Non-traditional markets showing potential

Bangladesh recorded exporting goods worth $12 billion for the first time to non-traditional market in the immediate past fiscal year even after the Russian market had shrunk due to payment method and vessel crisis after its invasion of Ukraine.

During this period, the country exported goods worth $12 billion which was a 21.59 per cent growth compared to $9.41 billion in the FY2020-21.

The apparel sector holds lion’s share of 53.08 per cent or $6.37 billion to achieve the goal.

Economists and stakeholders, however, claimed that though it is good news the big challenge was to continue the growth despite high inflation.

They also said Bangladesh was enjoying duty-free facility in Indian, Japanese and Chinese markets as part of LDC country. But it will be over in 2026 and the country has to face the main challenge after that.

Research and Policy Integration for Development (RAPID) Chairman MA Razzaq said, “It is a good news to Bangladesh that the contribution to regional market expanding. But we have to take long-term policy to keep it up.”

Due to inflation, consumers have reduced purchases which are likely to impact our export. For this reason, we have to focus on Indonesian, Chinese and middle-eastern markets to grow export.

Non-traditional market share, however, declined in FY22 compared to the FY21, according to the Export Promotion Bureau (EPB).

In the FY2020-21 this market accounted for 24.28 per cent market share from $38.75 billion export which was 23.08 per cent from $52.08 billion export in the FY22.

The EPB data showed that Bangladesh earned around $2 billion in FY22 from India which was another record.

During this time $1.35 billion came from Japan, $916 million from Australia, $864 million from UAE, $638 million from Russia, $530 million from South Korea and $683 million came from China.

The United States, Canada, Great Britain and European Union (EU) countries are generally known as the traditional markets. The rest of the markets are considered non-traditional markets.

To achieve the goal, the apparel sector is performing a key role. They are also enjoying four per cent cash incentive from export to the non-traditional market.

According to the EPB, the apparel sector earned $6.37 billion in the market which was $5.08 in FY21 and $4.78 in FY20.

The sector earned $1.1 billion from Japan, $812 million from Australia, $$583 million from Russia, $715 million from India and $439 million from South Korea.

Industry insiders said they planned to earn over $1.5 billion through Russian market. But due to the war, this market has shrunk.

However, they expected that if the present situation would come back to normalcy and thought they would able to earn big amount of currency through this market.

The Bangladesh Garment Manufacturers and Exporters Association President Faruque Hassan told The Business Post, “Our plan is to make Asian market like that of EU. We are working on it. Already our export to Japan, India and Korea has gradually increased.”

“Although Russia was our emerging market, we missed to increase export there due to the war. The Middle-East market is also our priority market,” he added.

To achieve the goal, jute and jute goods, leather and leather goods and home textile sector performed excellently.

Most of the leather and jute goods have been exported to non-traditional market.

M Shahadat Hossain Sohel, Chairman of Bangladesh Terry Towel and Linen Manufacturers and Exporters Association, told The Business Post, “If we are able to export again to Russia, the sector will be able to earn billions of dollars.”

However, Esrat Jahan Chowdhury, Director of the Bangladesh Jute Goods Exporters Association, said, “The Indian government imposed some barriers to Bangladesh jute goods such as anti-dumping duty. If the government is able to remove the barrier, the export performance will increase more.”

She further said, “Singapore, Malaysia and Middle-East would be our big market for diversification of goods.”

Economist and experts said regional market should be first priority for the government. But to continue it after LDC graduation, there will be no other alternatives to signing FTA and PTA.

MA Razzak said, “The government should start process of signing FTA and PTA from now.”

Professor Mustafizur Rahman, Distinguished Fellow at the Centre for Policy Dialogue (CPD), said, “We have to diversify our product basket in the regional market. It will help increase our export earnings and make us stronger.”