Home ›› 09 Aug 2022 ›› Front
Bangladesh’s export earnings from non-apparel sectors rose by 72 per cent in the last decade, paving the way for reducing dependency on a lone industry and opening up more opportunities for product diversification.
The country earned $52 billion from exports in FY22, and of the figure, $9.47 billion came from non-RMG products. In FY13 – just a decade ago – total export earnings were $27 billion, with $5.51 billion coming from non-RMG exports, shows the Export Promotion Bureau (EPB) data.
Economists and exporters are viewing the growth as a new window of opportunity for the country to widen its product basket and meet the government’s export targets in the coming days.
Centre for Policy Dialogue’s (CPD) Distinguished Fellow Prof Mostafizur Rahman said, “Earning $52 billion through exports is a milestone for Bangladesh. The most noticeable and positive thing about this growth is the nearly $10 billion in earnings from non-apparel sectors.
“This is a ray of hope for the country. Without any delay, the policymakers should become very firm in retaining this growth.”
Meanwhile, former lead economist of World Bank Dhaka Office Zahid Hussain, said, “A $9.4 billion export earnings from the non-apparel products is not very big compared to the $52 billion in total export earnings.
“But this is a small milestone from the diversification perspective, which gives us hope for the future. It is an opportunity for Bangladesh to diversify the export basket. If we can cash in on the opportunity, it would help us reduce dependency on the apparel industry.”
Which sectors contributed the most?
Among the non-apparel industries, four sectors – agriculture, leather and leather goods, jute and jute goods and home textile – touched the billion-dollar export earnings mark in FY22. In the same criteria, the jute and jute goods sector was the only billion-dollar industry in FY13.
Export earnings from the agriculture sector increased by 117 per cent to $1.16 billion in FY22, which was $536 billion just a decade ago.
Textile products provided a great push for increasing export earnings from non-RMG sectors. Home textile posted robust growth by 105 per cent to $1.62 billion and became the second largest export earner. The sector earned only $792 million in FY13.
Meanwhile, the specialised textile sector earned $315 million, up by 153 per cent, compared to $125 million in FY13.
The leather sector, the then second largest export earner, suffered a setback due to relocation of tanneries to Savar and environmental compliance. But the industry made a turnaround last year.
Exports earnings from leather and leather goods stood at $1.25 billion, recording a 27 per cent growth, which was $981 million in FY13. However, crushed leather exports declined by 62.13 per cent to $151.37 million, compared to $400 million a decade ago.
Of the total earnings, leather footwear fetched $756 million, and recorded an 80.33 per cent growth.
Commenting on the industry, leather goods manufacturer Picard Bangladesh’s Managing Director Md Saiful Islam said, “It is a significant growth and a very good sign for the country’s exports in terms of product diversification.
“The growth of non-RMG sectors will continue, and dependency on the apparel sector will go down in the coming days.”
Saiful, also the president of Metropolitan Chambers of Commerce and Industry (MCCI), continued, “Not only just the leather footwear, we are doing excellent in non-leather footwear as well.
“Bangladesh will turn into a hub for the leather and footwear sector, as our capacity, efficiency, as well as environmental compliance is increasing.”
The USA is a big market for Bangladeshi leather and non-leather footwear exporters, he said, adding that in 2021, footwear exports to the country recorded a 73.22 per cent growth to $275 million.
Earnings from jute and jute goods sector exports rose by 9.41 per cent to $1.12 billion in FY22, and contributed 2.15 per cent to national exports. Jute yarn and twine did well with 37.7 per cent growth to $698 million, while raw jute exports declined by 6 per cent to $216 million.
Md Rashedul Karim Munna, managing director of jute goods manufacturer and exporter Creation Private Ltd, said, “As people are concentrating more on the use of eco-friendly jute goods, we have a big scope for growth in different export markets.
“However, the exporters of jute and jute goods are yet to capitalise on this opportunity due to a lack of product divarication, research and innovation.”
He continued, “An exporter can earn more by exporting goods instead of just raw jute, so the industry has to pay more attention in diversifying jute products. At present, 80 per cent of the export in this sector is raw jute.
“The share of jute products should be increased further in the export basket. The industry also needs more policy support from the government, as well as investment to help develop research centres.”
Meanwhile, despite having opportunities, frozen fish, and live fish exports performed poorly compared to other non-apparel industries. Exports earnings from the frozen fish and live fish sector posted a negative growth by 2 per cent to $533 million, which was $544 million in FY13.
Earnings from shrimp exports dropped by 10.48 per cent to $407 million in FY22, and industry insiders say the decline was caused by a lack of new technology in the cultivation process.
Emerging non-apparel sectors
An analysis of EPB data collected during the last decade shows that pharmaceuticals, non-leather footwear, furniture, headers and caps, and plastics goods are among the emerging export earners in the non-apparel category.
Non-leather footwear is the most lucrative and emerging sector with $449 million export earnings in FY22. This sector was almost absent a decade ago in the list of exports.
Besides, headers and caps showed outstanding performance as well, earning $365 million in FY22, which was only $48 million a decade ago.
Riding on the growing demands of the European markets, bicycle exports rose 60 per cent to $168 million in the last FY, which was $105 million in FY13.
Pharmaceuticals, an emerging export sector, recorded 215.58 per cent growth to $189 million in FY22, against $60 million in FY13.
Globe Pharmaceuticals Chairman Md Harunur Rashid said, “Pharmaceuticals products are very sophisticated and it takes time to penetrate a market. We are gradually entering both developing and developed countries.
“It is crucial to spend more on marketing and getting approval from the importing country’s drug administration to grab more opportunities.”
Furniture export earnings rose by 251 per cent to $110.26 million in FY22, against $31 million in FY13. Meanwhile, the plastic sector posted a 98 per cent growth to $166 million in the last FY.
PRAN-RFL Group’s Chairman and Chief Executive Officer Ahsan Khan Chowdhury said, “Everything that is made in our beautiful country must be exported. Our target is to become the leading exporter of the country.
“To this end, we set a target to earn $1 billion by 2025 and $2 billion by 2030.”
With over 1,000 exportable products including agricultural products, plastic products, RMG, footwear, PRAN-RFL group exported different types of goods of $532 million in FY22.
Ahsan added, “Bangladesh’s economic growth is led by exports. A country’s growth depends on its exports, and export growth depends on diversification.
“PRAN-RFL Group is now the most diversified exporter in the country, and it will export under all categories in different markets across the globe.”
“We are grabbing more markets in the European Union and other countries. Our new bicycle plant – currently in the pipeline – will increase Bangladesh’s exports in the light engineering sector and new investments will make significant changes in our export volume.”
How can Bangladesh sustain this growth?
CPD’s Research Director Khondaker Golam Moazzem said, “Diversification in any field is the key to a sustainable business. Bangladesh’s exports are mostly focused on a few items and over 82 per cent of the earnings come from the readymade garment (RMG) sector.
“Bangladesh’s continued success in exports will depend largely on the diversification of the products basket. To achieve this, the government will have to bring changes in policy and provide financial support to ensure a level playing field for emerging export industries.”
He added that cash incentives and policy support for the non-RMG sectors acted as a catalyst to the growth recorded in the last decade, but it is not enough.
Reorientation of cash incentives against exports is crucial for the non-apparel sectors to tap into more opportunities. The government has to assess the impact of incentives, and those should be redesigned based on the findings, said Moazzem.
Overall export performance in FY22
Bangladesh’s exports earnings rose by 34.38 per cent to $52 billion in the last fiscal year. Of the total export earnings, $42.61 billion came from RMG products, up by 35.47 compared to $31.45 billion in the previous year. It contributed 81.81 per cent to the national exports.
Non-RMG exports contributed $9.47 billion or 18.19 per cent to the national exports of $52 billion.
