For the first time ever exports of knitwear look set to overtake woven products this year as the country's largest export item, with the industry benefiting from large-scale investment in the sector over the past decade.
While twelve years ago knitwear exports were worth less than a quarter of woven products, in the first four months of this fiscal year they exceeded woven goods, bringing in US$ 1.6 billion.
Behind the leap is the creation of a vibrant yarn and dyeing industry that provides 'backward linkage' as well as the introduction of innovative fashion and design.
These developments are especially attractive for international buyers as domestic production of yarn increases flexibility and greatly reduces lead times.
Sources in the research cell of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) said backward linkage industries can supply up to 90 percent of the raw materials used in knitwear. This figures drops to around 25 percent in the case of woven goods, where most of the cloth has to be imported, a process that can take weeks.
"The most important advantage of knitwear is the backward integration, it really does cut lead time," said one major buyer.
"This is also very helpful when it comes to placing repeat or expanded orders. With the woven producers this takes a much longer time, " he added.
In knitwear Bangladesh is now competing with countries such as Turkey, rather than China, and in doing so is able to exploit its advantage of lower labour costs.
In 2006-07 fiscal year woven worth $4.54 billion and knit worth $4.39 billion was exported registering a growth of 14.05 percent and 19.30 percent respectively. However in 12 of the past 13 years knitwear has been growing faster than woven and this year is finally expected to take first place among export items.
In the fiscal year 2006-07 Ready Made Garment exports in total made up 76 per cent of the country's total exports.
Talking to The Daily Star recently former president of BGMEA Annisul Huq said the declining trend in woven export in 2007 has been a consequence of political turmoil and labour unrest 12 months ago.
Moreover, many buyers shifted from Bangladesh in 2007 to other countries like Vietnam and Cambodia due to the uncertain market situation, he said.
“The traditional fashions and designs are also responsible for declining in the export of Bangladeshi products. Buyers want something new,” Huq said.
“But I am hopeful that in 2008 Bangladesh will do better in ready-made garment (RMG) export in the world market as everything looks good until now,” he added.
Director of the BKMEA, MA Baset said the demand of knit items especially in the European market has been increasing. So, the export of the locally made knit has also been increasing, he said.
“Moreover, the investment in knit sector in Bangladesh over the last few years also increased tremendously following huge demand in world market,” Baset said.