Non-cotton garment exports could rise from $8.5b to $19b: Study

Infographic: TBS

The country's exports of non-cotton garments, including man-made fibres, could double to $19 billion by 2025, up from the current $8.5 billion, if the existing challenges are resolved, according to a study by the Economic Relations Division (ERD).

The study has been conducted based on global market share and export projection of 20 types of non-cotton apparel items exported by the country.

The study has also underscored the need for devising a fibre security strategy, ensuring duty-free access of all fibres and establishing a dedicated low-cost investment fund, skill development to support man-made fibre investments.

The ERD conducted the study in association with the Research and Policy Integration for Development (RAPID), a non-government think tank.

The study report, "Expanding Man-Made Fibre (MMF) Apparel Export: A Strategy for Upscaling the Garment Sector", was presented to stakeholders at a programme in Dhaka on Wednesday.

"The demand for man-made fibres is growing faster than cotton in the global market. Bangladesh's position in this market is still relatively low. There is a great potential for Bangladesh in this sector, and it can be achieved by addressing existing challenges," MA Razzaque, chairman of RAPID, told The Business Standard.

"To achieve this target, it is necessary to make raw materials easily available, provide logistics, and financial and policy support," he said.

Local entrepreneurs also agree with the potential outlined in the ERD study report.

Md Saleudh Zaman Khan Jitu, managing director of NZ DY Flax Spinning Limited, a backward linkage industry for non-cotton apparel, told TBS, "Our main challenge is the import of man-made fibres. If we are given the facility to import its raw materials duty-free, like cotton, we have the potential to go a long way."

He added, "We have customers, the market is established, and there is an opportunity to produce this textile in the existing setup. But due to a lack of proper policies, we are not able to grab this huge market."

Challenges

The ERD study finds a lack of duty-free raw materials, delay in customs clearance, complicated duty-drawback procedures, inadequate short-term financing support, insufficient FDI inflow and absence of fibre security strategy are key challenges that need to be addressed to explore the potentiality of non-cotton garment exports.

A lack of modern technology adoption, skills gap in top and mid-level managerial positions, lack of skilled workers, limited research and development activities, low level of compliance and certifications practices also act as bottlenecks to reach the untapped potentials, the study reads.

While cotton and cotton textiles are imported duty-free, man-made fibres raw materials are subject to import duties of up to 59%, the study mentioned. Although these duties are supposed to be refunded upon export, businesses get discouraged from doing so due to the complexity and additional costs involved, it finds.

Mohammad Ali Khokon, president of the Bangladesh Textile Mills Association, told TBS, "To increase our value addition, it is imperative to enhance the importance of man-made fibre."

He noted, "Flax fibre yarn is worth $18 per kilogram, while cotton yarn is worth $3 per kg. This is why we need to diversify. To do this, we must remove all types of duties and taxes on flax fibres, just as we have done in the case of cotton."

Abdullahil Rakib, MD of Team Group, one of the largest RMG exporters in Bangladesh, told TBS, "We fully agree with the findings of this study. We have opportunities ahead of us, but we need policy support to capitalise on them."

Non-cotton garments include waistcoats, T-shirts, wind jackets, brassieres, non-woven garments, trousers, synthetic dresses, shirts, overcoats, tracksuits, full or knee-length hosiery and socks, rubberised garments for women, non-knitted synthetic dress, etc.

According to the Export Promotion Bureau (EPB), non-cotton garments accounted for 29% of the country's $55.56 billion export earnings in FY23.

In 2021, non-cotton garments accounted for 54% of the global apparel market size of $505 billion, according to the ERD study.