“Most of the buying agents working here are from India, Hong Kong or Sri Lanka who are eating up a big share of our business”,
Arif Chowdhury, Executive Director AKH Knitting

BKMEA successfully organised a two-day single-country fair in New York recently, drawing more than 200 American potential knitwear buyers. As many as 45 knitwear units from Bangladesh took part that provided huge exposition of Bangladeshi knitwear products.

“The initiative of organising fair in USA world’s biggest buyer in textile, to promote our knitwear goods is appreciable and was the demand of the time,” said Arif Chowdhury, executive director, AKH Knitting, whose firm participated in the fair, when he spoke to us last week.

He was very optimistic after seeing the positive response from the buyers in USA at the fair. He said that many of the buyers showed keen interest to visit industry in Bangladesh.

"They have also asked whether we have Effluent Treatment Plant (ETP) in our dyeing sector and the truth is we do not. Most of the industries do not have capacity to establish such plants as they are cost intensive,” he observed.

“95 percent of our knitwear products go to the European market and the rest we export to US, Canada and Australian market. This show will open a new horizon for the knitwear of the country,” said Chowdhury.

Although optimistic with the outcome of the show in New York, he, however, feared that if Bangladesh does not improve efficiency at the managerial level and infrastructure, we would not be able to capitalize from the response and expectation.

“Participating in a fair in abroad involves huge investment in time and money and due to slackness in infrastructure and inefficiency, we might not get optimum response,” he said. He explained that the efficiency level in the field of marketing and other relevant sectors to get orders from the buyers is still very poor.

“Most of the buying agents working here are from India, Hong Kong or Sri Lanka who are eating up a big share of our business,” concluded Chowdhury.

Ayon Islam

Knitwear sector hit by yarn shortage
The knitwear sector is facing yarn-crisis that may cause lower- production leaving a threat to export income. The overall productivity of knitwear has dropped by nearly 10 per cent due to shortage of yarn as well as increase of price in the local market. Uncertainty looms large in achieving the export-earning target given to the knitwear industry for the fiscal year 2005-06. Foreign exchange earning target through knitwear sector has been raised to $3.60 billion from last fiscal year’s income of $2.81 billion.

The industry suffered a setback due to the price-hike of yarn. Industry-insiders apprehend that the productivity of the second-largest foreign currency earner could fall by up to 25 per cent if the situation does not improve. Domestic yarn manufacturers were recurrently failing to supply knit fabrics as per requirement of knitwear exporters. They even could not deliver yarn within their committed deadline, posing a serious threat to the knitting industry. As a result, production in the knit sector is falling. The knitwear exporters have from time to time urged the government to take prompt decision on the reopening of Benapole land-port for importing yarn from India.

BKMEA seeks facility from EC
Knitwear manufacturers and exporters have moved to lobby the EU on the GSP facility as the EC is framing a new rule for local exporters.
Bangladesh Knitwear Manufacturer and Exporters Association (BKMEA) requested Esko Kentrschynskyj, EU Ambassador and head of delegation of the European Commission, to give GSP (generalised system of preference) facility on 45 per cent value addition for local apparel. The ambassador agreed to place the proposal before the EU Headquarter in Brussels.

As the EC is in the process of forming a new method that favours using a method of evaluation of sufficient processing based on a "value added test" as the starting point, the BKMEA made this strategic move.

Under the new method, a product resulting from the working or processing of imported non-originating materials will be considered originating if the value added in the country or in a region in the event of cumulation amounts at least to a certain threshold (a minimum local or regional value content), expressed as a percentage of the net production cost of the final product. Under the new rule, garment exporters from the LDCs will get the GSP facility only on the value addition, although EU is yet to declare the final structure of GSP, which will remain valid from January 1, 2006 to 2015.

The BKMEA president, Fazlul Haque told Esko Kentrschynskyj that, "If the EC does not issue a rule for 45 per cent value addition for the local exporters, it will be a disastrous for local knitwear industry." "We are recommending a separate GSP facility for the BGMEA as they have a very weak backward linkage," Fazlul Haque added.

On 7 July 2004, the EC set out principles that will guide the new GSP scheme for the next ten years, as the current cycle ends on 31 December 2005. Bangladesh accounts for only 3.6 per cent of the total volume of EU GSP imports and ranks eighth among the GSP beneficiaries after China (33.1 per cent), India (11.5 per cent) and Indonesia (4.8 per cent). In 2002, EU imports under GSP amounted to 53.2 billion euros.