Inflation & Energy Crisis May Damage October’s RMG Export Earning

Inflation & Energy Crisis May Damage October’s RMG Export Earning

According to the BGMEA president, due to rising inflation in the Europe region brought on by the Russia-Ukraine War and a drop in production because of the ongoing energy crisis in factories, October’s earnings from RMG product export may face a 20 percent YoY decline. Mr. Faruque Hassan, BGMEA president, also shared his concerns that the country may not achieve its apparel export target in the current fiscal year at a press conference in Dhaka.

Moreover, reports for November also seem like they could be better because international retailers and brands have been postponing the release of work orders for upcoming seasons. However, as per Mr. Faruque Hassan’s statement, the future is very uncertain because the entire scenario depends on the local energy crisis and the war between Ukraine and Russia. Moreover, Bangladeshi factories can’t run at their full capacity because there is still an ongoing problem with electricity and gas in industrial units, which makes the trend of falling RMG export earnings worse. 

However, lowering the value of the taka helped to make up for the fact that garment exports were bringing in less money than they were sending out, but it will not help to get out of the crisis. To cover up, Mr. Faruque suggested that the government should move gas supplies from fertilizer factories to industrial units, so these factories’ operations could run smoothly. To meet fertilizer demand, the government can import them. Moreover, the government can cut off all taxes and fees on the import of liquified natural gas (LNG) from the international spot market, which will assist in supplying gas at adequate pressure to industrial areas at an affordable price. Lastly, if the government cuts tax from 1% to 0.5% at source, the export can grow more, and the government can benefit from it. 

If Bangladesh’s government takes such steps to help businesses, it can get the government a lot of money from indirect tax because companies undertake many measures to make money. Some restrictions imposed by the government slow down the imported goods, due to which the revenue is decreasing. Though Govt. will lose around 500 to 600 crore BDT if the source tax is cut by half, it will earn more indirect revenue because businesses will expand their operation due to this facility. 

According to data from the Export Promotion Bureau, Bangladesh wants to earn $46.80 billion from apparel exports in the current fiscal year of 2022-23. This is 10% more than the amount made in the last fiscal year. During the first three months of the current fiscal year, the number of clothes shipped out went up 13.41% from the same time of last year to $10.27 billion, where knitwear contributed $5.64 billion and woven apparel contributed $4.62 billion. However, in September, exports of woven goods fell 5.66% to $1.43 billion, while knitwear exports fell 9.0% to $1.73 billion because export earnings went down. After all, European and American buyers still need help with rising prices. In the United States, the consumer price index grew 8.3 percent YoY in August, a measure of the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services.

In August, earnings from garment exports went up 36% compared to the same time last year, but they went down 7% in September, which was a sign of trouble in the sector. Due to this, small and medium factories are facing difficulty paying workers. As BGMEA cannot provide financial support anymore, only the government can resolve this by removing the trade barrier.

Bangladesh has the highest number of green garment factories globally and is responsible for only 0.1% of carbon emissions. In comparison, the US is responsible for 18%, making Bangladesh one of the countries with the least amount of carbon in the global environment. 

Before the press conference, Hassan inaugurated the BGMEA Complex’s Center for Innovation, Efficiency, and Occupational Health.

Leave a Comment