It's a good piece of news that the country's export earnings hit an all-time high in the just concluded fiscal year (FY). The amount of earnings is US$ 40.53 billion in 2018-19. Exports registered a 10.55 per cent growth over that of the last fiscal.
Export earnings of the just concluded fiscal year also surpassed the target by 3.94 per cent. The readymade garment (RMG) sector contributed more than 84 per cent to the total export income in FY 19. In last fiscal, the RMG exports grew by 11.49 per cent from $ 30.61 billion of FY 18. The sector's earnings also exceeded the respective target in FY 19 by 4.42 per cent.
Buyers are now placing more orders to Bangladeshi companies, as they are satisfied with workplace safety situation here. The ongoing trade war between China and the US is also offering a good opportunity as the latter is shifting orders to other countries including Bangladesh.
In the meantime, the Export Promotion Bureau (EPB) has set a $ 44.40 billion export target for fiscal year 2019-20. More than 84 per cent or $37.42 billion of the targeted export earnings is expected to come from RMG sector. The EPB has also eyed an additional $6.60 billion in earnings from the services export, raising the next FY's aggregate target to $51.0 billion.
The government, meanwhile, has formulated rules to provide 23 types of required services for the country's eight export processing zones under the Bangladesh Exports Processing Zones Authority (BEPZA). The services to be provided are related to visa, work permit, company registration, trade licence, tax related registration, certificates related to environment, explosive and fire fighting, release of export-import goods, tax and duty, narcotic licence, utility including gas and electricity connections, banking and transportation. A central one stop service (OSS) authority would be formed to frame standard operating procedures for rendering the services.
The move will help provide all investment related services under one umbrella not only related to BEPZA but also to other agencies. It would help simplify doing business procedures, reduce cost of doing business and also attract investments in the country. A total of 456 industries are operating in the country's eight EPZs that have created employment for some 0.51 million people. About US$ 4.99 billion have been invested in the EPZs until May 2019.
What is needed now is that the commerce ministry should conduct a study to explore product-wise demands in the traditional and non-traditional markets. Entrepreneurs also need to raise their networking with the buyers so that they can increase their export orders and also 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 largely unexplored. It has been found that importers of African, Russian and some East European countries are eager to import items like 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. With support from the 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 its competitive potential, Bangladesh needs to start focusing on improving its trade policy regime and 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 it cannot become the next Asian export powerhouse, said the WB report.
Inadequate infrastructure facilities may, however, affect enterprises that are involved in export activities. It hampers production activities, delays movements of goods leading to delay in the delivery of goods. Delays in delivery may result in the cancellation of contracts and the loss of markets. On the other hand, official rules and regulations pertaining to exports are still complicated.
Lack of adequate investment in the country is also a problem in diversifying export basket. Bangladesh has been following a private sector-led growth strategy since 1980s. Public sector investment has come down but private sector investment should increase. This will lead to high level of capital formation. Increase in the inflow of foreign capital is also needed.
All said and done, the government should come forward with a plan of action to enhance the quality of local products and explore untapped markets across the world. The plan should otherwise aim at exploring non-traditional markets and put emphasis on all items which have widespread export potential.
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