Brunei garment exports hit by devaluation of Singapore currency
Brunei’s garment industry expects shipping and raw material costs to increase up to 10 percent as a direct result of the global economic downturn and the devaluation of the Singapore dollar, reported the Brunei Times.
While some economists and financial experts have said that the devaluation was supposed to increase exports, Brunei garment exporters don't expect this to happen. The Brunei dollar is pegged to the Singapore currency one to one.
"The global recession has already affected our exports, and now that the Singapore dollar is devalued, our shipping costs will go up at least five to 10 per cent," said Charlie Lim, country manager of Jati Freedom Textiles Sdn Bhd, a local manufacturer that exports to the United States.
The global downturn has pushed up the cost of materials, he said. "We have to force the supplier to give us a price that we can afford, now the price of everything has gone up and we have to sell everything at a cheaper price."
A few years ago, he could sell a dozen men's polo shirts at about $12 per kilogramme, while today the weakening demand has forced exporters to sell such items at about $7-8.
Lau Chai Seng, general manager of Aewon Garment and Embroidery, said: "Since last year, the garment industry has been affected by the oil prices, where fabric costs went up by 20 percent... After that 20-percent hike, the oil prices started to drop which also dropped the material costs by about 15 percent, so we are still looking at a five-per cent increase since the start of the recession," he said.
He said that the recent Singapore dollar devaluation would mean that now the material cost hike would be increased by about an additional five per cent.
"So now since the start of the recession, we would be paying an additional 10 per cent for the cost of the materials," he said.
Lim said that the garment industry in Brunei is suffering at a rapid rate where the first quarter of the year has already shown a 15-per cent decrease in output, and predicts a further five-per cent decrease by July.
"Our output target is usually about 80 dozen garments a month, but in July we already know that the orders are decreasing and we will be exporting about 65 dozen garments only," he said.
Lim added that the situation, although dire, still allows his company to break even, however, he hopes that the US policies will soon change.
Asked about whether he thought the situation would worsen for garment companies in Brunei, Lim said that he "is still unsure, because at this point in time, it is (difficult to predict) how long the recession will last".
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