Published in The Financial Express on Thursday, 21 July 2016
Growth in export of products excluding top five lacks lustre
The latest reckoning reveals exports from most sectors save five major ones, namely apparel, frozen fish, jute, leather and agro-products, have not increased that much over the last five years.
The export of products excluding the top five fetched $2.07 billion in the fiscal year 2015-16 against $1.56 billion in 2010-11, according to data of the Export Promotion Bureau (EPB).
The $2.07 billion export earnings included pharmaceuticals, furniture, plastic, rubber, ceramic, handicraft and light engineering products.
Experts and industry-insiders attribute such performance to a stronger local currency, trouble-torn export destinations and absence of the government’s policy support.
Dr Khaodaker Golam Moazzem, additional director at the Centre for Policy Dialogue (CPD), said the basket of non-traditional exports remained limited to a few items and largely dependent on a few markets.
Apparel exports increased significantly in last few years mainly because of both its product and market diversifications, he noted.
“As Bangladesh exports a small quantity of non-traditional items to markets beyond traditional ones, their market size and any fluctuation in their demand, currency rate and growth affect local products’ exports,” he said.
Moreover, local products face competition with other countries as they don’t get preferential duty benefit in those markets.
These exporters are also small entrepreneurs, he said, recommending that the EPB should individually sit with them to identify their export obstacles and take moves to make them familiar with the global markets.
Bangladesh exports more than 700 items, including garments, jute and jute goods, frozen fish, leather and leather goods, pharmaceuticals, plastic, furniture, ceramics, handicrafts, light-engineering products, mainly bicycle, and agricultural products like vegetables and fruits.
In the FY 2015-16, out of total US$34.24 billion worth of export earnings, $28.95 billion came from textile and clothing sector that includes specialised textiles, knit and woven garments and home textiles.
The remaining $ 5.28 billion was fetched by non-RMG (readymade garment) items in the fiscal. Of the amount, $3.21 billion came from frozen fish, jute and jute goods, leather and leather goods and agricultural products.
Contribution of the non-RMG sectors gradually decreased to 15.44 per cent of the total exports in the just concluded fiscal which was 17.69 per cent in 2010-11.
Asked about such export situation, Mahruha Sultana, vice-chairman of the EPB, said there is growth in overall export of non-RMG-products, though some like frozen fish, farm products, raw jute and leather are on the decline.
Agricultural items have yet to meet the EU standards while the government discourages raw-jute export to encourage its diversified use for more value addition, she said. The leather sector faces some difficulties due to relocation process, though footwear is doing ever so well, she added.
“The EPB is working to diversify both products and markets and diversified items continue to grow,” she said.
Exporters and officials said neither the number of export items nor the export destinations of the country is increasing. They emphasised effective product campaigns to introduce local quality items to overseas markets.
Exporters said the government should come forward with a plan of action to increase competitiveness of local products and explore the untapped markets across the world. The plan should target improving the present energy situation and low infrastructure facilities in the country.
They felt the need for government policy support to change the entire export scenario, including opening new missions, branding the local products, and cash support for the potential sectors.
The government recently announced cash incentives for plastic and furniture sectors alongside the existing 14 sectors that include frozen fish, jute, textiles, light engineering, and agro-products. RMG gets the cash stimulus for new market exploration.
Jashim Uddin, president of Bangladesh Plastic Goods Manufacturers and Exporters Association (BPGMEA), said exports of plastic products to the USA declined significantly, especially after the GSP suspension.
“Long distance and high freight charge are another barrier to exporting plastic products to the United States of America, though Bangladeshi plastic products are more competitive than those of China and have good demand over there,” he added.
Shah Jalal secretary of Bangladesh Handicrafts Manufacturers and Exporters Association popularly known as Banglacraft said earnings from the sector has not increased much mainly due to absence of adequate research, training and design development of products.
SM Amzad Hossain, president of Bangladesh Frozen Foods Exporters Association (BFFEA), said shrimp export had not increased over the last few of years mainly because the locally-produced shrimp species failed to compete with low-cost and small-sized vannamei species.
Besides, prices of local shrimp have been on the climb-down in recent times and competitiveness is eroding due to local currency appreciation while currencies in importing countries are depreciating against the US dollar, he opined.
Both demand and prices of jute and jute goods witnessed a downturn on the global market, said A Barik Khan, secretary of Bangladesh Jute Mills Association. The EU has yet to come out of its economic recession while problems in the Middle-Eastern countries have negative impact on exports, he cited as causes.
“We face stiff competition with Indian products because our currency is strong against the US dollar while that of India is depreciating,” he noted.