Govt strategy coming for export competitiveness of 4 major sectors

Government authorities have got down to devising a strategy for keeping competitiveness of four major export sectors beyond apparel after 2026 when export subsidy will go following Bangladesh's graduation from world's poor-country club.

The four sectors -- leather and leather goods, jute goods, agriculture and agro-processed goods, and pharmaceuticals -- are now under government focus to maintain export growth after the country graduates from the least-developed-country status, officials said.

The Ministry of Finance this week formed a committee for brainstorming on what measures can be taken to maintain their export competitiveness on the global market and further raise export of the products in the post-LDC era.

Bangladesh is scheduled to graduate from the status of least-developed country (LDC) after 2026, and according to World Trade Organisation (WTO) rules, the developing countries are not allowed to provide subsidies to support their exports.

To help the export sector cope with the shock from sudden withdrawal of subsidies, the government in January last year lowered cash incentives for almost all sectors which enjoy the financial support.

Officials say an additional secretary of the Finance Division is heading the committee comprising representatives from the monitoring cell of the finance division, the Ministries of Commerce and Industries, Bangladesh Bank, the National Board of Revenue, Bangladesh Investment Development Authority, Bangladesh Trade and Tariff Commission, Export Promotion Bureau, and the Federation of Bangladesh Chambers of Commerce and Industry.

The panel has been entrusted with the responsibility to view the existing facilities given to the sectors to maintain export competitiveness and raise export, and identify the impediments to further augmenting export competitiveness.

Moreover, they have been asked to recommend the kinds of financial and non-financial assistance can be given to the sectors excepting the export subsidy, and to prepare an outline of platform to promote these potential sectors.

The committee has been asked to submit the report within next two weeks.

The government presently provides incentives, ranging between 0.3 per cent and 10 per cent, to support export competitiveness of 43 sectors on the international market. Country's main foreign- exchange-earning sector, the readymade garment industry, makes the most out of the total government spending as subsidy and cash incentives.

The leather-and leather-goods sector enjoys 10 per cent, diversified jute products get 10 per cent, agriculture and agro-processed goods 10 per cent, and pharmaceutical products enjoy 6.0 per cent as cash support.

Data available with the Export Promotion Bureau (EPB) show that in the fiscal year 2023-24 the country exported farm products worth $964.34 million, marking a 16.59-percent growth, while pharmaceutical exports earned $205.48 million with 17.14-percent growth year on year.

However, export earnings from leather and leather products fell by 11.6 per cent to $1.039 billion and earnings from jute and jute goods fell by 6.17 per cent to $855.23 million.

A senior finance ministry official told the FE that, during the last couple of years, the government spent some Tk 90.25 billion annually to support the export-oriented sectors, which is considered a big burden for the state coffer.

He said after graduation, Bangladesh would not be allowed to provide export incentives and so "we are now exploring how the major forex-earning sectors can be supported by other ways and means".

"We will devise mechanism based on the report and the suggestions of the committee," he said.

syful-islam@outlook.com