Cablegate: Bangladesh Textile and Apparel Stats And

This record is a partial extract of the original cable. The full text of the original cable is not available.




E.O. 12958: DECL: N/A

REF: A. DHAKA 4154; B. STATE 146213

1. Summary: Post collected data on textile and apparel
labor and production statistics of Bangladesh per ref
B. request. Information sources included trade
associations and government data. There is no
consistent, reliable, current source of data for the
information requested. Early indications are that
export prices have fallen but volumes have increased,
resulting in an overall increase in apparel exports.
End summary.

2. Post collected information from BGMEA (Bangladesh Garments
Manufacturers and Exporters Association), BTMA (Bangladesh
Textile Mills Association), and the World Bank. Data is seldom
disaggregated by month and is collected according to the fiscal
year of the government of Bangladesh, which runs from July 1-
June 30. The BDG FY 2004 year ended June 30, 2005. Thus,
FY 2004 data includes the data for the first six months of
calendar year 2005. Moreover, data from these different sources
are inconsistent and the reliability of the data can not be
independently verified.

3. Responses to questions posed ref B., para. 4, follow:

A. Total industrial production during FY 2004 was 15 billion.

B. Total textile production in FY 2004 was 2.7 billion meters
(no data based on price is available) and apparel production was
USD 7 billion (both estimated).

C. Textile share could not be compared with the import and
export figures because data on the value of textile production
is not available. During FY 2004, apparel share was 52% of the
total imports and 81% of the total exports.

D. Total manufacturing employment was 4.9 million (estimated)
in FY 2004.

E. Total textile employment by the BTMA member organizations
was 250,000 and by BGMEA member organizations was 2.0 million
during FY 2004. Women are estimated to comprise 80% of the
textile and apparel workforce.

3. Responses to questions posed ref B., para. 5, follow:

A. Bangladeshi apparel manufacturers are receiving lower
prices due to heightened international competition. In the
beginning of 2005, they received a lower number of orders
compared to the same period of 2004. However, some
manufacturers report that orders are now coming back and there
are indications that total volume is up over the previous year.
To date, no foreign investor in the sector has left Bangladesh.
The knitwear sector has shown significant growth, particularly
in European markets where Bangladesh qualifies for GSP
preferences. Knitwear also benefits from stronger vertical
integration and domestic production of inputs, reducing costs
associated with Bangladesh's inefficient ports. The woven sector
has not benefited significantly from these advantages, and has
experienced only limited growth in volumes but declining prices.

B. The U.S. and the EU are the two principal export markets
for Bangladesh textile and apparel products. Bangladeshi
manufacturers benefit from limits on and uncertainty over
continued U.S. and EU access to Chinese goods, as buyers retain
their relationship with Bangladesh manufacturers to ensure a
continued source of supply. The BDG has not implemented, nor is
it considering, its own safeguard measures against China. The
BDG is encouraging Chinese investment in its textile and apparel

C. Increased global competition is squeezing margins in the
textile and apparel sector, but has not led to reduced wages or
requests for waiver of minimum wage laws. Wage reductions to
address competitive pressures are rare in Bangladesh industry
generally. There has been some upward wage pressure at
companies located in export processing zones (EPZs), due to
recent labor legislation unrelated to the end of the MFA.
Overall, wages and benefits paid by companies operating in the
EPZs are higher than those paid by companies located outside the

D. The private sector continues to invest to improve the
competitive position of the industry. This investment, both
before and after the expiration of the MFA, is largely
responsible for the continuing competitiveness of the industry.
The BDG and industry have identified the major infrastructure
and policy impediments to improving overall competitiveness.
These include an inefficient and costly port, absence of a deep-
water port, poor transportation linkages between the port and
major manufacturing centers, inadequate and unreliable power,
poor telecommunications infrastructure, particularly in land-
lines and high-speed internet access, corruption and a lack of
transparency in government.

Although the BDG has made sporadic attempts to address
these failings, implementation has been weak, inconsistent and
subject to substantial delays. The ADB is helping the
Chittagong port to develop its infrastructure and
computerization of the customs procedures. The port is now
constructing a container terminal, which will be operated by a
private sector operator yet to be selected. The Dhaka-
Chittagong highway is being expanded to ease transportation of
goods to the port, which will speed up transportation of apparel
goods too. Post is not confident, however, that significant
progress will be made to address these issues prior to the 2008
end of MFA provisions on safeguards.

E. Bangladesh's eligibility for GSP benefits in the EU is a
significant factor behind increased knitwear exports to the EU.
The industry is concerned, however, that changes in the EU GSP
program, especially concerning rules of origin, could make
Bangladesh knitwear less competitive in the EU. Bangladesh
textiles and apparel do not benefit from regional free trade
agreements; however, some benefit is possible once the South
Asia Free Trade Agreement (SAFTA) is implemented. U.S. GSP
benefits have a limited impact on the textile and apparel
industry. Bangladesh does not benefit from other U.S. trade
preference programs. The industry, led by BGMEA, is lobbying
for passage of the Trade Relief Assistance for Developing
Economies Act of 2005, which would grant U.S. duty free access
to textiles and apparels from several developing countries,
including Bangladesh.

F. Bangladesh should be able to remain competitive in the
short to medium term. The country benefits from low labor costs
and a good reputation in its export factories for compliance
with "social" standards, such as lack of child labor. Buyers,
who do not want to become dependent on China as a sole source of
supply, continue to rely on Bangladesh as an alternative source.
The longer term health of the industry, however, will depend on
the government's ability to improve critical infrastructure and
improve the underlying business climate by addressing corruption
and simmering political unrest.


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