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Apparel exports may slow in the coming days as a sluggish world economy has depressed demand in major markets, garment makers said yesterday. They urged the government not to impose any new tax on them.
"With the global economy being in turmoil and demand for garments declining, there may be a slowdown in future exports,” said Shafiul Islam Mohiuddin, president of Bangladesh Garment Manufacturers and Exporters Association (BGMEA). The trade body represents one of biggest export earning sectors.
"Our selling price and volume of exports have declined,” Mohiuddin said after a meeting with National Board of Revenue (NBR) Chairman Nasiruddin Ahmed at the NBR.
Mohiuddin said his association informed the NBR of the current scenario of international markets, urging the tax authority to refrain from imposing any new tax so that garment makers can face the challenge ahead.
"Our risk factors have increased while profit margins have shrunk," Mohiuddin said.
The plea from BGMEA comes as industrialists are counting increased costs of doing business because of a hike in bank interest rates on loans and electricity and fuel prices.
Export earnings remained higher in July-March. But on a monthly basis, export receipts have declined.
During July-March of fiscal 2011-12, exports receipts from the clothing sector, which accounts for 80 percent of the total export earnings, grew 12 percent to $14.10 billion from a year ago.
In March, apparel exports fell 6 percent in value from the same month a year ago, said the BGMEA president.
"The biggest concern is the fall in exports in terms of volume. Real exports have dropped.”
Exports of woven and knitwear clothing fell 8.7 percent to 607 million pieces in volume during July-December period of fiscal 2011-12 from 665 million pieces in the previous year, according to BGMEA.
Mohiuddin linked the slowdown in exports to demand weakened by a bleak global growth outlook resulting from the debt crisis and austerity measures in Europe where 15 economies now suffer recession.
As a result, sales in EU countries have declined as consumers in those countries have become cautious in spending and tightened their belts.
"Apparel imports in European Union have declined alarmingly in volume during the October-December period," he said, adding that imports from Bangladesh to EU countries dropped 15 percent.
Demand for apparel in the USA, another major destination for Bangladesh garment makers, remains weak, although retail sales in the USA improved in March, he said.
However, there are doubts whether the current demand will last long, said Mohiuddin, referring to slow growth in the USA and lack of job creation.
"The world economy is in turmoil and global growth is predicted to be sluggish," he said, citing forecasts that growth in EU countries might be zero in 2012.
New markets such as Latin America, Turkey, China, Korea and India have emerged as a respite for garment makers who feel the impact of reduced demand in Europe less because of opening of these new export destinations.
Source : The Daily Star Business Report