Export is the lifeline of the Bangladesh economy, though excessive reliance on a few products has stagnated the growth of some potential products. For sustenance of business, the country needs diversification of both export products and export destinations. Under the prevailing circumstances arising out of the Covid-19 pandemic, such a move can hardly be executed. But a strategy can be formulated.
Mention may be made that the government declared last week that the entire Bangladesh is at risk from the pandemic as Covid-19 patients have been detected in most of the 64 districts. In such a grim situation, it is very difficult to continue with the country's present export activities. Many countries have cancelled or withheld their export orders and many others are reluctant to give fresh orders for exportable goods.
There is no denying that Bangladesh is one of the fastest growing economies in the world. It's the 39th largest in the world in nominal terms, and 29th largest in terms of purchasing power parity. It is classified among the next 11 emerging middle income economies and a frontier market.
Apparel manufacturers are working to raise their production capacity and expand business. The government's policy support is also helping the industry flourish further.
Other export-oriented sectors often find themselves deprived of such support. They allege that the government is focusing on RMG sector only and offering generous support for its further growth. Henceforth, non-RMG sectors are now having a stunted growth.
There are as many as 750 products on the list of exportable, but 85-90 per cent of the annual export receipts come from RMG and a few other items. In view of the situation, the RMG sector needs 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 -- 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, matchmaking and information sharing to market their products overseas.
Added to this, aggressive government-to-government negotiations are needed to remove or reduce the non-tariff barriers, especially to the non-traditional markets that need non-traditional products. There is also a need to organise more trade fairs and send trade missions to various destinations according to the demand of products.
Of the total exports of the country, 23 per cent goes to the US, nearly 60 per cent to the EU countries, 5.0 per cent to Canada and 12 per cent to the rest of the countries of the globe. So, it is clear how much of the country's exports rely on a few markets.
The good news is that Bangladesh started exploring new export destinations like Japan, Russia, South Africa, Mexico, Brazil, Chile, Malaysia, New Zealand, India, South Korea, China and Australia. Export growth to these countries has been higher over the last few years.
Looking for new markets with new products will help expand the export basket. Through export diversification, it is possible to minimise the risks in business.
Export diversification is needed not only to minimise risks, but also to create employment with improved skills of workers. Full utilisation of natural resources is also possible through product diversification.
Bangladesh has a lot of scope to diversify its garment products. The country mainly produces basic garment items, although the country has a scope to avail the benefit of upscale market through diversification of garment products.
Shipbuilding is an emerging sector for Bangladesh. Two or three companies have already exported small to medium oceangoing ships to some countries like Germany, Denmark and Mozambique.
This industry being a labour-intensive one can provide employment to a large pool of skilled and unskilled workers. Globally, the annual market size of shipbuilding industry is around $1600 billion, and that of small ships is $400 billion worldwide.
If Bangladesh can even avail 1.0 per cent share of small ships, the country will be able to earn $4.0 billion a year. Bangladesh exported small ships and vessels worth $45.95 million in 2011-12 fiscal, according Export Promotion Bureau (EPB) data.
Pharmaceuticals sector is very promising in the country. Currently, local pharmaceuticals meet 97 per cent of the domestic demand. The country has 270 registered pharmaceutical companies and exports drugs and medicines to more than 90 countries.
Export of jute and jute goods is regaining its previous shine. After a long time, jute and jute goods crossed $1.0-billion-mark export in the last fiscal. Jute and jute goods became the second largest export items in the last fiscal after RMG. Jute and jute goods have high demand, particularly in Turkey and in some Middle Eastern and African countries.
Agriculture and agro-processed food industries have become a major exporting item for Bangladesh now. The demand for Bangladeshi vegetables, fruits and agro-processed food items is high among the non-resident Bangladeshis residing in different countries.
Bangladesh has already become a popular country for exporting quality leather, leather goods and footwear. Bangladesh exported $335.51 million worth of leather goods and footwear in the last fiscal. A number of footwear and leather goods manufacturers are exporting quality products globally.
Bangladesh has great potential in export of ceramic taleware, tiles and earthen tallies, fisheries and crabs, plastic goods and furniture as well. Another important sector that has good potential for export is light engineering.
It needs joint initiatives of the government and the private sector to diversify exportable products and global markets. The government should incentivise the nascent industries so that these can become stronger and capable of accessing markets abroad.
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