The share of woven garments in Bangladesh’s export earnings wanes mainly as lax backward-linkage industry fails to support the apparel subsector, insiders say.
The woven subsector of the country’s principal export industry is likely to face strict rules-of-origin (RoO) requirements in its major destinations, including the European Union, after Bangladesh’s LDC graduation as clothing producers will need to comply with double-transformation requirement irrespective of their access to GSP or GSP-plus schemes.
Bangladesh is largely dependent on imported fabrics for woven garment manufacturing as local spinners can meet 35-40 per cent of demand of woven exporters, they say.
Industry people say share of knitwear garments has been rising due to its strong backward linkage that is helping the subsector to ship exports in the shortest possible lead time.
Absence of infrastructure, mainly shortage of gas, required policy supports and financial matters, is discouraging entrepreneurs from making fresh investment in woven fabrics manufacturing, they note.
Data analysis from official sources also indicates the downturn in woven apparel-export share over several years now.
Woven garments contributed over 43 per cent to the country’s total exports worth US$34.24 billion in the fiscal year 2015-16, according to central bank data.
The share stood down at 37.40 per cent in the last fiscal while it further dipped to 35.38 per cent during the first half of the current fiscal year, 2021-22, Bangladesh Bank quarterly review shows.
Bangladesh received $8.73 billion from woven-garment export and $11.16 billion from knit-item export respectively during July-December period of the current fiscal year.
When asked about the slide, Bangladesh Garment Manufacturers and Exporters Association (BGMEA) vice- president Md Shahidullah Azim said during the pandemic, demand for woven garments declined as people stayed at home for safety.
Echoing his view, Mahmud Hassan Khan, a former leader of BGMEA, says pandemic was a temporary reason-the main reason behind the decline of woven share is absence of strong backward-linkage industry here.