Originally posted in New Age on 5 April 2025
Reliance on single product, fewer destinations take toll on Bangladesh’s exports
Professor Mustafizur Rahman, M Masrur Reaz, Md Abdur Razzaque and Md Nasir Khan
Economists and business leaders said excessive reliance on readymade garment and fewer major export destinations and lack of diversification increasingly creating a risk on Bangladesh’s economy.
Although the diversification issue has been discussed for long in the country, the improvement in the area remains poor due to lack of proper implementations of policies.
They also said that reducing Bangladesh’s overreliance on fewer major destinations like the United States, European Union, or United Kingdom could ease the burden if any destinations introduce punishing tariffs.
According to Export Promotion Bureau data, in FY24, Bangladesh’s merchandise export was $44.47 billion and the percentage of Bangladesh’s total exports was to US around 17 per cent ($7.6 billion), 43.87 per cent to the EU ($19.51 billion), and 10.7 per cent to UK ($4.48 billion).
Moreover, in the last FY, the earnings from the RMG sector were more than 80 per cent, EPB data said.
They said these regarding against the backdrop of fresh 37 per cent tariff by imposed the US on exporting goods from Bangladesh as a part of US president Trump’s sweeping global tariffs.
As part of the new tariff structure, the new tariff based on the Trump team’s calculation that as they said Bangladesh imposes 74 per cent tariffs on imports from the US, so it has halved the amount making 37 per cent for being ‘reciprocal’.
Currently, most Bangladeshi goods face a 15 per cent tariff from the US.
Economists suggested addressing the issue through the Trade and Investment Cooperation Forum Agreement (TICFA) and focusing on enhancing competitiveness, reducing business costs, and diversifying markets.
Diversified destinations would protect Bangladesh
Talking to New Age, Professor Mustafizur Rahman, a distinguished fellow of the Centre for Policy Dialogue, said that they have been urging the government for the past few years to consider market diversification.
‘Our export heavily relies on a single-destination. If our destinations were diversified, the hurt of fresh US tariff were comparatively lower,’ he added.
However, he also warned that this new tariff punishment may negatively impact global trade, growth, and demand and supply chains, noting that the fresh tariff undermined the global trading system of the WTO.
‘When the global trade will be in sluggish trend, it will hit the all countries even they export outside of the US,’ he added.
He also said that they always urge the government to diversify the market, primarily to focus on regional markets, which may protect Bangladesh from the trade wars of big economies.