RMG export prices have fallen by 8% to 16% over the last eight months compared to the same period last year. This decline is attributed to a significant drop in demand at key destinations like the US and the EU due to inflation, covid-19 and the effects of the Ukraine war, according to data from the Bangladesh Garment Manufacturers and Exporters Association (BGMEA).
BGMEA President SM Mannan Kochi shared these insights during a meeting with economic reporters in the capital on Saturday. He also said that the import of apparel in the US declined by 7% and in the European Union (EU) the import volume of apparel fell by 13% in July -April of the current fiscal year because of fall in demand from the consumers.
In July-April period, the garment export increased by 4.97%, a 5.77% fall from 9.09 percent growth in the corresponding time of FY2022-23 where the bank interest rate rose by 15%, he added. He also said that the cost of production has increased by around 50% over the last five years due to hikes in the price of gas, power and wages of the workers.
In the meantime, the government has decided not to allow industrial investment outside the industrial zones. In this regard, Kochi said that this decision of not allowing investment outside of the Export Processing Zones (EPZs) and the Special Economic Zones (SEZs) will negatively impact the inflow of investment in the country and he urged a review the decision.
He also urged the government to prepare the major SEZs by supplying adequate gas and power and other logistic services so that those zones can be operationalised soon. Ahead of the upcoming budget of FY25, the BGMEA president sought policy support from the government including making effective the tax at source at the previous 0.5% instead of 1% against exports. He also urged the continuation of cash incentives over export earnings till 2029 as well as reducing the tax on cash incentives to 5% from the existing 10%.
The BGMEA chief also suggested the government reduce the harassment in the offices under the National Board of Revenue (NBR) like customs, bond and VAT.
The BGMEA president said the new board is prioritizing a number of issues which include resolving RSC related complexities, introducing exit policy, and export credit guarantee facilities, bringing in the SMEs under special policy support and financing schemes, increasing competitive edge through automation and digitalization, taking initiatives on product and market diversification.
The apex body also planned food rationing and welfare of the workers, fixing fair price of products and floor price, formulating unified code of conduct.
Mentioning that the country’s apparel export target has been set at $100 bn by 2030, Mannan said it would not be possible to attain this export target unless government policy support is available.
“’If government support remains intact, then our RMG sector will be able to play a pioneering role in building Smart Bangladesh as envisioned by Prime Minister Sheikh Hasina,” he added.
He sought the government’s attention in addressing the power and energy crisis as well as addressing the complexities on HS code and on the weight of woven fabric, not giving gas and power connections to industries outside the industrial areas.
