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The Financial Express

Looking beyond the apparel sector


Looking beyond the apparel sector

It is an undeniable truth that the government pampers the country's apparel industry with many policy and fiscal supports. Taking its contribution, in terms of export revenue earnings and employment generation, into consideration, the industry deserves all types of support, no doubt.

But experts, for a long period, have been urging the government also to pay attention to non-RMG sectors and offer identical support to those. This is even more necessary for the sake of bringing more revenue through the export of non-RMG items and making the relevant sectors strong enough to deal with the challenges that might emerge following the country's LDC graduation.  

Discussants at a virtual event, organised by the Dhaka Chamber of Commerce and Industry (DCCI) late last week, highlighted the discriminatory approach of the government to non-apparel sectors.

They felt it was the prime time for the government to change its strategy involving the non-RMG exports that have enormous potential to change the country's export landscape. The participants, mostly economic researchers and businesses, also felt the urgent need for remodelling the export strategy to face the post-LDC challenges.

The export-oriented apparel industry sponsors have been receiving sufficient policy and fiscal supports. In recent years, the government proved to be extra generous. Many tend to believe that the RMG owners have greater access than the sponsors of other industries to the government policymakers. It is, however, nothing unusual since the RMG industry with its substantial contributions has emerged as the most dominant one in the country's economy.

But one can hardly miss the fact that the RMG's export performance even before the pandemic had been lacklustre. It was losing ground to one or two competitors in the global market. The situation has now become tighter during the pandemic. Everybody knows the problems the industry has been facing lately. But there have not been enough efforts to address those. After the LDC graduation, the challenges would be even stiffer as the international supportive measures that the country has been enjoying for the past decades will either be withdrawn or curtailed.

The apparel industry would have to chalk out its plan to survive and sustain in a hard time and it might demand more concessions from the government.

The situation is likely to be harsher for the small- and medium-scale industries in jute, agro-processing, pharmaceuticals, leather and footwear, light engineering, ICT etc., sub-sectors. During the just-concluded financial year home textiles, jute, agro-processing and pharmaceuticals showed their potential. They had a better exporting earning record during the Covid-time.

The Bangladesh RMG does enjoy certain advantages. It has almost an ensured share in the global market. But with the right kind of fiscal and policy supports many other sectors are also capable of improving their export performance. The policymakers need to understand this fact. The entrepreneurs involved in these sectors instead of making piecemeal and separate efforts should join hands to pursue their common good. It is not that the government has not offered them supports. But the industries other than RMG are not happy with that.

Even the RMG people want more support. During the pandemic, the government proved very generous to the RMG in particular. Being instructed by the central bank, the commercial banks have extended low-interest-bearing loans with easy repayment options.

It is rather normal that industrial units and other businesses would seek the support of various types from the government. The policy support is primarily sought to remove hurdles to their day-to-day operations. These hurdles, for long, have been responsible for keeping their cost of doing business at a high level. Surveys carried out by local and international institutions have highlighted that fact repeatedly. Bureaucratic complexities, systemic delays, corruption etc., are problems that can be eased to a great extent through appropriate policy supports. The government does very often talk about removing those but it is not sincere enough in taking action to that end.

What the businesses expect from the government most is fiscal support, in the form of cash subsidy or cut in tax rates or exemptions. It has become an insatiable demand. But one has to remember the fact that the government has to support its annual revenue and development budgets, the size of which has been growing unabatedly. And to do that it needs resources.

Industries, export-oriented or not, have to be self-sustainable. The export-oriented ones, in particular, should be both innovative and aggressive to survive the post-LDC graduation challenges. A good number of them, despite enjoying protections in some major export destinations, are yet to gain enough strength to face such challenges. Unless they do not gain strength within the next five years or so, they might face a hard time in the global market. 

 

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