Bangladesh's garment export gets a boost

Saquib Mustafa

THE garment industry of Bangladesh has bounced back after a lull period caused by order cuts or cancellations by some top US and European buyers in the wake of the global financial crisis.

A massive diversion of orders from China, the world's largest apparel producer, has more than compensated, say industry sources.

In the first quarter of the fiscal, garment shipment grew by a record 45 per cent to 3.4 billion dollars, with over 90 per cent of the exports going to the US and Europe, official data show.

"It's a huge change in fortune for us," said Golam Faruq, owner of the country's largest sweater manufacturer and a key supplier to British upmarket retailer, Marks and Spencer.

"Recently, I got an order to make sweaters worth 12 million dollars for a Swedish buyer. In the past they used to get the supply from China. But this year we offered a far better price," he said.

Faruq said, his SQ Sweaters also received dozens of small orders, diverted from China, as Bangladesh has became the top choice for its low-priced basic items like T-shirts, denim pants, sweaters and shirts. Bangladesh Export Promotion Bureau (EPB), which monitors shipment trends, has asked the industry to prepare for a "flood of orders", with global recession boosting the sale of low-cost items.

At a number of expositions in Europe and North America, organised by the Export Promotion Bureau last month, top buyers asked Bangladesh to be prepared for a massive increase in orders in the months and years ahead, said EPB chief Shahab Ullah.

The people in the West are switching to cheaper items, said the importers. And it's Bangladesh manufacturers, not the Chinese, who can supply the items at a price they now want, he said. Bangladesh specialises in low-end clothing. The garment industry accounts for about 80 per cent of Bangladesh exports and employs more than 40 per cent of its industrial workforce.

Bangladesh's 6.2 per cent economic growth last year was bolstered by a 17 per cent increase in garment sales. For this year, the government projected the growth at 6.5 per cent, banking on garment exports remaining strong. Knitted items, led by T-shirts, which last year made up a quarter of garment exports, were the main drivers of the growth, manufacturers said.

"This year thousands of Chinese factories have shut as they are no longer competitive because of higher wages and currency appreciation," said Fazlul Haque, chairman of the Bangladesh Knitwear Manufacturers and Exporters Association. "The buyers shifted orders to new global sourcing destinations. Bangladesh became the main beneficiary", says Haque.

Haque said that 1,500 factories in the associations had enough orders until end of the year. But only recently the industry was a bit worried over the long-term impact of the global economic crisis.

Shahab Ullah expects Bangladesh, now the world's second largest apparel producer, to continue to dominate in basic apparels, only if it scales up investment in new factories. "Data shows we are cashing in on the new trend," he said. But Bangladesh can do more, provided its factories increase capacity with backward linkages for yarn manufacturing, dyeing and washing as early as possible."