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Bangladesh’s RMG profits fall

The profitability of garment exporters in Bangladesh has hit rock bottom. The main reason is that price of garments has been falling five to eight per cent every year whereas the cost of production is increasing 15 per cent to 18 per cent. This means production cost and the buying price of a pair of denim trousers are almost the same.

In fiscal 2016-17, the growth of garment exports, which account for 82 per cent of total national exports, was also the lowest in the past 15 years. Garment exports increased 0.20 per cent year-on-year in the last fiscal year, 7.34 per cent below the target for the year.

The sector witnessed on an average 16 per cent year-on-year growth since 1990 up to fiscal 2015-16. Although garment exports grew 10 per cent in volume in fiscal 2016-17, the value remained almost the same as previous year.

Primarily, demand for apparel items is declining in the western world as customers progressively become more environment-minded. They are making more conscientious buying decisions: purchasing less and focusing on quality.

In 2015, the demand for apparel items worldwide declined eight per cent. Too many products for too few consumers are the greatest challenge facing the fashion industry.

 
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