Due to increasing local use of raw materials, Bangladesh is seeing an increase in its retention value for apparel items. This highlights the importance of backward linking and less dependence upon imported yarn and fabrics.
According to data from Bangladesh Textile Mills Association and Export Promotion Bureau, the retention value of exported apparel jumped 36.36% to $28.5 Billion in the fiscal year 2021-22. This was up from $20.9 Billion a year ago.
Follow The Daily Star’s Google News channel for the latest news. This means that the country could retain $28.5 billion during FY22. It accounts for 66.88 percent of total garment export revenues of $42.61 trillion in the financial year.
One-third of the total was spent on knitwear, while $6.11billion went to the woven sector and $908.25m in the home textile industry.
Because Bangladesh needs to import raw materials as well as intermediate goods in order to produce export-oriented garment items, it cannot retain the $14.11 billion.
Out of total $28.7billion in shipment, the apparel sector retained $18 billion.
The high retention value of local garment suppliers means that they used more local yarns and fabrics when making apparel products for international buyers. It reduces the dependence on import raw materials, such as dye chemicals and fabric, and makes them less dependent on these imported resources.
In Bangladesh, knitwear has actually had more retention value since its inception than the woven industry. The reason is that the yarn used locally was higher.
Entrepreneurs have heavily invested in the primary textile industry, and local spinners now supply close to 90% of raw material for export-oriented knitwear manufacturers.
In the spinning sector, investors have made investments of nearly $15 million. A total of 450 large spinning factories are available today to provide yarn raw material.
Investment in the woven industry was not as high as that made by knitwear. Therefore, wet-weave garment manufacturers rely on countries like China, India, and Pakistan for raw material such as woven fabrics.
Weavers in the area can provide up to 45 percent of the raw materials for exporters.
Home textiles have a very high retention rate because many entrepreneurs invest a lot to produce them.
Ha-Meem Group in Bangladesh is one the largest garment exporters. They purchase 60% of fabric for denim, 50% for woven and 70% for accessories.
Ha-Meem Group chairman AK Azad stated that “the main reason for growing garment export retention value is because of the increased use of local yarns, fabrics.”
Kutubuddin Ahmed chairman, Envoy Textiles (another large exporter of garments), stated that the consumption of yarns and fabrics made locally has increased because China cannot meet demand.
Because of rapid fashion changes and new styles, a shorter lead-time is important in the garment industry.
International retailers and brands demand quick deliveries of their goods. Therefore, exporters look for yarns and fabrics that can be manufactured quickly on a local market.
If garments are made with imported fabric and yarn from China, it takes at most 30 days to ship them to Western markets.
Bangladesh is the largest producer of denim fabrics. Local millers can supply 60 percent of the market demand.
Md Fazlul Hoque (managing director, Plummy Fashions Ltd) believes the retention value of Plummy Fashions Ltd will grow because exporters use more local raw material.
Narayanganj, a manufacturer that produces knitwear for export, uses 90% local materials.
President of the BTMA, Mohammad Ali Khokon said that “the higher retention value is a sign of strength in the country”
Future retention will be determined by the energy sector. He also stated that mills are struggling to operate at maximum capacity due to ongoing energy shortages.