RMG exports to UK may grow 2.5 times by 2030: RAPID
Having left the European Union, the United Kingdom is going to launch the Developing Countries Trading Scheme to replace the Generalised Scheme of Preferences (GSP) offering lower tariffs and simpler rules of origin requirements for exporting to the UK to facilitate growth in trade with developing countries such as Bangladesh.
With this relaxation in export terms, set to take effect this year, Bangladesh's exports of readymade garments to the UK may increase two and a half times to $11 billion by 2030, a study by the private research organisation Research and Policy Integration for Development (RAPID) has found.
The study report was published in a stakeholder consultation, entitled "Expanding and diversifying export to the UK under the developing countries trading system", at the Brac Inn Centre in the capital's Mohakhali on Thursday.
RAPID chairman Dr Mohammad Abdur Razzaque, highlighting the rationale of this forecast, said that the average annual growth rate of Bangladesh's apparel export to the UK in the last decade was 8%.
"As some conditions have been relaxed in the DCTS and China's market share is declining there, the growth rate could be 10% till 2026. On the other hand, after LDC graduation in 2026, Bangladesh's duty-free export facility under market preferences to countries other than the member-states of the European Union will come to an end and so the concentration in the UK will increase. And for this reason, the growth projection for exports to the UK is 15% beginning 2026."
Bangladesh's total annual apparel exports to the UK could rise to $11 billion by 2030, he added.
The UK as a single country is Bangladesh's third largest export market. In FY22, Bangladesh exported $4.8 billion worth of garments to the UK market.
Although China is in the top position in apparel exports to the UK, its share of apparel exports has been declining over the past years.
According to RAPID data, Bangladesh has gained most of the share lost by China in the UK market.
Data show that China's share in the UK clothing market fell from 37% to 21% in the 11 years from 2010 to 2021. During the same period, Bangladesh's share in the UK apparel market doubled to over 14%. Bangladesh now holds the second position in the UK market.
At present, Bangladesh has to meet the condition of a 30% value addition for exporting clothes to the EU market as well as the UK.
Besides, there is also a condition for Bangladesh to ratify 32 international conventions.
But in the UK's new trade scheme for developing countries, value audition criteria have been reduced by five percentage points to 25%. Moreover, the condition to adhere to 32 international conventions is also not there, although they can look into the matter if there is a human rights violation.
At the seminar, sector insiders emphasised the need for diversifying Bangladesh's export basket.
In this case, entrepreneurs pointed out the tendency to ignore letters of credit while receiving payment from the UK market, problems in testing some products, not being connected to the supply chain, and the lack of local government policy support.
Commerce Secretary Tapan Kanti Ghosh said that the issue related to payment will be resolved through discussion with the Bangladesh Bank.
Dr M Abu Eusuf, executive director of RAPID, presided over the meeting while Export Promotion Bureau (EPB) Vice Chairman AHM Ahsan, Bangladesh Trade and Tariff Commission Chairman Md Faizul Islam, Foreign, Commonwealth and Development Office's Deputy Development Director Dr Duncan Overfield also spoke on the occasion, among others.
Source: tbsnews