The draft Export Policy 2018-21 received cabinet approval this week with a view to, what the government claims, infusing dynamism into export operations, enhance competitiveness in trade and commerce.
The authorities expressed the hope that the policy, if implemented properly, will strengthen the position of Bangladesh in the competitive world. The new policy was framed by updating the existing export policy of 2015-18. A separate and a new chapter on definitions have been incorporated in the new policy by integrating the existing definitions in various chapters. Also, new definitions like sample, aromatic rice and indirect export have been included.
The number of sectors receiving highest priority has been increased from 12 to 15. The new sectors are Denim, Active Pharmaceutical Ingredients (API) and Re-agent (shoes made from leather, non-leather and synthetic).
The new export policy provides for lowering value added tax (VAT) as stimulus to export from the existing 40 per cent to 30 per cent. It aims at doubling export income to US$ 60 billion in next five years time through international standardisation of products.
The government has reportedly designated some service sectors as special development thrust sectors. Tourism sector, architecture, engineering and consultancy services have been accommodated under the development sector. A number of steps will be taken for infrastructure development of ports, easing delivery system of goods at ports, and reducing cost of doing business by introducing one-stop service.
Bangladesh earned $28.15 billion by exporting readymade garments last fiscal while it was $28.09 billion in 2015-16. The growth stands at 0.20 per cent, a sharp decline from 10.14 per cent recorded in 2016-15. The country earned $14.39 billion from woven apparel and $13.75 billion from knitwear apparel. During this period, knitwear export increased by 3.0 per cent while woven export decreased by 2.35 per cent.
In fact, the country's overall exports to major destinations including the USA, Canada and some other EU countries marked a downward trend in the last fiscal year. The factors like currency fluctuation and sluggish demand and ongoing safety issues in the ready-made garment sector were attributed to such poor performance of the sector.
The global consumption for apparels declined by 5.0 per cent. Bangladesh currency against US dollar remains unchanged while the currencies in competitor countries devaluated. Brexit had a negative impact on local garment export. Analysts see these as major reasons for losing competitiveness in the global market.
Moreover, due to the ongoing safety activities carried out by the western retailers' platforms, many factories were shut while a good number of units are in the process of relocation. Existing gas crisis and other infrastructure problems are also affecting the sector.
In such a situation, the commerce ministry needs to conduct a study to explore product-wise demands that are increasing in the traditional markets. Entrepreneurs need also to increase their networking with the buyers so that they can increase their orders in the country and with those who are currently sourcing from other competitor countries. The government should offer incentives to help increase orders in non-traditional markets.
There are, in fact, better opportunities 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 readymade garments (RMG), leather products and jute goods from Bangladesh.
According to a World Bank (WB) report, Bangladesh should deepen reforms to improve the capabilities of its firms to participate in global value chains, which will require making it much easier for exporters to import what they need, gradually reducing tariff, while improving trade logistics.
With support from government, local firms can improve their productivity and competitiveness by investing more in training their workers and managers, innovating to introduce new products and processes, the report added.
To realise maximum competitiveness potential, the country needs to start by focusing on improving its trade policy regime and the business environment, and address the acute shortage of industrial land. With the right set of policies and an enabling environment, there is no reason why Bangladesh cannot become the next Asian export powerhouse, said the WB report.
The government should thus 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 simultaneously consider the country's existing energy situation and low infrastructure facilities.
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