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Now RMG exports incur a hit

Published : Friday, 29 December, 2023 at 12:00 AM  Count : 357

Tremors of geopolitical unrest, Russia-Ukraine war, Israeli invasion of Gaza, political tensions at home have rippled across continents, altering economic landscapes far beyond the conflict epicentres. An expected aftershock is felt in Bangladesh too, where the RMG export industry, a cornerstone of the nations economy, stands at a critical juncture.

According to a news report published in this daily, as inflation surges in the United States and European Union (EU) countries, consumer behaviours pivot, leading to a noticeable decline in clothing sales. This shift has directly impacted the countrys export of ready-made garments, triggering a consistent decrease over the past 5 months. The repercussions are alarming, echoing concerns of an impending crisis that could cast a long shadow on the industry.

Industry stakeholders, including the Bangladesh Garments Manufacturers and Exporters Association (BGMEA) and Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), voiced noticeable worries over dwindling purchase orders. Factory owners have also confirmed anxiety, articulating the severity of the situation.

However, the impending crisis is not merely a speculation but a foreboding reality. Increased production costs, notably the 56.25 percent hike in garment workers wages, coupled with a 30 to 35 percent rise in overall production expenses, paints a bleak picture for factory owners. This sharp increase, juxtaposed with diminishing purchase orders, forewarns of factory closures coupled with growing insecurity.

Delay in payments due to decreased orders is further worsening the situation, causing a ripple effect that threatens the operational viability of garment factories. And the domino effects are palpable - reduced bookings for raw materials, a 30 percent cut in CM (cutting and making charges), and sluggish export schedules compounding the challenges faced by the industry.

Recent statistics reflect this crisis clearly. A steady decline in exports, a $91 million uptick in August followed by a subsequent decline, and a consistent decrease in apparel exports from Chattogram Export Processing Zone (EPZ) serves as clear indicators of the industrys sufferings.

However, in order to navigate through the storm, preventive measures are indispensable. Collaborative efforts between industry stakeholders, policymakers, and global buyers are imperative. Restructuring of price ranges, negotiation of terms to accommodate increased production costs, and fostering an environment conducive to sustained garment exports are paramount. Moreover, diversification and exploration of alternative markets, coupled with innovative strategies to enhance competitiveness, can bolster resilience against external shocks.

The challenges ahead are formidable, but not insurmountable. Bangladeshs garment export industry has weathered storms in the past and emerged stronger. Concurrently, intensive efforts and strategic interventions are also imperative to sustain through turbulent times.

Lastly, the future ahead is uncertain, yet it is in these moments of testing times that unity, resilience and innovation thrive. The RMG industrys survival hinges on collaborative action, adaptation, and a steadfast commitment to weathering this blizzard together.

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