Identifier | Created | Classification | Origin |
---|---|---|---|
05DHAKA4652 | 2005-09-15 10:36:00 | UNCLASSIFIED | Embassy Dhaka |
1. Summary: Post collected data on textile and apparel labor and production statistics of Bangladesh per ref B. request. Information sources included trade associations and government data. There is no consistent, reliable, current source of data for the information requested. Early indications are that export prices have fallen but volumes have increased, resulting in an overall increase in apparel exports. End summary. 2. Post collected information from BGMEA (Bangladesh Garments Manufacturers and Exporters Association), BTMA (Bangladesh Textile Mills Association), and the World Bank. Data is seldom disaggregated by month and is collected according to the fiscal year of the government of Bangladesh, which runs from July 1- June 30. The BDG FY 2004 year ended June 30, 2005. Thus, FY 2004 data includes the data for the first six months of calendar year 2005. Moreover, data from these different sources are inconsistent and the reliability of the data can not be independently verified. 3. Responses to questions posed ref B., para. 4, follow: A. Total industrial production during FY 2004 was 15 billion. B. Total textile production in FY 2004 was 2.7 billion meters (no data based on price is available) and apparel production was USD 7 billion (both estimated). C. Textile share could not be compared with the import and export figures because data on the value of textile production is not available. During FY 2004, apparel share was 52% of the total imports and 81% of the total exports. D. Total manufacturing employment was 4.9 million (estimated) in FY 2004. E. Total textile employment by the BTMA member organizations was 250,000 and by BGMEA member organizations was 2.0 million during FY 2004. Women are estimated to comprise 80% of the textile and apparel workforce. 3. Responses to questions posed ref B., para. 5, follow: A. Bangladeshi apparel manufacturers are receiving lower prices due to heightened international competition. In the beginning of 2005, they received a lower number of orders compared to the same period of 2004. However, some manufacturers report that orders are now coming back and there are indications that total volume is up over the previous year. To date, no foreign investor in the sector has left Bangladesh. The knitwear sector has shown significant growth, particularly in European markets where Bangladesh qualifies for GSP preferences. Knitwear also benefits from stronger vertical integration and domestic production of inputs, reducing costs associated with Bangladesh's inefficient ports. The woven sector has not benefited significantly from these advantages, and has experienced only limited growth in volumes but declining prices. B. The U.S. and the EU are the two principal export markets for Bangladesh textile and apparel products. Bangladeshi manufacturers benefit from limits on and uncertainty over continued U.S. and EU access to Chinese goods, as buyers retain their relationship with Bangladesh manufacturers to ensure a continued source of supply. The BDG has not implemented, nor is it considering, its own safeguard measures against China. The BDG is encouraging Chinese investment in its textile and apparel industry. C. Increased global competition is squeezing margins in the textile and apparel sector, but has not led to reduced wages or requests for waiver of minimum wage laws. Wage reductions to address competitive pressures are rare in Bangladesh industry generally. There has been some upward wage pressure at companies located in export processing zones (EPZs), due to recent labor legislation unrelated to the end of the MFA. Overall, wages and benefits paid by companies operating in the EPZs are higher than those paid by companies located outside the EPZs. D. The private sector continues to invest to improve the competitive position of the industry. This investment, both before and after the expiration of the MFA, is largely responsible for the continuing competitiveness of the industry. The BDG and industry have identified the major infrastructure and policy impediments to improving overall competitiveness. These include an inefficient and costly port, absence of a deep- water port, poor transportation linkages between the port and major manufacturing centers, inadequate and unreliable power, poor telecommunications infrastructure, particularly in land- lines and high-speed internet access, corruption and a lack of transparency in government. Although the BDG has made sporadic attempts to address these failings, implementation has been weak, inconsistent and subject to substantial delays. The ADB is helping the Chittagong port to develop its infrastructure and computerization of the customs procedures. The port is now constructing a container terminal, which will be operated by a private sector operator yet to be selected. The Dhaka- Chittagong highway is being expanded to ease transportation of goods to the port, which will speed up transportation of apparel goods too. Post is not confident, however, that significant progress will be made to address these issues prior to the 2008 end of MFA provisions on safeguards. E. Bangladesh's eligibility for GSP benefits in the EU is a significant factor behind increased knitwear exports to the EU. The industry is concerned, however, that changes in the EU GSP program, especially concerning rules of origin, could make Bangladesh knitwear less competitive in the EU. Bangladesh textiles and apparel do not benefit from regional free trade agreements; however, some benefit is possible once the South Asia Free Trade Agreement (SAFTA) is implemented. U.S. GSP benefits have a limited impact on the textile and apparel industry. Bangladesh does not benefit from other U.S. trade preference programs. The industry, led by BGMEA, is lobbying for passage of the Trade Relief Assistance for Developing Economies Act of 2005, which would grant U.S. duty free access to textiles and apparels from several developing countries, including Bangladesh. F. Bangladesh should be able to remain competitive in the short to medium term. The country benefits from low labor costs and a good reputation in its export factories for compliance with "social" standards, such as lack of child labor. Buyers, who do not want to become dependent on China as a sole source of supply, continue to rely on Bangladesh as an alternative source. The longer term health of the industry, however, will depend on the government's ability to improve critical infrastructure and improve the underlying business climate by addressing corruption and simmering political unrest. Chammas |