On top of tackling the dwindling foreign exchange reserves, Bangladesh has failed to retain growth from its key foreign currency earnings sector — goods export — in three consecutive months, putting industrialists into hot water.
Industry insiders are comparing the ongoing business situation with the time after Rana Plaza collapsed when the sector faced big trouble at home and abroad.
According to the latest Export Promotion Bureau (EPB) data published on Tuesday, the country posted 13.64 per cent, 6.05 per and 1.06 per cent year-on-year negative export growths for October, November and December of FY2023-24, respectively.
The country earned $3.76 billion, $4.78 billion and $5.31 billion, respectively, during these three months, according to the data.
As a result, the first six months' export earnings growth in FY24 were hovering below 1 per cent, totalling $27.54 billion. Although the figure is 0.84 per cent higher than the same period of FY2022-23, it is 8.55 per cent lower than the commerce ministry’s $30.1 billion export target.
During this period, almost all sectors, except agriculture, saw negative export earnings, according to EPB data.
Besides, the country’s key export earners — apparel — also witnessed yet another year-on-year negative export earnings growth in December FY24, as income dropped by 2.35 per cent to $4.55 billion.
The sector also saw negative export earnings in October and November as income dropped by 13.93 per cent and 7.45 per cent year-on-year, respectively.
Despite the negative export growth in three consecutive months, the readymade garment sector posted a 1.72 per cent year-on-year growth in the first half of FY24 and earned $23.39 billion.
The figure, however, is 7.87 per cent lower than the commerce ministry’s export target for the period.
Struggling
Industry insiders, particularly RMG exporters, said they do not see any hope in the coming days as the global economy is still struggling and it’s becoming tougher day by day for businesses, as the Russia-Ukraine war is prolonging and the rising tension in the Middle East due to the ongoing Israel-Palestine war.
Adding more concern, the political situation at home has become volatile over the upcoming 12th parliamentary election as the major opposition parties have boycotted the polls and are observing countrywide protests, which are sometimes turning violent.
Workers also carried out protests in recent months demanding better wages and justice for four people killed in clashes during the demonstrations over the salary hike issue.
Meanwhile, the Western community, Bangladesh’s lion export shareholders, called for a free, fair and participatory election and the US, the biggest export destination, announced visa restrictions over the issue.
Recently, the European Union (EU) — which holds almost 50 per cent export share — threatened that they will rethink GSP facilities as Bangladesh is delaying meeting its commitment over the proper implementation of labour rights.
The US also issued a presidential memorandum for advancing workers' rights at home and abroad, and the Bangladesh Embassy in Washington, DC sent a letter to the commerce ministry secretary stating that there are reasons to believe that Bangladesh may be one of the targets of that memorandum.
Exporters believe these have and are still severely impacting their businesses, and the government should take necessary steps to avoid any potential sanctions.
Their big challenge now is paying workers on time as the minimum salary rose by 56.25 per cent from December, Bangladesh Garment Manufacturers and Exporters Association (BGMEA) President Faruque Hassan told The Business Post. “But we will likely turn around in the last quarter of FY24.”
“Western economy is bouncing back and brands were able to release most of their stocks during Christmas. That means we will receive a good number of orders in the third quarter of FY24. But we will need a stable country and uninterrupted supply of gas and electricity to cash in on that opportunity,” he stressed.
Non-RMG earnings
According to the latest EPB data, the agriculture and fish sectors — which are considered primary commodities — posted a 2.36 per cent year-on-year negative earnings growth in the first six months of FY24 and earned $730.64 million.
Of the total, frozen and live fish sector earnings dropped by 12.68 per cent to $215 million and agricultural goods sector earnings rose by 2.28 per cent to $508 million.
Meanwhile, the leather and leather goods sector continued negative earnings growth and earned $523 million during this period, which is 17.93 per cent lower compared year-on-year.
Another potential sector, jute and jute goods also followed the negative earnings trend, and income dipped by 10.24 per cent to $436 million when compared year-on-year.
In the first half of FY24, home textile sector earnings dropped by 38.48 per cent to $370 million year-on-year. Besides, earnings from the non-leather footwear sector also dipped by 1.85 per cent to $246 million.
Talking to The Business Post, Bangladesh Employers’ Federation Director Fazlee Shamim Ehsan said, “Energy shortage, low order and low product price made us suffer throughout 2023, and these crises are still ongoing. Liquidity crisis in banks and a hiked interest rate have also hindered uninterrupted private investment in the sector.”
“Political instability and relief from the bureaucratic tangle is most important when it comes to doing business smoothly,” he added.
