Even though Bangladesh looks to diversify export market and the government provides policy support to diversify export, 70.97 per cent of its total export earnings came only from 10 countries in the just-concluded fiscal year.
Bangladeshi exporters are facing much problem due to overdependence on these countries whose demand for products fell drastically, but the country is still struggling to penetrate the alternative market zone.
In recent times, exporters, especially apparel makers, have tried their level best to enter the non-traditional market.
According to the Export Promotion Bureau (EPB) data, the country earned $55.56 billion in the just-concluded fiscal year by exporting goods to different countries. Of the total, $39.43 billion came just from ten countries--the USA, Germany, the UK, Spain, France, Italy, India, the Netherlands, Japan and Poland--which was 70.97 per cent of total export earnings.
The figure was $ 37.85 billion in FY22 when the country’s total export earnings were $ 52.08 billion. It was 72.66 per cent of total earnings.
Among the countries, eight are in the European region, and two-India and Japan–are in the Asian region. As the western countries are facing an economic crisis, it also impacts Bangladesh’s export earnings and economy.
To diversify export markets, the government currently provides 4 per cent cash incentives for RMG exports to the non-traditional markets. The RMG sector gets incentives for contributing more than 84.58 per cent to the country’s total exports.
Industry insiders and experts said that government’s support is not enough for market diversification. They recommend organising more single country expos, using commercial councilors of respective countries, branding Bangladesh, developing new products for new markets. Diversification of cash incentives based on the market demands and products is also badly needed to reduce dependency on top ten countries.
They also suggested inking bilateral trade deals with prospective countries to boost exports to those markets.
Zahid Hussain, former lead economist of the World Bank's Dhaka office said, “To diversify the market, we need huge export items in the basket. But we have only one item, readymade garment, to beat the international market. How the country will achieve the market diversification goal?”
“We are in good position in the western market thanks to cheap labour. But except RMG, we also failed to grab the opportunity due to compliance and standard issues. Even our labour cost is increasing day by day. So, if we want to retain the ongoing export growth, there is no alternative but to diversify products,” he added.
Top ten countries’ shares
In FY23, Bangladesh earned $55.56 billion, of which the US, the single largest export destination for the country, imported goods worth $9.7 billion. It was 17.46 per cent of total earnings.
In FY22, Bangladesh exported goods of $10.42 billion to the US, which was 20 per cent of total $52.08 billion earnings.
Exports of goods fetched $7.08 billion from Germany in FY23, which was 12.74 per cent of total earnings. The share was 14.58 per cent or $7.59 billion in FY22.
The data showed that these market shares declined in the last fiscal year because export earnings also dropped due to the ongoing global economic crisis.
In the last fiscal year, Bangladesh earned $5.31 billion from the UK market, and contributed 9.56 per cent to total $55.56 billion earnings. The share was 9.27 per cent or $4.83 billion of total $5208 billion in FY22.
The country’s export receipts totalled $3.68 billion from Spain in the last FY, which was 6.63 per cent of total earnings. Bangladesh earned $3.17 billion from the market in FY22, which was 6.08 per cent of total earnings.
Bangladesh earned $3.29 million from France in the last fiscal year, which was 5.92 per cent of total $55.56 billion earnings. The share was 5.21 per cent or $2.71 billion in FY22.
Italy imported products of $2.39 billion from Bangladesh in the last fiscal year, which was 4.3 per cent of the country’s total exports. The EU country imported goods of $1.7 billion in FY22, which was 3.27 per cent of Bangladesh’s total exports.
In the last fiscal year, Bangladesh exported goods worth $2.13 billion to India with a 3.83 per cent market share of the country. The share was 3.82 per cent in FY22 by importing goods of $1.99 billion.
The Netherlands grabbed a 3.76 per cent market share of Bangladesh by importing goods worth $2.09 billion. It was 3.41 per cent in the fiscal year 2021-22 while the country imported $1.78 billion worth of goods from Bangladesh.
Bangladesh exported products worth $1.9 billion to Japan in the last fiscal year, which was 3.42 per cent of the country’s total exports. The share was 2.92 per cent in FY22, and the country earned $1.52 billion from Japan.
In FY23, Bangladesh received $1.85 billion from Poland, which was 3.33 per cent of the country’s total exports. In FY22, Poland imported goods worth $2.14 billion from Bangladesh, which was 4.11 per cent of the country’s total exports.
The EPB data showed that except India, the readymade garment sector contributed nearly 84 per cent to total earnings from these countries. But in India, the RMG sector contributed 50 per cent and the rest of earnings came from other sectors.
Industry insiders said that they are trying to diversify the export market and the result is now visible, though it will take more time to reduce dependency on the top ten markets.
Bangladesh Garment Manufacturers and Exporters Association (BGMEA) President Faruque Hassan said that they already found some non-traditional markets such as India, Japan, South Korea, Australia, South Africa, United Aram Emirates, Saudi Arabia, Brazil and Russia.
“Due to Russia-Ukraine war, we failed to perform well in the Russian market. But earnings from other markets are good. I expect that the ratio of top ten markets will gradually decline.”
Expert suggestions
Experts said that to boost exports across the world, the country should widen its export basket. But after 52 years of its independence, the non-RMG share to export is decreasing day by day.
“This happened because our trade policy is promoting local industry and that is why investors are investing there. The RMG sector is doing well because it is shifting from China to Bangladesh due to their high manufacturing cost and our cheap labour,” Zahid Hossain said.
He said, “Our jute and leather sector failed to perform well due to compliance issue. We are exporting local leather mostly to China because we don’t have leather working group certification, though Bangladesh’s leather goods have huge demand in the global market.”
The economist further said that Bangladesh Standards and Testing Institution (BSTI) failed to provide international standard certificates. That is why the country failed to increase agro and processed food export despite having huge potential.
“Either the government will have to enhance the BSTI’s capacity or set up another international standard institution which will be able to provide all certificates and which will be acceptable across the world. We have to understand that we will have to face a big challenge after the country’s graduation from LDC status in 2026,” he added.
Mohammad Abdur Razzaque, Chairman of Research and Policy Integration for Development (RAPID), said that in recent times, the country was doing well in the non-traditional markets, but this was not enough compared to its potentiality.
“We will be able to double exports to India within a short time. We have a huge potential in Australian, Japanese and South Korean markets as the countries now want to diversify their imports due to US-China trade war.”
The international trade expert said, “Our leather and footwear sector, pharmaceutical sector and agro-processing sector could earn billions of dollars which can help us diversify the product basket and export market.”
“Trade and tariff policy must have to be changed to export-oriented. To attract foreign investors, the government should adopt all policies for a long term,” he added.
