In the home textile sector, Bangladesh has been having difficulty regaining lost work orders after a large portion of them moved to Pakistan over two years ago.
The abrupt doubling of gas prices in Bangladesh and the notable depreciation of the Pakistani rupee in relation to the US dollar were the primary causes of this change. Lower earnings have recently been a result of months of political upheaval in Bangladesh and labor unrest in industrial belts.
Pakistan also has several natural benefits. For instance, Statista ranks it as the seventh-largest producer of cotton worldwide.
Bangladesh only has access to normal GSP facilities, whereas Pakistan also benefits from the Generalized Scheme of Preferences Plus (GSP+) offered by the European Union.
Major home textile exporters avoided booking work orders when the government of Bangladesh abruptly raised gas prices by 150.41 percent in February 2023, from Tk 11.98 per unit to Tk 30 per unit. This was because of the unusual increase in production costs, and a significant number of work orders were transferred to Pakistan.
Since work orders were based on cheaper costs prior to the increase in gas prices, Khorshed Alam, chairman of the textile miller Little Group, adding that this decision resulted in significant losses for local home textile exporters.
According to him, for example, a large local company’s monthly gas bill, which was Tk 68 crore before the raise, would now cost Tk 126 crore.
For a while, local millers did not schedule new work orders as a result.
“However, the export of home textile is gradually recovering,” Alam stated.
While Bangladesh depends on imports to meet over 98 percent of its domestic cotton demand, Pakistan has the advantage of having easily available cotton.
Pakistan’s export numbers also demonstrate the country’s performance in the home textiles market.
According to SAMAA TV, a private television channel, government policies and assistance from the Special Investment Facilitation Council (SIFC) helped Pakistan’s textile exports soar to a 26-month high in August, hitting $1.64 billion, a 13 percent year-over-year gain.
The Pakistan Bureau of Statistics reports that in August of last year, textile exports were $1.46 billion.
Significant development was seen in a number of categories, with ready-made garment exports rising 28% and knitwear and bedwear exports rising 15% over the previous year.
“Analysts attribute the rise to Pakistan’s strategic positioning in the global textile market, especially in light of political instability in Bangladesh and international sanctions on China, which have led global importers to seek alternatives,” according to a report by SAMAA TV.
However, according to data from the state-owned Export Promotion Bureau (EPB), Bangladesh’s exports of home textiles, such as carpets, tents, and bedsheets, decreased 2.05 percent to $851.01 million in the fiscal year 2023–24.
In FY21, domestic textile exports reached $1 billion, representing a staggering 49.17 percent year-over-year increase. With exports increasing by an additional 40 percent or more to $1.62 billion the next year, that trend persisted.
The next year, however, the gas crisis reversed that trend, with home textiles selling for $1.09 billion, a nearly one-third decrease.
“We were expected to export $30 million worth of home textiles per month under our prior plan. However, we are currently exporting $25 million every month,” stated Md. Shahidullah Chowdhury, executive director of Noman Group, which is responsible for over 70% of Bangladesh’s domestic textile exports.
“This is even less than the previous monthly amount, which was supposed to increase,” he stated.
According to Chowdhury, home textiles account for $15 million of the total quantity exported, while terry towel shipments account for $10 million.
“We are trying to recover the lost business but some factors like low gas pressure and labour unrest are posing major barriers at present,” Chowdhury stated.
Chowdhury’s opinions were supported by Monsoor Ahmed, the former CEO of the Bangladesh Textile Mills Association.
According to Ahmed, a few large enterprises had to close a few years ago for a variety of reasons, but five to seven major local textile manufacturers are currently exporting.
According to him, low gas pressure prevents textile mills from operating at full capacity and from producing enough items to be more competitive.
Additionally, since 2014, Pakistan has benefited from zero-rated or preferential tariffs on around 66 percent of tariff lines, which has improved the nation’s capacity to export to the EU market under the GSP+.
While imports from the EU rose by 65% between 2014 and 2022, Pakistan’s exports to the EU soared by 108%. From 8.3 billion euros in 2013, the entire amount of trade grew to 14.85 billion euros.
