Home ›› 04 Jul 2022 ›› Front
Fifty-one years after starting with $348 million in export earnings in 1972, Bangladesh has joined the $50 billion exporters’ club in the FY2021-22 — recording a 34.38 per cent growth to $52 billion — thanks to the apparel industry.
The export earnings of the country, once termed a bottomless basket now a success story, was $38.75 billion in FY2020-21, according to Export Promotion Bureau (EPB) data.
Back in 1972, the export basket was very small and now it has grown bigger with nearly 300 products and is full of potential.
Increased contribution of the non-apparel sectors, mostly agriculture, leather, engineering products and pharmaceuticals, and robust price-pushed growth of the clothing sector have played major roles in driving the export growth to cross the milestone of $50 billion.
“Over $52 billion in exports is a big milestone for Bangladesh. But it’s been possible mostly because of the rise in prices of raw materials of apparel goods,” Mustafizur Rahman, a distinguished fellow at the Centre for Policy Dialogue, told The Business Post.
“Non-apparel exporters have contributed nearly $10 billion out of the total earnings. That is also a positive sign,” he said.
As this sector’s contribution is growing, it is high time to restructure the incentives to diversify exports. To cash in on the opportunity, Bangladesh needs to focus on the East Asian market to diversify, he added.
Zahid Hussain, the former lead economist at World Bank’s Dhaka office, said, “After the Covid-19 pandemic eased, there was increased demand for products in the US and EU markets as the economic situation was improving. Bangladesh took advantage of that demand because China, Myanmar and Pakistan failed due to their internal crises.”
“Bangladesh got more work orders as the factories were not closed for long. Data shows that Bangladesh exports to the US and EU performed better, which contributed to growth,” he told The Business Post.
“However, the outlook is weak [due to the Russia-Ukraine war and rising inflation]. The exporters won’t be able to do anything if external demands drop. The government will have to keep providing policy support to the exporters to continue the growth,” he added.
The economist also stressed stabilizing the foreign exchange rate to ensure further export growth.
Performance of RMG, textile sectors
Defying adversity and soaring raw material prices, the readymade garment (RMG) sector, the largest earner, contributed 81.81 per cent to the national exports.
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.
As the demands for knitwear products were higher, they fared better than woven products.
Of the $42.61 billion, knitwear products fetched $23.21 billion, up by 36.88 per cent from last fiscal year’s $19.91 billion, while woven items earned $19.39 billion, registering a 33.82 per cent growth.
“We have entered the $50 billion exporters club. It is a remarkable moment for Bangladesh,” BGMEA President Faruque Hassan told The Business Post.
The unit price and the volume of exports both have increased while the rise in raw material prices also pushed the earnings up, he said.
On top of that, relentless support from workers and buyers and incentives from the government expedited the growth, Faruque added.
“To retain the double-digit growth, we are now focusing on innovation and research. We’ve already developed a road map that we’ll launch on Tuesday,” said the apex apparel trade body chief.
Meanwhile, home textile also earned $1.62 billion in FY22, posting a 42.28 per cent growth, while the specialised textile sector recorded a 140 per cent growth to $315 million.
“Chinese and Pakistani manufacturers failed to deliver goods in time due to the various crises in their countries. But we kept our commitment to ensuring lead time, which helped us post robust growth,” said M Shahadat Hossain Sohel, the chairman of Bangladesh Terry Towel and Linen Manufacturers and Exporters Association.
“We had expected to earn more but the Russia-Ukraine war cost us that. However, to maintain the momentum of growth, we will need an uninterrupted power supply,” he added.
Performance of other major sectors
Export earnings from leather and leather goods, which previously suffered setbacks due to environmental compliance issues, recovered and crossed the billion-dollar mark again in FY22.
Their earnings increased by 32.23 per cent to $1.25 billion. The amount was $942 million in FY21. Of the total earnings, leather footwear contributed $756 million, leather products $337 million and crushed leather $151 million.
“Our products saw strong export growth because buyers gained confidence and placed work orders with us following the improvement in safety standards and environmental compliance,” Bangladesh Tanners Association General Secretary Md Shakawat Ullah told The Business Post.
“The export earnings would have been higher if the Russia-Ukraine war did not disrupt the supply chain. However, if the war does not prolong, we expect the growth to continue this year,” he added. Meanwhile, in FY22, export earnings from jute and jute goods dropped by 2.91 per cent to $1.13 billion, from last fiscal year’s $1.16 billion.
“This happened because production cost has increased due to the syndication of raw jute traders and the global economic crisis cut demands,” said Esrat Jahan Chowdhury, a director of Bangladesh Jute Goods Exporters Association.
Exports of the frozen and live fish sector rose by 11.64 per cent to $533 million in FY22.
Shrimp exports recorded 23.84 per cent growth, earning $407 million. Agricultural products also posted a 13.04 per cent growth to $1.16 billion.
Performance of emerging sectors
Moreover, pharmaceuticals, electronic products, bicycle, furniture, non-leather footwear, dry foods and plastic goods are gradually increasing their contributions to national exports and emerging as lucrative sectors.
Exports earnings from pharmaceuticals stood at $189 million in FY22, up by 11.69 per cent from last fiscal year’s $169 million.
Non-leather footwear posted $449 million in earnings, which is a 30.39 per cent robust growth from last year’s $344 million.
Bicycle export earnings increased by 28.31 per cent to $168 million, while electric products saw a 48.34 per cent growth to $100 million.
Furniture products also earned $110 million, posting a 38.87 per cent growth.
