Looking beyond high reliance on RMG

Shahiduzzaman Khan | Published: May 30, 2018 21:28:17


The country's export earnings are increasingly becoming dependent on readymade garment (RMG) sector. It is not yet known whether the RMG-based or biased policy support of the government is responsible for a sluggish growth of export concerning non-RMG items.

According to a recent FE report, the share of proceeds from the RMG exports in the country's total export earning has gone further up in the current fiscal year. Knit and woven items contributed 83.22 per cent, or $25.30 billion, of the total export earnings valued at $30.40 billion in the first 10 months of the current fiscal year (FY). It was 78.59 per cent in the fiscal year 2011-12.

On the other hand, exports of non-RMG items have been declining gradually over the years, according to official data. During the July-April period of the current FY, earnings from all other sectors stood at $5.10 billion, or 16.77 per cent of the total export proceeds.

There are, however, many reasons for the phenomenal growth of the apparel industry. The apparel manufacturers are aggressively working to raise their production capacity and expand business. Government policy support is also helping the industry flourish further.

After installing modern machineries in the sector, especially in sweater segment, operators in the sector are now manufacturing various kinds of lucrative RMG products. Many entrepreneurs are going for export to unexplored destinations in Latin America and Africa. The government is also giving maximum policy support to the sector to flourish more.

On the other hand, other export-oriented sectors have long been facing neglect. They allege that the government is focussing on RMG sector only and offering total support for its further growth. Henceforth, non-RMG sectors are now having a stunted growth.

For example, bond licence renewal time is three years for RMG, whereas it is two years for leather. Bangladesh Garments Manufacturers and Exporters Association (BGMEA) can issue utilisation declaration, but the leather manufacturers' association is not allowed to issue utilisation permission for the leather sector. Besides, Export Development Fund (EDF), green fund and low-cost housing are also focused on RMG sector.

There are as many as 750 products on the list of exportable, but 85 to 90 per cent of the annual export receipts come from RMG and a few other items. In view of the situation, there was definite need for the RMG sector to be properly nourished, especially to enable it to retain its competitive edge in the global market. 

However, promoting other export sectors simultaneously is a matter of crucial importance. Experts say that steps taken earlier by the government -- either strategic or operational -- were not sufficient to diversify both products and markets.

Now, it is time for the government to provide policy support to the non-RMG products. Those who are small suppliers need networking, match making, information sharing to popularise their products to the world.

Added to this, 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. There is also a need to organise more trade fairs and exchange of missions to various destinations according to the demand of products.

Opportunities galore in the comparatively new markets but for lack of proper knowledge and efforts from the local businesses and the government, those have so far remained unexplored.

Dependency on a single sector is not a healthy sign. Any untoward incident in the sector might cause a major setback to the national economy. Side by side the RMG, other areas also deserve the same attention to help them grow.

szkhanfe@gmail.com

 

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