Export, remittance slow in Sept

Both remittance and merchandise export recorded a fall in September over the previous month, adding pressure to country's foreign-exchange reserves.

Merchandise exports in September declined by 9.83 per cent to US$ 4.31 billion compared to that of the previous month.

The official count of the July-September export income, however, marks a notable increase from the $12.49 billion earned during the same period in the previous fiscal year, according to Export Promotion Bureau (EPB) data released Sunday.

In September export earnings recorded a 10.37-percent growth over the corresponding period of last fiscal.

However, the single-month earnings fell short of the target by 7.05 per cent.

Out of the $4.31 billion total earnings in September, the country's overwhelmingly largest export industry--readymade garments--fetched US$3.61 billion.

The growth momentum, which showed a remarkable 15.26-percent increase in merchandise shipments in July, somewhat slowed down in August, to stand at 4.78 per cent.

As usual, the RMG sector remained the key driver of the export growth in the first three months, fetching the country $11.61 billion in a double-digit growth of 13.07 per cent.

During the July-September period of 2023-24, the knitwear subsector within the RMG category generated $6.76 billion, up by 19.70 per cent. Earnings from woven garments amounted to $4.85 billion, demonstrating a 4.97-percent increase.

On the downside, the home-textile sector experienced a decline of around 46.39 per cent, with earnings amounting to $189.5 million.

Asked about the export performance as per official reckonings, Bangladesh Garment Manufacturers and Exporters Association (BGMEA) President Faruque Hassan hailed the growth as "positive". Despite a fall in imports by major markets, Bangladesh's RMG industry sustained this positive growth.

"We are doing better compared to other competitors because of our different initiatives, including visits and exploring markets and networking with them," he says.

The association chief notes although apparel exports from Bangladesh decreased in quantity, the shipments of high-value products have been on the rise, as reflected in the export data.

Value-added items helped in getting better prices, while earnings from non-traditional and new markets like Australia, Japan and Korea are also increasing, Mr Hassan says about an ongoing transition.

According to the EPB data, exports of jute and jute goods stood at $221.89 million, recording a 9.67 per cent fall.

Earnings from agricultural items like vegetables, fruits and dry foods also registered a decline of 5.2 per cent to $257.49 million.

The data showed that engineering-product shipments declined by 16.13 per cent to $121.1 million.

Export earnings from frozen and live fishes decreased by 25.05 per cent to $99.54 million in the same period. Pharmaceutical exports fetched $52.69 million, registering a 25.78-percent growth.

Bangladesh received $267.49 million from the export of leather and leather goods in July-September, marking a negative growth of 18.44 per cent.

Export earnings from footwear other than leather items also decreased by 1.01 per cent to $124.07 million during the period.

The EPB count also shows that exports of plastic products witnessed a 16.24-percent growth, reaching $55.96 million.

In a much-anticipated relief amid a forex crunch, Bangladesh in the last fiscal year bagged a record-high $55.55 billion in earnings from merchandise exports, riding on a double-digit growth for readymade garments.

Country received the lowest remittance since April 2020 -- when the Covid funk began to shutter economic activities worldwide.

This drastic drop prompted top bankers to call on the central bank to allow the US dollar to free-float and declare war against informal money transaction channels like 'Hundi' and 'Hawala'.

In September, Bangladeshis working abroad sent home US$1.34 billion, marking the lowest figure in 41 months, according to the latest statistics from the central bank.

The previous lowest volume of remittances was recorded in April 2020, at $1.09 billion.

September's remittance income declined by around 16 per cent from the August total of $1.60 billion and it dropped by 13 per cent year-on-year, with the volume of internal remittances at $1.54 billion in the corresponding month a year ago, the data showed.

The drastic fall in remittance earnings is a matter of serious concern for an economy that has been under immense stress due to declining foreign currency reserves.

Md Mezbaul Haque, the spokesperson for the Bangladesh Bank (BB), acknowledged the remittance decline in September.

He said, "We're now analysing the trend and data regarding the remittance. Once it is done, we will be able to make comments elaborately."

Seeking anonymity, a BB official said the significant drop in remittances in the past month is sending a negative signal for the economy, especially at a time when the country's macroeconomic situation is already under immense stress due to the forex shortage.

The official said the central bank has implemented various measures, including gradual depreciation of the local currency against the US dollar and tightening monitoring against Hundi operators, in recent times to increase the supply of US dollars.

However, despite these measures, the inflow of remittances continues to decline, putting further pressure on foreign reserve management, he added.

The official suggested an immediate policy shift from a managed float system to a completely floating exchange rate regime, which might provide some relief in the coming days.

Seeking anonymity, managing director and chief executive officer of a private commercial bank, said the central bank is placing more emphasis on issues related to the exchange rate rather than Hundi.

"It will not be effective unless all government entities, including the BB, declare a war against the Hundi and ensure exemplary punishment."

Talking about the exchange rate, he said the rate for remittance and export proceeds is fixed at Tk 110. "But, to be honest, we cannot buy a single dollar with this rate. It needs to be aligned with the unofficial market rate. So, the BB should not create panic by launching a crackdown against bank officials."

Contacted, Dr Ahsan H Mansur, executive director of the Policy Research Institute of Bangladesh (PRI), expressed frustration over the downward trend in remittances, saying it will make reserve management extremely difficult.

"The volume of capital flight is increasing ahead of the next parliamentary elections and the falling trend is a reflection of it. I believe the downtrend will continue until the next parliamentary elections," he added.

He said the BB should take strict action against Hundi operators. He also suggested cancelling the incentives for remitters, as it has failed to attract them.

Talking to the FE, Dr M Masrur Reaz, chairman of the Policy Exchange of Bangladesh, said the spread between rates in the formal and informal channels has reached around Tk 10 per dollar.

He warned that this might encourage migrant workers to send their hard-earned money through unofficial channels.

He also noted that many remitters might refrain from sending additional money on speculation that the American dollar might appreciate further in the coming years.

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