Low prices cut into RMG export growth
A drastic reduction in prices of cotton, yarn and fabrics has
slowed down export growth. As the prices of raw materials are
low, the products have become cheaper and the buyers now pay
less for their garment purchase.
According to Export Promotion Bureau (EPB) statistics,
overall exports grew by only 2.4% in December 2011 compared to
the same month in the previous year. The growth was 15% in
November and 2.29% in October. But the fiscal 2011-12 started
with a high hope -- 28.7% growth in export in July, the first
month of the year, and 32.4% in August.
The prices of raw materials such as cotton, yarn and fabrics
have come down by 50%-60% now from that of January this year.
The price of widely consumed 30-count yarn has come down to $3.2
a kg now from $5.5 in January, said Mahmud Hasan Khan, Managing
Director of Rising Group.
Exports of knitwear and woven, which account for the
country's two-third of $22.93 billion export earnings per year,
lag behind the strategic export target for July-December this
Bangladesh's knitwear export was $3.99 billion during
July-December of 2011-12, down by $105 million than the target
for the same period. Similarly, woven export was less by $66
million than the target.
Mustafizur Rahman, Executive Director of Centre for Policy
Dialogue (CPD), said this year's export growth in terms of value
would show a downtrend due to a sharp fall in the prices of raw
materials. He said the prices of cotton and yarn were 60% up
last year than their present value. Still he sees challenges for
Bangladesh's exports due to the global economic situation.
The analysis found 10 major export sectors that earned $22.18
billion or about 97% of Bangladesh's $22.93 billion worth of
exports in fiscal 2010-11 is combined lagging behind the target
so far this fiscal year.