Bangladesh's export earnings in the first half of the current fiscal have registered a 14.42 per cent growth over the corresponding period of the last fiscal. The earnings stood at $20.49 billion in July-December period. The figure was, however, $17.91 billion during the same period of the last fiscal. Earnings from export of readymade garments (RMG) increased by 15.65 per cent during the same period. By and large, the government considers the RMG export earning satisfactory.
The country's entrepreneurs were reportedly investing more in technology, process up-gradation and design development alongside ongoing post-inspection remedial work. All those efforts have helped them regain buyers' confidence and encouraged them to source their products from Bangladesh.
There is no denying that the exports play a vital role in the country's economy. Increased exports lead to higher economic growth and more employment opportunities. Exports to countries except for the EU, US, UK and Canada soared significantly in recent times.
The country is making a stride to achieve the economic status of a middle-income country by 2024. The government has taken diverse policies to pave the way to the higher economic standing. It has also stressed on economic diplomacy.
The authorities have offered incentives and other financial benefits to exporters in an effort to diversify and increase exports. Overseas missions have been asked to open up new windows of export in collaboration with domestic and foreign business communities.
Yet the worrying fact is that years of prolonged efforts by the government to diversify both products and markets failed to yield any visible result. So many years have passed since liberation, the country's export earnings are still dependent on limited items and export destinations.
The country still relies on six exportable items and four markets in its external trade over the years, ostensibly for failing to effectively implement the plans for diversification of the export basket and overseas market. Although there is good prospect of a jump in the export trade under the global trading regime, lack of product campaign and market diversification left a number of quality products almost unknown to the outside world.
The Export Diversification Project, taken up by the government in 1999 with financial support of the World Bank, failed to perform satisfactorily and was later abandoned. The project was aimed at integrating Bangladesh with the global economy through promotion and diversification of exportable goods.
The government did also provide cash subsidy for a number of products and introduced incentives for encouraging exports to new markets. But again, there was no tangible outcome. Neither the number of exportable items nor the export destinations could see the much-needed expansion.
Previous steps taken by the government -- either strategic or operational -- were not sufficient to diversify export products and markets. The government needs to provide policy support now to the non-RMG products. Those who are small suppliers need networking, match making and information sharing to popularise their products to the world.
In fact, aggressive government-to-government negotiations are needed to remove or reduce the tariff barriers, especially to the non-traditional markets that need non-traditional products. Proposals like more trade fairs and exchange of business missions to various destinations were also mooted, but did not work properly for export diversification.
There are, however, some bottlenecks on way to the expansion of exports. Among them, infrastructural constraint is perhaps the single most important bottleneck to expansion of export and investment-augmenting activities in Bangladesh. Problems continue to remain in spite of the government efforts to streamline a number of stumbling blocks.
Inadequate functioning of infrastructure may adversely affect enterprises that are involved in export activities. It hampers production activities, delays movements of goods and passengers leading to delay in the delivery of goods. On the other hand, official rules and regulations pertaining to exports are complicated requiring time-consuming paper work.
A fundamental problem of export diversification is the lack of adequate investment in the country. Bangladesh has been following a private sector led growth strategy since 1980s. Public sector investment has come down but private sector investment is yet to pick up. This has led to low level of capital formation in recent years. Inflow of foreign capital is also sluggish.
Some potential products have been identified for widening the export basket. Such products include printing and packaging, furniture, electronics, shipbuilding, plastic and light engineering. Shipbuilding may be seen as a formidable industry capable of being at per with even garments because of its backward linkages.
Opportunities are galore in the comparatively new markets but for lack of proper knowledge and efforts both from the local businesses and the government, those have so far remained unexplored. It has been found that the importers of African, Russian and some other countries are eager to import items like RMG, leather products and jute goods from Bangladesh.
Indeed, there are well over hundred products on the export list, yet 85 to 90 per cent of the annual export receipts come from only few items-- apparels, frozen foods, jute and jute goods, and leather products. Similarly, the country receives a lion's share of its export receipts from only four destinations, including the European Union (EU), and the United States (US).
The government should, in such a situation, come forward with a plan of action to raise competitiveness of the local products and explore the untapped markets across the world. The plan should also take into account the present energy and infrastructure situation in the country.
