Originally posted in The Financial Express on 21 July 2022
Bangladesh eyes $67b export this fiscal despite headwinds
All factors like pandemic, war disruptions taken into account in setting 10.1pc export growth, says minister
Bangladesh sets sights high on US$ 67 billion in export earnings in the current financial year, a 10.1-percent growth over the achieved income in the just-past fiscal, discounting headwinds.
All factors, like pandemic and war disruptions, have been taken into account in setting the new export target, the commerce minister said while unveiling Wednesday the external trade plan that evoked mixed feelings among economists.
Of the total turnover, merchandise export has been set at US$58 billion, 11.36-percent higher than that of the last FY’s achieved earnings worth U$ 52.08 billion.
Some US$9.0 billion is targeted from services export in the current FY2022-23 on the back of a 12.5- percent growth over the achieved earnings of US$8.0 billion in the last fiscal.
Commerce Minister Tipu Munshi made the announcement at a press conference held at his secretariat office, one a note of optimism that the export target can be achieved at the end of the fiscal year.
“The post-covid-19 pandemic recovery, global economic-recovery situation, global supply chain, LDC- graduation issue, exporters’ views have been considered in determining the new export growth for the current fiscal year,” Mr Munshi told reporters, to dispel any doubt.
Besides, the Russia-Ukraine war impacts have been considered in fixing the new export target, he added.
Bangladesh bagged a record US$60.08 billion by exporting products of goods and services sectors in the last FY, 2021-22, exceeding the government-set target by 17.80 per cent.
As usual, readymade garment (RMG) sector has been considered as major-export earning sector this FY, too. Export target from knitwear and woven sectors combined has been fixed at US$47 billion in the current budget year.
The knitwear-export target has been set at US$ 25.6 billion for the current FY, up from US$ 20.98 billion of the last FY, while the woven target has been fixed at US$ 21.4 billion, up from US$ 17.53 billion in 2021-22.
Earning target from shipments of agricultural products has been fixed at U$ 1.3 billion from the achieved actual export earnings worth U$1.10 billion in the last fiscal year and target from leather and leather goods is U$1.3 billion. It was U$1.11 billion in the last FY.
Export earnings from jute and jute goods have been fixed at US$1.2 billion as against US$1.05 billion set by the government in the last FY.
Home textiles sector is expected to fetch US$1.8 billion. It was US$1.46 billion in the last financial year.
Frozen-and live-fish export target has been set at U$ 604 million in the current fiscal year. It was US$491.62 million in the last FY.
Export earnings from engineering products have also been fixed at US$ 964 million in the FY 2022-23. It was US$ 718.66 million in the last FY, according commerce ministry data.
Only five items could fetch more than US$1.0 billion in the last FY as the export earning was mainly dependent on the country’s apparel products.
The minister noted that the import value increased in Bangladesh because the local entrepreneurs imported capital machinery after two years of pandemic. He expects that if machinery go into production, the export earnings will rise and foreign currency will also enter the country.
“There has not been anything to fear if we do not spend money in unnecessary sectors, especially non-productive sectors,” the commerce minister said while replying questions about the ongoing huge gap in balance of payments and volatile forex markets.
The minister also believes that the industrial units are out of government’s power-cut mechanism, meant for saving fuels and forex under austerity measures. “The cut move could not impact the country’s production sector.”
He expects that production in the country’s industrial units will continue uninterrupted to maintain the export momentum.
However, exporters and economists expressed mixed opinions regarding the achievement of the export target, in view of the current realities across the world.
When contacted, a leading apparel exporter was skeptical about reaching the USD67 billion target, given the emerging overall situation.
“There remains doubt as to whether such export target would be achieved or not, taking the present situation in the apparel sector into account,” former president of Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) Fazlul Haque told the FE.
When asked, Chairman of the Policy Exchange of Bangladesh Dr M. Masrur Reaz said the set export target has both positive side and worries.
“Although the target is still lower than that of our capability, the possible recession in the EU and North America has put our export growth at risk,” he says.
Also, some factors like the prevailing power outages, increased transportation cost would push up the overall cost of production, thus affecting country’s competitiveness on the global market, Dr Masrur said.
To coup with the situation, he suggests diversification of both the country’s export basket and markets also.
Also pointing out some existing uncertainties, especially in the areas of electricity and foreign currencies, Centre for Policy Dialogue (CPD) research director Dr Khondaker Golam Moazzem suggests that there is need of an urgent and prudent step to face such possible shocks.
He also hinted that the country’s export orders might fall in the days ahead if the situation in the developed economies deteriorates further.
However, two more sectors-light engineering and plastics-have huge potential to earn more than U$1.0 billion in export earnings in the near future as the prospects are better of those two items on the global market, said additional secretary Md. Abdur Rahim Khan, at his secretariat office on Wednesday.
The gross domestic product (GDP) growth has been estimated at 7.25 per cent in the FY 2022-2023, and the contribution of export is considered 13.7 per cent, it is mentioned in the target paper.
At present, the government is providing export incentives/cash assistance in 42 sectors to encourage the country’s export trade.
Senior commerce secretary Tapan Kanti Ghosh, Export Promotion Bureau (EPB) Vice-Chairman A.H.M. Ahasan and senior officials of the commerce ministry were among others present at the conference.