RoO helps increase woven garment export earnings

Monira Munni
The revised rules of origin (RoO) by the European Union (EU) has changed the equation in overseas trade of the local apparel sector in recent years with earnings from shipments of woven garments surpassing that of knitwear ones, insiders have said.
Besides, offering of better prices by overseas buyers, especially in the European markets, has also helped raise exports earnings from woven garments, according to them.
Under the revised EU rules of origin in 2011, clothing exporters can enjoy duty-free access to the EU– the world's largest apparel market — even if they source fabrics from other countries.
The previous RoO had paved the way for the garment makers for buying bulk of their fabrics from Bangladeshi textile plants in order to enjoy zero-tariff benefit in the EU.
Knitwear had been the top export earning product since fiscal year 2007-08 while woven garment once again emerged as the country's biggest export-earning product from 2011-12 fiscal, according to official data of the Export Promotion Bureau (EPB).
In the FY 2011-12, the knitwear sub-sector earned $ 9.48 billion while woven earned $ 9.60 billion, according to the EPB data.
The country fetched $11.89 billion from woven items shipments recording a 12.71 per cent growth during the first ten months of the current fiscal year of 2015-16 compared to the corresponding period of last fiscal.
Earnings from knitwear stood at $10.73 billion recording a 7.29 per cent growth during the same period.
Woven and knit export earnings grew by 17.31 per cent and 5.77 per cent respectively in the EU during the July-April period of current fiscal, data showed.
"Despite a weakening euro, shipment of woven items to the markets of the 27-nation regional bloc is on the rise mainly because of the relaxed rules of origin that came into effect in 2011," said Mahmud Hasan Khan, vice president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA).  
Md Shahidullah Azim, a woven maker, said prices of woven items especially those of denim ones are on the rise.
"Denim is an item used by both men and women all the year round and rising cost in China has created an opportunity for us to grab the market," said Abdus Salam Murshedy, managing director of Envoy Group.
In denim segment, Bangladesh now produces more value-added products, he noted.
"Knitwear export is increasing in terms of quantity but failed to get desired price while the situation is just reverse for woven," Mr Azim added.   
Echoing Mr Azim, Md Hatem, former vice president of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), said knit products failed to attract an increased number of buyers as its prices widely varied.
The production of the sector, that sources nearly 90 per cent of its fabric from local market and add more value compared to that of woven sector, is being hampered mainly because of severe gas and electricity crisis, he noted.
 "We failed to use full production capacity due to power crisis that has also affected timely shipments," the managing director of MB Knit Fashion, said.  
On the other hand, woven sector imports about 60 per cent of its required fabric and enjoy duty benefit in the EU for the revised RoO, he said.
Though value addition is high from knitwear sector, the makers face a wide range of difficulties and harassment in getting the government's cash incentive, he alleged. [Read More]

Source: The Financial Express


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