of work orders, the prices of our garments are not increasing,” said Shahidullah Azim, managing director of Classic Group, a leading exporter.

As the manufacturing base of China is shrinking due to higher cost of production, garment orders are shifting to Bangladesh, he said.

“If political stability continues to prevail, we will beat our export targets for the year,” he said.

Another reason behind the rise in export orders is improved economic situation in the US and the EU, two major export destinations for Bangladeshi apparel items, Azim said.

Chinese manufacturing contracted for the 10th straight month in December as demand remained weak and factories trimmed staff and output, a private survey showed.

The Caixin/Markit index, based on a survey of factory purchasing managers, fell to 48.2 in December from 48.6 the previous month, according to media reports. The index uses a 100-point scale with numbers above 50 indicating expansion.