The United States remains the largest destination for Bangladeshi apparel exports, but in recent months, Bangladesh has lost ground to its competitors. Exporters are facing shrinking market share as rival nations gain traction.
Compared to its competitors, Bangladesh's export earnings have seen negative growth, raising concerns among industry stakeholders. Exporters are not only losing market share but also losing work orders to competitors.
Economists and trade analysts have called for immediate steps to identify the root causes of this downturn to reverse the negative trend in export earnings. While expectations were high for increased earnings, exports to the US continue to fall.
According to the US Department of Commerce's Office of Textiles and Apparel (OTEXA), overall apparel imports into the United States saw a 4 percent decline from January to August this year. Bangladesh's exports during this period dropped by 9.17 percent, generating $4.7 billion compared to $5.18 billion last year.
Among the top 10 apparel-exporting countries to the US, Pakistan and Cambodia achieved positive growth of 1.15 per cent and 3.39 per cent, respectively. Mexico experienced a sharp decline of 10.49 per cent, earning $1.47 billion, down from $1.95 billion.
China, the largest apparel exporter to the US, saw a 2.7 per cent decline, earning $10.69 billion. Meanwhile, Vietnam, the second-largest exporter, experienced a slight dip of 1.03 per cent, earning $9.55 billion, compared to $9.65 billion in the same period last year.
Bangladesh's closest competitors, Indonesia and India, saw their earnings fall by 7.13 per cent and 1.50 per cent, respectively, earning $2.68 billion and $3.31 billion.
China holds 20.83 per cent of the US apparel market, followed by Vietnam with 18.62 per cent, Bangladesh with 9.18 per cent, India with 6.2 per cent, and Indonesia with 5.23 per cent.
Reasons for negative growth
The US economy has yet to fully recover from the economic slowdown caused by the COVID-19 pandemic, which has reduced consumer purchasing power and kept clothing demand low. Additionally, Bangladesh received fewer work orders due to political unrest surrounding the National Assembly elections held in January. The anti-discrimination student movement in July and August further disrupted production and shipments.
Industry experts believe these factors have contributed to the decline in export earnings.
Mohammad Hatem, President of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), told Jago News, "Most US buyers hesitated to place orders due to concerns about the political transition during the January elections. As a result, we received fewer work orders, which led to a decline in earnings from the US. The recent student movement also affected production, and we faced difficulties in shipping products on time."
Hatem also expressed concern over labor unrest, which has weakened buyer confidence. "If the situation isn't controlled, we risk losing work orders permanently," he added.
Regaining buyer confidence
The deterioration of law and order following the fall of the Awami League government has worsened the business environment, impacting investor and buyer confidence.
To regain trust, the government must prioritise improving law and order. The interim government, however, has managed to prevent further violence in key industrial areas.
Zahid Hossain, former chief economist at the Dhaka office of the World Bank, told Jago News, "Bangladesh Bank has taken steps to address issues with troubled banks and restructured their boards, which will benefit both exporters and importers. But full security for the business community and citizens is essential."
He also emphasised addressing worker grievances. "While maintaining worker satisfaction, their legitimate demands must be met, and proper implementation ensured," he added.
Khondkar Rafiqul Islam, President of the Bangladesh Garments Manufacturers and Exporters Association (BGMEA), mentioned that unrest has subsided to some extent, with efforts made by all parties. "Most of the workers' demands have already been addressed. We are working closely with the government and trade unions to resolve any remaining issues."
Rafiqul called on the government to ensure complete security in industrial zones and bring stability to the country. He urged the deployment of sufficient law enforcement to prevent acts of vandalism by miscreants.