Amid a downturn of export orders triggered by the ongoing global economic crisis – a ripple effect of the Russia-Ukraine war, Bangladesh secured 6.67 per cent year-on-year (YoY) export growth in FY23.
The country earned $55.56 billion in FY23, compared to $52.08 billion posted last fiscal year, show data from the Export Promotion Bureau (EPB). The apparel sector, which provides the lion’s share of export earnings, contributed $46.99 billion – 84.58 per cent of the total earnings.
Bangladesh however has failed to meet its $58 billion export target for FY23, which was set by the commerce ministry. Total earnings are 4.21 per cent lower than this target. Almost all major export items, except apparel, failed to achieve export growth during the year, EPB data reveals.
Speaking to The Business Post, Distinguished Fellow of Centre for Policy Dialogue (CPD) Mustafizur Rahman said, “Export growth has been positive riding on RMG alone. That means the concentration on this sector has increased a lot. It is a weak side of our economy.
Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) Executive President Mohammad Hatem said, “Despite various crises, the ready-made garment industry has kept production running.
“We have no choice because the bank loan instalments and workers' salary have to be paid. That is why we are doing our best to maintain this growth.”
Bangladesh Garment Manufacturers & Exporters Association (BGMEA) Vice President Shahidullah Azim said, “The growth that we have achieved was secured through a lot of struggle.
“It is difficult to say what the situation will be in the future, because orders are declining at a much faster rate than before. As a result of the Russia-Ukraine war, demand has steadily fallen in the Western world, and many buyers were saddled with debt.”
He added that the situation will not improve if the war does not stop.
Adding that valuation in the RMG industry is half of other exports, CDP’s Mustafizur Rahman said, “Where other products have a valuation ratio of around 90 per cent, RMG has only 55 per cent. But all other sectors' earnings have done worse. It is a concerning matter.
“Another alarming issue is that Taka has depreciated by more than 25 per cent in the last FY, still we could not maintain competitiveness. This means other costs have gone up.”
Echoing the same, BKMEA’s Hatem said, “We could not utilise the opportunity of Taka depreciation due to an increase in gas and electricity, and the high price of imported raw materials. Other costs have risen significantly.”
To increase export earnings, Mustafizur recommended lowering the cost of doing business, improving business environment, and focusing more on regional markets as part of diversification.
The economist also suggested preparing for the upcoming LDC graduation.
Performance of RMG, textile sectors
The readymade garment (RMG) sector contributed 85.58 per cent to the national exports defying adversity and soaring raw material prices.
In FY22, export earnings from RMG products rose sharply by 35.47 per cent to $42.61 billion, which was $31.45 billion in the previous year. The sector posted $46.99 billion earnings in FY23.
As the demands for knitwear products were higher, they fared better than woven products.
Of the $46.99 billion earnings, knitwear products fetched $25.74 billion, up by 10.87 per cent from last FY’s $23.21 billion. Meanwhile, woven items earned $21.25 billion, registering a 9.56 per cent growth.
Providing more details, Mohammad Hatem said, “This growth has been possible as we have been able to sustain production even amid gas and electricity shortages. We were unable to utilise up to 30 per cent of our capacity due to various constraints.
“If we could utilise our full capacity, the sector’s export earnings would have increased further.”
Home textile earned $1.09 billion in FY23, posting a 32.47 per cent decline. Besides, the specialised textile sector also slipped by 9.58 per cent to $284.65 million.
Performance of other key industries
Export earnings from leather and leather goods, which previously suffered setbacks due to environmental compliance issues, have 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 the 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 products earnings rose by 17.4 per cent.
Bangladesh Tanners Association Chairman Shaheen Ahmed believes that the industry’s export income will not go up until the compliance of Savar Tannery State is ensured.
He added, “If there is no compliance, exports will decrease further. The working environment in factories and waste management is not improving. Another investment of Tk 600 crore to Tk 700 crore is required to complete the CETP in Savar.
Meanwhile, in FY23, export earnings from jute and jute goods dropped by 19.1 per cent to $912 million, from last fiscal year’s $1.12 billion.
Frozen and live fish exports declined by 20.76 per cent to $422 million in FY23. Shrimp exports recorded a 26.27 per cent decline, earning $300 million. Agricultural products saw a 27.47 per cent slip to $843 million.
Performance of emerging sectors
Pharmaceuticals, electronic products, bicycle, furniture, non-leather footwear, dry foods and plastic goods industries are gradually increasing their contributions to national exports and emerging as lucrative sectors.
However, except for the non-leather industry, the rest of the items’ export earnings declined in FY23 when compared year-on-year. Non-leather footwear posted $478 million in earnings, which is a 6.61 per cent growth from last year’s $449 million.
Exports earnings from pharmaceuticals stood at $175 million in FY23, down by 7.08 per cent from last fiscal year’s $188 million. Bicycle export earnings dipped by 15.31 per cent to $42 million, while electric products saw a 28.32 per cent growth to $128 million.
Export earnings from furniture products declined by 17.84 per cent to $90 million in FY23, which was $110.36 million in FY22.
