GlobalScene

China’s high prices boost Bangladesh garment exports

Bangladesh’s garment industry is growing rapidly despite the global economic turmoil as China loses orders due to high prices and worldwide demand for cheap clothing soars.

Nearly 5,000 apparel makers here initially sought government help when some top US and European buyers postponed and cut orders in the wake of the worst financial crisis since the 1930s Great Depression.

But clothing makers say that a massive diversion of orders from China, the world’s largest producer of apparel, has more than compensated.

In the first quarter to September, garment shipments grew by a record 45 percent to 3.4 billion dollars, government data this week showed, with more than 90 percent of the exports going to the US and Europe.

“It’s a huge change in fortune for us,” said Golam Faruq, owner of the country’s largest sweater manufacturer and a key supplier to British upmarket retailer Marks and Spencer.

“This month I got an unexpected 12-million-dollar order to make sweaters for a Swedish manufacturer. They told me in the past they used to give the order to Chinese manufacturers. But this year we offered a far better price,” he said. Faruq said his SQ Sweaters had also received dozens of small orders diverted from China as Bangladesh has became the top choice for producing low-priced basic items like T-shirts, denim pants, sweater and shirts.

Now the government’s Export Promotion Bureau, which monitors shipment trends, is urging the industry to prepare for a “flood of orders” as the global recession boosts sales of the low-cost items it produces.

“We held several expositions in Europe and North America in the past month and top buyers told us to be prepared for a massive increase in orders in the months and years ahead,” said Export Promotion Bureau head Shahab Ullah.

“They said people in the West have cut purchase of luxury goods and are switching to cheaper items.

And it’s our manufacturers, not the Chinese, who can supply the items at a price they now want.”

Bangladesh’s garment sector specialises in low-end clothing and is the impoverished country’s main industry, pumping 11 billion dollars a year into the economy. It accounts for about 80 percent of exports and employs more than 40 percent of its industrial workforce.

Bangladesh logged 6.2 percent economic growth last year, bolstered by a 17-percent increase in garment sales.

This year, the government projected growth of 6.5 percent, banking on garment exports remaining strong.

Knitted items, led by T-shirts which last year made up a quarter of garment exports, were the main drivers of the growth, manufacturers said.

“This year thousands of Chinese factories have shut as they are no longer competitive because of higher wages and currency appreciation,” said Fazlul Haque, head of the Bangladesh Knitwear Manufacturers and Exporters Association.

“The buyers have no choice but to switch orders to another country. It has emerged as a new pattern in global sourcing. And so far it looks like Bangladesh is the main beneficiary,” said Haque.

Haque said his group, which includes 1,500 factories, had enough orders to the end of the year, although it was still a bit worried over the long term impact of the global financial turmoil.

DHAKA, Monday, AFP
 

Dollar falls in Asia

The dollar fell against the yen and euro in Asia on Monday with uncertainty over the fate of US banking giant Citigroup adding to confusion in the market, dealers said.

The dollar eased to 95.02 yen in morning trade, from 95.89 in New York late Friday, while the euro rose to 1.2598 dollars from 1.2587.

Tokyo markets were closed for a public holiday.

“There’s still quite a bit of confusion and fear in the market,” which is contributing to volatility, said Thomas Lam, senior treasury economist with United Overseas Bank Group.

He said traders were closely watching the outcome of reported talks over the fate of Citigroup.

US news reports on Sunday said authorities were considering a rescue plan for the bank, whose stock value plunged by 50 percent last week, prompting executives to consider selling all or part of the company.

Executives at the bank, once the world’s largest, held weekend talks with US Federal Reserve and Treasury Department officials, the Wall Street Journal reported on its website. Operating in more than 100 countries and with more than two trillion dollars in assets, “Citigroup is widely viewed, both in Washington and on Wall Street, as too big to be allowed to fail,” The New York Times reported.

The outcome of the talks could also have implications for other banks, and “that’s why it’s important,” Lam said.

He added the confirmation that president-elect Barack Obama has named two key members of his economic team was in line with expectations, but does not clarify their likely course of action in the face of a global financial crisis.

On Sunday Lawrence Summers was confirmed as Obama’s pick for director of the National Economic Council (NEC), his chief economic adviser. Summers earlier led the Treasury Department under former president Bill Clinton.

Obama’s Treasury Secretary will be Timothy Geithner, president of the New York Federal Reserve. He has been leading US authorities’ efforts to shore up panicky financial markets.

Singapore, Monday, AFP
 

China to cut tariffs up to 30 percent: report

China will reduce tariffs on agricultural and non-agricultural products by 20 to 30 percent, state media reported Monday, citing a senior trade diplomat.

The move is to help boost global trade amid the international financial crisis, the China Securities Journal said, citing Zhang Xiangchen, a senior envoy at the Chinese Permanent Mission to the World Trade Organization (WTO). Zhang was not quoted as giving any timetable for when the cuts would take place.

It was not clear if the tariff cuts would affect all products imported by China. A Chinese commerce ministry official contacted by AFP Monday said she was unable to clarify the matter.

The average tariff on agricultural products now is 15.2 percent, compared with 54 percent before China entered the WTO in 2001, the report said.

Beijing, Monday, AFP