The government's effort in exploring strategies for boosting exports while formulating the upcoming Export Policy has been well covered by the media. However, it remains to be seen whether the policymakers have placed adequate attention to strategies for increasing exports to the regional markets.
Bangladesh's exports to the regional markets are less than expected precisely because the country's export trade did not grow by meeting regional demands, in the first place. Secondly, the emergence of readymade garment (RMG) sector since the early eighties with its ever-expanding potential has added increased thrust on the European and North American markets. Even in the pre-RMG days, when the country's main export items were confined mainly to jute, leather, frozen fish and tea, it was the European markets which were the key export destinations.
The situation, over the decades, has largely changed. But lack of diversified products is commonly blamed as the impeding factor for expansion of export market. This statement may not hold good if we look at the varied range of well over hundred products currently being exported to as many countries. The scenario has been more or less the same for around a decade. So, terming the product range narrow is misleading. The range is wide, perhaps wider than many countries with much higher export remittances. What is disconcerting is the overdependence on a core group of products of which RMG as the single largest contributor accounting for more than 80 per cent of the total export earnings.
The problem, understandably, lies in the product base and not the range. Supply side constraint has been the main deterrent in case of a vast majority of the products, which did not flourish as expected and suffered from a lack of consistency because of the poor production base. There are niche markets for a variety of Bangladesh products in the regional markets, including those in China and Korea. These markets do have potential that should be explored to assess the nature and quantum of demands as well as the capacity of the local industry to deliver. The reality remains the demand for the bulk of hundred-plus products, a large majority of which have bright prospects for growth in the regional markets, has remained stagnated for long. The reasons may not be difficult to discern, in that these may be traced to - narrow manufacturing base confined to only a handful of production plants, lack of entrepreneurship coupled with the absence of proactive marketing drive, and requiring, among others, product promotion and adaptation.
According to the central bank's data, the country has been perennially on the negative side of balance of trade with almost all the regional countries. Not to mention the examples of China and India, where it suffers from a whooping trade imbalance, trade with other regional countries such as Hong Kong, Japan, Korea Republic, Myanmar, Nepal, Pakistan, Thailand and Sri Lanka also reflects a far less than desired balance of trade situation.
This, however, does not necessarily reflect a faltering trade scenario, as sourcing from the region at costs that may be competitive benefits importers. Besides, the pattern of imports inasmuch as they relate to capital machinery and intermediate goods for export may reflect an altogether different picture. But this should not be an excuse for less than expected export to the regional markets. It is here that there is the need for policy direction which can take care of both market-specific and product-specific exports.
It hardly needs any mention that boosting exports of non-traditional and diversified products is essential for sustaining the growth trend which is increasingly reliant on RMG. In other words, what matters is a boost in the export of these products. The only way to achieve this is by strengthening the base. Or else, a diversion from the traditional export destinations to the regional markets would take place. This is bound to be self-defeating and might only marginally reduce regional trade gap.
It must not be disputed that the commonalities in consumer tastes and preferences may play an important role in seeking to increase exports to the Asian region. But at the same time, it must not be forgotten that while consumer preferences may be the same, the pattern of export trade and composition of export baskets are also more or less the same. Given the reality – albeit challenges – retaining foothold of a product in a market and consolidating its strength depends largely on product development and adaptation, besides robust production base.
It is true that as a beneficiary of preferential treatment under SAPTA and SAFTA, Bangladesh did succeed in increasing its exports to India over the past decade. But this has not been the case under the two other trading arrangements-BIMSTC and APTA. That is to say, whatever progress has been achieved is confined to the market of the immediate neighbour. There is thus a great need to explore prospects in niche markets in China, Japan and Korea Republic.
In keeping with the government's efforts to facilitate exports as a whole, it would be pertinent to look for niche markets in the Asian region where Bangladeshi products, if properly developed and adapted, may enjoy comparative advantage.
