Apparel Exports to US and Germany Decline

Despite the ongoing Russia-Ukraine war and declining export earnings, Bangladeshi exporters, particularly in the ready-made garment (RMG) industry, are considering Russia as a potential market once again. The resolution of the crisis over inter-banking transactions has played a significant role in this shift. The Bangladesh Bank's decision to allow foreign trade in Yuan and the use of Chinese and other Russian allies' shipping lines have facilitated direct shipments of clothes to Russia.

Bangladesh's apparel export to the European Union (EU) has demonstrated positive growth during the January-March period of 2023. The value-wise growth reached 3.9%, amounting to $5.6 billion compared to $5.4 billion in the same period of 2022. With a 24.07% share of the EU's total ready-made garment (RMG) import in terms of dollar value, Bangladesh remains the second-largest apparel import source for the EU, just behind China, which holds a 24.55% share.

The government of Bangladesh is implementing changes to limit cash incentives for textile and apparel exports. The Bangladesh Bank will issue a new circular, removing freight costs, foreign currency commissions, and insurance costs from the cash incentives provided to these sectors. Currently, the cut, make, and trim (CMT) manufacturing sector receives cash incentives, where buyers handle pre- and post-production processes.

In the face of global economic headwinds, Bangladesh has emerged as an emerging and high-potential non-traditional market, with Australia becoming a significant destination for exports worth $12 billion. According to data from the Export Promotion Bureau (EPB), in the first ten months of fiscal year 2022-23, Bangladesh witnessed a remarkable 34.3% year-on-year growth, earning $1.05 billion from the Australian market. Industry insiders attribute this achievement to factors such as duty-free market access, product diversification, extensive marketing efforts, and the China-Australia geopolitical conflict.

Bangladesh's tea exports have suffered due to increasing domestic demand, despite the steady growth in tea production over the past decade. The country's population growth and urbanization have fueled higher consumption, hindering the export potential of the tea industry. Tea production reached an impressive 94 million kilograms in 2022, marking a 53 percent increase from 2012. However, only 0.78 million kilograms of tea were exported, a significant drop from 2.17 million kilograms in 2020.

Vietnam has surpassed Bangladesh as the second-largest apparel exporter to Canada in 2022, benefiting from the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). Bangladesh's apparel exports to Canada reached $1.73 billion, a 35.2% increase compared to the previous year, while Vietnam's exports rose by 46.35% to $1.75 billion. The CPTPP provided Vietnam with duty-free access to the Canadian market, leading to its increased market share.