Global economic crisis to be major hurdle

The government has set the FY23 export target at $58 billion considering the global economic crisis, but exporters think it will be difficult to meet that due to the global economic crisis.

They say Bangladesh’s export destinations, especially the European Union (EU) countries and the US, are facing very high inflation and are likely to face a recession as well. 80-85 per cent of Bangladesh’s export products go to the EU and the US markets.

The readymade garment as well as the jute and jute goods sectors may fail to meet their targets, industry people said.

However, the home textile as well as the leather and leather goods sectors expect to earn more than their targets, provided the government can supply uninterrupted power and gas.

Economists said the Russia-Ukraine war has made the economies of Bangladesh’s export destinations volatile and most of them are likely to face a recession, which will impact the country’s export earnings.

Research and Policy Integration for Development Chairman Mohammad Abdur Razzaque told The Business Post high inflation and the appreciation of the USD against Bangladesh’s export destinations’ currencies would reduce the purchasing power of those countries’ consumers.

“If Bangladesh can continue positive growth, that is enough considering the ongoing situation,” he said.

“But if exports can be increased to non-traditional markets, especially India, Indonesia, the Middle East, Japan, China, and Korea, and the export basket can be diversified, Bangladesh is likely to meet the target,” he added.

Apparel

The commerce ministry set the clothing sector’s FY23 export target at $47 billion, which is over 81.03 per cent of the total merchandise export income target. In FY22, export earnings from readymade garments rose by 35.47 per cent to $42.61 billion year-on-year.

Of the FY23 target, $25.6 billion is expected from knitwear and $21.4 billion from woven products while their expected growth is 10.28 per cent and 10.32 per cent respectively.

Industry insiders said the ongoing economic crisis had reduced work orders while buyers had also started offering lower prices citing a decline in cotton prices. That is why this sector is likely to miss the target but will be able to maintain positive growth.

Fakir Kamruzzaman Nahid, managing director of Fakir Fashion, told The Business Post data shows $42 billion was earned from this sector in the previous fiscal year. “But the reality is we exported at higher prices due to raw material price hikes and import costs.”

He also said cotton prices were declining, which would reduce product prices. “But we are facing order shortages. It will be tough to meet the target.”

Home textile

The export target for the home textile sector was set at $1.62 billion, but insiders said they would hopefully exceed that.

“The government should ensure uninterrupted electricity and gas supply to help us meet the target. That will help us meet shipment deadlines,”

Towel Tex Limited Managing Director M Shahadat Hossain Sohel told The Business Post.

“Even if the Russian market does not open, we will be able to earn over $2 billion from other markets,” he added.

Leather and leather goods

After two fiscal years, the leather and leather goods sector fetched above $1 billion in export earnings in FY22. The FY23 target is $1.2 billion.

Industry insiders said meeting the target would not be difficult and it could even be exceeded as the demand for leather and leather goods had not fallen yet. But the target cannot be met if the government allows wet blue exports again, they said.

Tajin Leather Corporation Managing Director Ashikur Rahman told The Business Post exporters earn $0.7-0.8 from per square foot wet blue but finished leather can bring in at least $0.9-1 per square foot. “Besides, exporters can earn more by exporting crust and split, which is not possible from wet blue,” he added.

Jute and jute goods

The jute and jute goods sector may fail to meet the export target due to high freight charges and low demand.

The sector posted $1.13 billion in export earnings in FY22, down 2.91 per cent from $1.16 billion in FY21. The government has targeted to earn $1.2 billion in FY23.

Industry insiders said production costs had risen by 40 per cent due to high raw jute prices. That is why export earnings may seem high but the volume is almost the same as before.

“Buyers have reduced orders due to high freight costs. It is almost impossible to meet the target,” Syed Ali Alfe Sany Akash, director at Monami Impex, said.