Bangladesh's net export earnings from the shipment of readymade garments (RMG) contributed to over 70 percent of the gross export receipts for the third consecutive quarter ending in September 2023.

The net export receipt of the RMG sector, determined by subtracting the import value of raw materials used in the sector from its gross export earnings, stood at US$ 8.2 billion in July-September of the fiscal year 2023-24.

It accounted for 70.78 percent of the gross export earnings of $11.61 billion during the period, the Bangladesh Bank (BB) said in its quarterly review on RMG sector, the country's largest industry.

Net export earning was 51.49 percent of gross exports earnings from apparel, standing at $10.27 billion in July-September period of the previous year, said the BB in its quarterly review.

Since then, Bangladesh has been retaining more of its earnings from RMG export, with net export earnings reaching 71.48 percent of $11.73 billion the during April-June period of the fiscal year 2022-23.

"The reason behind the increasing net export earnings is the expansion of backward linkage industry. It has developed a lot," said BB Executive Director Research Md Ezazul Islam.

Once, exporters had to import buttons, but now a lot of the demand is met through domestic production.

"This is good for us. The share of net export earning in RMG will rise in future," he added.

The BB report said the RMG sector had been experiencing a series of challenges, including domestic political unrest, global geopolitical conflicts, energy price hikes and cotton price fluctuations.

Nevertheless, the sector's contribution to Bangladesh's gross domestic product was 10.35 percent.

However, due to the financial condition of the global economy, apparel exports declined 1.04 percent in July-September period this fiscal year compared to the previous year.

The BB said the import value of raw materials such as raw cotton, synthetic or viscose fibre, synthetic/mixed yarn, cotton yarn and textile fabrics and accessories for garments amounted to $3.39 billion in July-September of FY23-24.

Those import costs accounted for 29.22 percent of total RMG export earnings.

The report said nine countries -- the United States, Germany, the United Kingdom, Spain, France, the Netherlands, Italy, Canada, and Belgium -- were the top destinations for Bangladesh's apparel exports during July-September of FY24.

Bangladesh earned $8.10 billion from RMG exports to these countries, accounting for 69.78 percent of total garment exports, the BB report said.

Going forward, the central bank review said apparel exports may face challenges in view of subdued economic activities owing to higher inflation and higher interest rates, heightened uncertainty about the future geo-economic landscape, weak productivity growth and a complex financial environment.

"Despite these uncertainties and challenges, the RMG industry of Bangladesh started to rebound in receiving fair share of work orders from international retailers and major global brands, which is indicating a sign of recovery from Covid-19 pandemic and the Russia-Ukraine war," the central bank review said.

However, inter-apparel diversification, reducing lead times, increasing efficiency, ensuring effective research and development and exploring new global markets should be priority areas in order to boost export receipts from the sector in the future, it added.