At a time when economists and stakeholders are putting heavy emphasis on reducing dependency on the readymade garment (RMG) sector, Bangladesh’s export earnings from non-apparel items plunged by 9.52 per cent to $8.52 billion in the last fiscal year.
Despite this fact, the country’s overall exports actually grew by 6.67 per cent to $55.56 billion in FY2022-23, compared to $52 billion in the previous fiscal year.
Export earnings remained positive in FY23 riding only on the clothing sector, which contributed 84.58 per cent or $46.99 billion to total export earnings.
According to Export Promotion Bureau (EPB) data, Bangladesh’s export earnings from non-apparel items declined by 9.52 per cent to $8.57 billion in the just-concluded fiscal year, which was $9.47 billion in FY2021-22.
As per the latest data, contribution of non-apparel items to national exports stood at 15.42 per cent in FY23, which was 18.18 per cent in the previous FY. Meanwhile, the apparel sector’s contribution rose to 84.58 per cent from 81.81 per cent in the previous fiscal year.
Export earnings from non-RMG items declined because of the downward trend in earnings from agriculture, jute and jute goods, leather and leather goods, frozen and live fish and home textiles sector, which are major contributors in the category.
Performance of key non-RMG sectors
Export earnings from the agricultural product sector in FY23 stood at $843 million, down by 27.47 per cent compared to $1.16 billion during the same period last year. The sector contributed 1.52 per cent to national exports.
Export earnings from jute and jute products declined by 19.10 per cent to $912 million, which was $1.12 billion during the same period last year. This sector contributed 1.64 per cent to total exports.
The frozen and live fish sector earned $422 million, down by 20.76 per cent compared to $533 million in the same period last year. Shrimp exports declined by 26.26 per cent to $300 million compared to $407 million in the previous fiscal year.
Leather, leather goods and footwear exports recorded a 1.73 per cent fall to $1.22 billion. It was $1.24 million in FY22. This sector contributed 2.20 per cent to total exports.
Export earnings from leather and leather goods, which previously suffered setbacks due to environmental compliance issues, declined by 1.74 per cent to $1.22 billion in FY23, when compared year-on-year. The amount was $1.25 billion in FY22.
Of total earnings in FY23, leather footwear contributed $704 million, leather products $396 million and crushed leather $123 million.
Crushed leather and leather footwear earnings declined by 18.45 per cent and 6.93 per cent in FY23, while leather product earnings rose by 17.4 per cent.
Home textiles earned $1.09 billion in FY23, posting a 32.47 per cent decline. Besides, earnings from the specialised textile sector also dropped by 9.58 per cent to $284.65 million.
How to boost non-RMG exports
It is not possible to increase exports from the non-apparel sector or reduce dependency on the single sector overnight. But a well-designed and time-bound policy can provide a long-term solution in this regard.
To do so, the policymakers and the sector people have to work jointly and explore the new window of export-oriented business.
“Only way to increase exports from the non-apparel sector is product diversification. Nearly 85 per cent of our export earnings come from the RMG sector and if you consider diversification within the RMG sector, export earnings are highly concentrated in five items,” said M. Masrur Reaz, Chairman and Chief Executive Officer (CEO) of Policy Exchange of Bangladesh.
Those who import non-apparel items are suffering due to the global economic crisis. On the other hand, raw material imports also decline due to the ongoing Russia-Ukraine war, which is another reason for the slower growth, said the economist.
For product diversification, Bangladesh needs end-to-end comprehensive concrete time-bound development plan. It is absent here. Technology upgradation and new technology adoption for new product development lacks severely, said Reaz.
“In addition to this, we have not enough experience in non-apparel items. We need to build confidence of global buyers,” he added.
Foreign direct investment (FDI) is very crucial for developing a new sector. On the other hand, harmonised testing standard to enter the global market is highly required. Beyond this, social compliance emerges as new component, said Reaz.
He suggested addressing these issues to reduce dependency on the RMG sector and grow in the non-apparel sector.
“Bangladesh has the highest production capacity of raw jute and jute goods. What right now we need is diversified use of jute,” said Md Rashedul Karim Munna, managing director of Creation Private Limited, a jute goods manufacturer and exporter.
However, manufacturers of jute and jute goods are yet to capitalise opportunity due to lack of product diversification, research and innovation. Technology adoption is very crucial here, said Munna.
Comparing to overall export earnings, the contribution of non-apparel items is very meager and it is not possible to attain the nation’s goals of export earnings, Zahid Hussain, former lead economist of the World Bank, Dhaka, told The Business Post.
“Among the non-apparel items, there are few items which are yet to get attention of buyers. Our agriculture sector is very promising but it lacks proper patronage and quality testing facilities from the government,” said Zahid.
“Our second largest foreign currency earner and billion dollar sector, leather and leather goods are struggling to turn around due to environmental and social compliance issues,” said the economist.
On top of that, emerging sectors such as pharmaceutical, furniture, processed foods and agro-processing goods need special attention to grow. If the government wants to increase contribution of non-apparel items to national exports, there are strong needs of assessment over cash incentives as well as reshuffling the policy, he added.
“Lather sector and footwear--both leather and non-leather--can be game changer but there are challenges. Environmental compliance is holding back the potentials and only sector people cannot overcome this,” Md Saiful Islam, Managing Director of Picard Bangladesh, told The Business Post.
Government initiatives and policy supports are required to attain Leather Working Group (LGW) certification for environmental compliance, said Saiful, also president of Metropolitan Chamber of Commerce and Industry (MCCI).
Non-leather footwear is very promising sector and doing well. The policymakers and stakeholders must concentrate on attracting more buyers and investment in the sector, he added.
