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Bangladesh RMG exporters expect order shift from Cambodia

Staff Correspondent | Published: 21:55, Feb 15,2020 | Updated: 22:14, Feb 15,2020

 
 

A file photo shows apparel workers sewing clothes at a factory in Cambodia. The country’s readymade garment exporters are expecting that the suspension of the European GSP facility to Cambodia would lead to an increase in export orders for Bangladesh in the EU market. — AFP photo

The country’s readymade garment exporters are expecting that the suspension of the European GSP facility to Cambodia would lead to an increase in export orders for Bangladesh in the EU market.

They said that there were similarities between the RMG products produced in Cambodia and Bangladesh for export to the EU market.

Buyers may shift their sourcing from Cambodia to other countries due to the rise in the prices of products manufactured in the Southeast Asian country because of payment of duties due to the suspension of the GSP facility, the exporters said.

They, however, said that although Bangladesh might be benefited from the suspension, Vietnam would solely be benefited from the shifting of orders for high-value-added products.

The EU on Wednesday partly suspended the Generalised Scheme of Preference facility to Cambodia due to the violation of human and labour rights.    

The European bloc generally provides the duty-free benefit to some least developed and developing countries under the ‘Everything But Arms’ deal to help boost trade and business.

Bangladesh is the second largest exporter of RMG product to EU market with around $21 billion of annual shipments as it gets GSP facility in the EU market.

When asked about the impact of EU’s decision suspending GSP facility of Cambodia on Bangladesh, BGMEA president Rubana Huq told New Age on Saturday, ‘ This may create some opportunities for other sources countries, including Bangladesh, in the shorter term.’

‘But in the longer term this would act as a significant signal for Bangladesh to prepare so that we can continue to have our market access either through extension of EBA negotiation or lobbying for the GSP Plus, for which the labour narrative will be a predominant factor,’ she said.

She also said that the GSP suspension would certainly put Cambodia’s apparel industry in a challenging situation as they would now need to pay 9 to 12 per cent duty on their exports to the EU.

Bangladesh Garment Manufacturers and Exporters Association data showed that the EU imported apparels worth $4.33 billion from Cambodia in 2018 while its total apparel exports to the world in the year stood at $7.83 billion.

Mohammad Hatem, first vice-president of the Bangladesh Knitwear Manufacturers and Exporters Association, said that Bangladesh would gain some of Cambodia’s lost orders but they would comprise the low cost items.

He said that Vietnam would be benefit more than Bangladesh from the suspension as Bangladesh did not have the capacity to deal with high value product orders.

Hatem also said that some of the orders had already shifted from Cambodia to Bangladesh because of the anticipation of buyers for months that the EU would suspend the GSP for Cambodia. 

The EU had started process to withdraw the tariff benefits for Cambodia in last year following an election won by prime minister Hun Sen.

Some Western countries had criticised the election calling it flawed, because of a campaign of intimidation by Hun Sen’s allies, and the lack of a credible opposition dissolved by the Supreme Court.

Amid the threat of GSP suspension by the EU, Reuters quoting representatives of some global brands in November last year reported that they would downsize their sourcing from Cambodia.

A sourcing manager at Britain’s Primark said that the European companies would ‘pull out of production’ in Cambodia if trade preferences ended, while the head of production at Sweden’s H&M warned of a ‘substantial backlash’.

David Savman, head of production at H&M, said the company would do less business in Cambodia if the trade benefits ended and named China and Indonesia as alternative sourcing countries.

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