Home ›› 05 Feb 2023 ›› Front


Is export growth making the target elusive?

Talukder Farhad
05 Feb 2023 00:00:00 | Update: 05 Feb 2023 00:02:28
Is export growth making the target elusive?

Bangladesh has announced the target to be a tobacco-free country by 2040, but tobacco export income almost doubled in the last five years, which experts say will make the target difficult to achieve.

According to the Export Promotion Bureau (EPB), tobacco exports fetched $56.39 million in FY18, which increased by 90 per cent to $107.22 million in FY22. Moreover, in the first half of FY23, export income surpassed that in the entire FY22, standing at $116.71 million.

Meanwhile, because of the government’s policy support to increase export earnings, cigarette companies are making new investments.

In this situation, experts and anti-tobacco organisations fear tobacco cultivation and production will increase more and more. As a result, it would not be possible to achieve the goal of becoming a tobacco-free country by 2040.

Prominent economist and Chairman of Palli Karma-Sahayak Foundation Qazi Kholiquzzaman Ahmad told The Business Post, “We want to control investment in the tobacco sector, but more foreign capital is being invested there.”

He said duty waiver is encouraging more tobacco exports as well as cultivation. “If that continues, the prime minister’s announcement of becoming a tobacco-free nation cannot be implemented. Rather, it will go in the opposite direction.”

ABM Zubair, executive director at anti-tobacco organisation PROGGA, said tobacco cultivation will increase if exports continue to jump. “As a result, tobacco cultivation will take over land where food is produced.”

He said Bangladesh wants to be a developed country by 2041 but such countries do not export products that harm health. “Therefore, to discourage exports, we are demanding again the imposition of a 25 per cent duty.”

Tobacco researchers said the Department of Agricultural Extension is intentionally showing less tobacco cultivation and production in its data either because of the anti-tobacco movement or the influence of cigarette companies.

Export income doubles

The EPB data shows export income from tobacco was $56.39 million in FY18, $63.33 million in FY19, $80.36 million in FY20, $86.2 million in FY21, and $107.22 million in FY22.

Mahfuz Kabir, research director at Bangladesh Institute of International and Strategic Studies, said duty withdrawal had encouraged exports.

“But the more important reason is that companies get better quality products from the cultivation of high-yielding tobacco. As a result, exporters get higher unit value, which has caused export income to grow.”

Bangladesh’s top tobacco export destination is Belgium, followed by the United Arab Emirates, the Philippines, Nigeria, Kenya, the Netherlands, Turkey, Poland, Pakistan, and the US.

Cultivation, production decline

Despite the jump in export earnings, both tobacco leaf cultivation area and production have declined. Industrial tobacco production has also fallen.

According to the Bangladesh Bureau of Statistics (BBS), tobacco was cultivated on 1.13 lakh acres in FY17, which fell to 1.05 lakh acres in FY18. The figure increased to 1.47 lakh acres in FY19 but declined to one lakh acres in FY20. The FY21 figure is the same as that of FY20.

Besides, in FY17, tobacco leaf production was 92,000 metric tonnes, which fell to 89,000 metric tonnes in FY18. However, production increased to 1.29 lakh metric tonnes in FY19, which was the highest in the country’s history. In FY20, production nosedived to 86,000 metric tonnes before going up to 89,000 metric tonnes in FY21.

Meanwhile, the Quantum index value of industrial tobacco production also declined over the years. According to the BBS data, the index value was 139.57 in FY17, which came down to 128.07 in FY21.

New investment

Cigarette companies are increasing their production capacity as export opportunities have gone up tremendously. The largest cigarette manufacturer in Bangladesh, British American Tobacco (BAT) Bangladesh, took an initiative in July 2021 to open a new factory in Savar at a cost of Tk 322 crore.

Golam Mainuddin, chairman of BAT Bangladesh, said in the company’s latest annual report, “The company has extended the manufacturing facilities in Savar to explore export opportunities of cigarettes in the world market and to meet the local demand.”

JT Group brought the largest foreign investment in Bangladesh in the tobacco sector. It acquired United Dhaka Tobacco Company, a sister concern of Akij Group, for $1.47 billion in 2018 and renamed it Japan Tobacco International (JTI).

JTI hopes the tobacco market in Bangladesh will expand. “With this investment, we continue to accelerate our expansion in emerging markets that matter, a key component of the JT Group’s growth strategy,” it said on its website.