Value addition in Bangladesh’s readymade garment (RMG) sector has been fluctuating in recent years and has yet to return to pre-pandemic levels.

Exporters have largely attributed this to the rising cost of raw material imports, particularly yarn, while prices of locally produced garments have also been declining in the post-Covid period.

According to Bangladesh Bank data, the value addition of local RMG items remained almost static between 60 per cent and 64 per cent from the financial year 2012-13 to FY 2018-19.

However, recent trends showed fluctuations, with a decline to 56.49 per cent in FY20, followed by an increase to 59.13 per cent in FY21.

The figure then dropped to 54.38 per cent in FY22, before rising again to 58.11 per cent in FY23 and 60.13 per cent in FY24.

In FY24, Bangladesh fetched $36.13 billion from RMG exports, while it imported raw materials worth $14.40 billion. Thus, the country’s net RMG exports stood at $21.72 billion in FY24, showing a 60.13 per cent value addition.

The percentage remained static to 60.09 per cent during the first half of FY25, as net RMG exports stood at $11.94 billion, compared to $19.88 billion in total exports and $7.93 billion in raw material imports.

The value addition remained lower than the pre-pandemic 64.32 per cent in FY 19, data showed.

According to its latest quarterly report, the central bank has considered the main value of the components—such as raw cotton, synthetic/viscose fibre, synthetic/mixed yarn, cotton yarn, textile fabrics, and accessories for garments—rather than just the raw materials brought in through back-to-back L/Cs.

Meanwhile, exporters said Bangladesh is largely dependent on imported raw materials, such as cotton, petro-chemicals and chemicals, despite being the second largest exporter of RMG.

The value addition of the knitwear sub-sector is higher than the woven segment, as the former sources 80 per cent of its required raw materials from the local market, while woven is largely dependent on imported fabrics, they said.

Fazlee Shamim Ehsan, executive president of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), attributed the decline in the price of locally made garments to an increase in imports.

However, he noted that the sector is now producing many high value-added items, which has led to a higher dependency on imported raw materials, as Bangladesh does not produce all the required fabrics, particularly man-made ones.

As a result, the value addition in the RMG sector remains at its current level. Without the production of these high value-added items, the value addition rate would have been much lower, as garment prices have not increased in line with the rising costs of raw materials and production.

Ehsan explained that the value addition of knit items is higher compared to woven ones because knitwear is largely produced after full processing—yarn manufacturing, knitting, and dyeing—within the country.

In contrast, buyers of woven garments often source fabric, washing and embroidery from third countries.

Faruque Hassan, former President of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), said that yarn imports saw a significant increase last year, which has impacted value addition.

However, he highlighted that value addition in processes such as knitting, dyeing, finishing, printing, and embroidery has improved, although it has yet to reach the required level.

According to the Bangladesh Textile Mills Association (BTMA), Yarn imports witnessed a significant surge in 2024.

Bangladesh imported 680.43 million kilograms of cotton yarn under bonded facility last year, which was 39.16-percent higher than the 2023 figure of 488.96 million kg.

Besides, the imports of woven and knitted fabrics recorded a 20.02 per cent and a 38.35 per cent rise, respectively, in 2024.