News reel


Monday, December 30, 2013

GSP + | Pakistan going to grab larger share of Bangladesh

Pakistan set to grab larger share of Bangladesh's RMG exports to EU | LAST PAGE | Financial Express :: Financial Newspaper of Bangladesh

Monira Munni
Pakistan set to grab larger share of Bangladesh's RMG exports to EU Islamabad starts enjoying GSP facility from January .

Pakistan is set to grab a larger share of Bangladesh's   apparel export orders as the European Union (EU) grants after getting the generalised system of preferences (GSP) facility from next month, industry insiders said.

Industry circles expressed their concern that Pakistan is going to enjoy the benefit at a time when the readymade garment (RMG) industry of Bangladesh is struggling hard to survive amid ongoing grave political turmoil.

The recent political crisis in Bangladesh has already given a negative signal to the EU member-states and many of them are looking for alternative destinations for a smooth supply of products. Pakistan might become a lucrative competitor for Bangladesh-made apparel products, they pointed out.

Earlier, on December 12, the EU granted GSP plus status to Pakistan coming into effect from January. The status will provide Pakistan duty-free or preferential duty access for a total of 3,500 products including textiles.

"Pakistan will emerge as a new competitor of Bangladesh as it will also enjoy the GSP benefit in the 27-nation bloc from January 2014," Reaz-Bin-Mahmood, vice president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) said.

The GSP is one of the main factors for buyers to place orders in Bangladesh, Fazlul Hoque, former president of Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) said. Pakistan will also avail the same benefit  triggering a strong competition.

Moreover, Pakistan has a strong backward linkage industry as it is a cotton- producing country and has enough technology and expertise, he told the FE.

The EU is offering the GSP benefit to Pakistan at a time when Bangladesh's garment industry is struggling hard due to unstable political situation and  other safety and compliance issues, he added.

Due to recent confrontational politics, buyers have already started shifting their orders to other competitors like India, Vietnam, Indonesia and Cambodia as they do not feel comfortable with us, he added.

"Before placing orders to Bangladesh, buyers will also consider Pakistan and this consideration will be a challenge for us," he added.

Orders for the next season has fallen to 30 to 40 per cent due to continuous disruptive political activities like strikes, hartals and blockades. Buyers are reluctant to place orders due to issues of security and timely shipments, said Md Shahidullah Azim, managing director of Classic Fashion Concept Ltd.

With the duty-free facility in the EU market, Pakistan will lure these orders, Mr Azim, also vice president of the BGMEA said. "We are now concerned whether these buyers will come back to Bangladesh or they will choose Pakistan as our alternative."

Dr Khondaker Golam Moazzem, additional research director of the Centre for Policy Dialogue (CPD) said, there is a possibility for buyers to take Pakistan into consideration if the political crisis lingers on here in Bangladesh.

With the GSP status, Pakistan could be a preferable destination for buyers. But how much it becomes a matter of concern for Bangladesh depends on the export basket of Pakistan and whether they will match with quality of Bangladeshi products, he added.

Bangladesh has been enjoying one-stage (garments made of imported fabrics, from any country in the world, will get the GSP and there is no value addition requirement for garment items) GSP facility in the EU market since January 1, 2011.

The EU is the largest destination for Bangladeshi garment products accounting for about 58 per cent of the total apparel exports.

The country fetched $12.56 billion from the EU market in 2012-13 fiscal while $5.17 billion came from woven products and $7.39 billion from knit items export.

Pakistan's textile and clothing exports to the EU currently constitute over half of the country's total $ 9.5 billion exports to the bloc.