With a couple of industrial product fairs held in the capital recently, the issue of market compliance got highlighted as integral to manufacturing products for export. Although fulfilling compliance needs has been a key element in overseas trading for quite some time, countries and economic blocs in the developed as well as developing world are now following increasingly stringent policies in allowing entry of products into their territories. While non-tariff measures (NTMs) in different countries were already there, compliance needs as regards standards, rules of origin, testing, production processes have become stumbling blocks for exporting countries which are yet to fulfil these requirements. The fact that Bangladesh is struggling to put in place a satisfactory compliance regime is evident from the less than expected performance in some of the major markets, especially in respect of exporting manufactured products.
The only exception, undoubtedly, is readymade garment (RMG) sector. The underlying reason is not difficult to discern. Most of the country's garment factories are now fully compliant, courtesy of the stupendous job done by the inspection platforms - Accord and Alliance, representing respectively European and US buyers. Moreover, the RMG sector has been under close supervision of the overseas buyers ever since Bangladesh started exporting garment in the early eighties. As a result, garment export, despite many anticipated threats following the abolition of MFA (multifibre arrangement) quota decades back, did not encounter any mentionable setback in exports; and now this sector accounts for around ninety per cent of the country's total exports. This, on the flipside, reflects the poor progress in non-RMG product arena. While undiversified product range and absence of product adaptation are often attributed to poor export performance of non-RMG products, the fact remains that lack of compliance, too, largely accounts for difficulties in market access.
Latest export figures available till March this year show that while there has been a noticeable slump in the export of leather goods (barring footwear) and jute goods, the rise in case of frozen food (shrimp mainly), toiletries, ceramics and a few other manufactured products is rather insignificant to suggest any meaningful market access. However, pharmaceutical products have done well with a growth of around 30 per cent over the corresponding period last year. As for leather goods, the decline in export despite relocation of the tanneries at the Savar leather estate points to some inadequacies in fulfilling compliance norms. The central effluent treatment plant (CETP) is yet to be fully equipped to treat solid factory waste which, reportedly, is one of the reasons for buyers shying away from placing big volumes of orders. Experts are of the view that full compliance of leather units, particularly tanneries, will boost exports considerably.
Lack of compliance has not only adversely affected the export of manufactured products, but also that of primary products like fresh fruits and vegetables and various processed foods to many traditional markets where the main consumers are Bangladeshi migrant communities. There is thus the crucial need to look into market-specific compliance needs in respect of the major export products in order that these can hit the target markets in a competitive manner and in increased volumes.
