Bangladesh RMG exporters expect order shift from Cambodia

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

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

Buyers may shift their sourcing from Cambodia abroad due to the rise in the costs of products manufactured in the Southeast Asian country because of payment of duties as a result of suspension of the GSP facility, the exporters said.

They, however, said that although Bangladesh may 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 supplies the duty-free benefit for some least developed and developing countries under the ‘Everything But Arms’ deal to greatly help boost trade and business.

Bangladesh is the second most significant exporter of RMG product to EU market with around $21 billion of gross 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 MODERN on Saturday, ‘ This may create some opportunities for other sources countries, including Bangladesh, in the shorter term.’

‘But in the long run this would act as a substantial signal for Bangladesh to prepare so that we can continue steadily to have our market access either through extension of EBA negotiation or lobbying for the GSP Plus, that the labour narrative is a predominant factor,’ she said.

She also said that the GSP suspension would definitely put Cambodia’s apparel industry in a challenging situation because they would now have to pay 9 to 12 per cent duty on the 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 entire 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 nevertheless they would comprise the reduced cost items.

He said that Vietnam will be benefit a lot more than Bangladesh from the suspension as Bangladesh didn't have the capacity to deal with quality value product orders.

Hatem also said that a number of the orders had already shifted from Cambodia to Bangladesh as a result 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 this past year following an election won by prime minister Hun Sen.

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

Amid the risk of GSP suspension by the EU, Reuters quoting representatives of some global brands in November this past year reported that they might 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, as 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.
Source: https://www.newagebd.net

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