Home ›› 03 Mar 2023 ›› Front
Bangladesh has been putting a heavy emphasis on export diversification in a bid to reduce dependency on the readymade garment sector, but in reality, the country performed negatively in almost all non-apparel exports in the first eight months of FY23.
Not only performance, but the overall export share of non-RMG goods has also declined during this period compared year-on-year (YoY). In the July-February period, only four non-RMG items were able to show one per cent or more contribution in total exports.
Experts pointed out that though the apparel sector is the country’s strongest industry, and it is a good sign, export earnings based on a single product are never sustainable.
Bangladesh must diversify its export basket as much as possible, and should focus on the ICT, agro-processing, light and heavy engineering, and pharmaceutical sectors, they added.
The Export Promotion Bureau’s (EPB) monthly provisional data published on Thursday shows that Bangladesh earned $4.63 billion this February, while the apparel sector alone contributed 85.58 per cent or $3.94 billion. It was 81.76 per cent in the same period of FY22.
Besides, the country earned $37.08 billion in the July-February period of FY23, and the non-RMG sector contributed only 15.41 per cent. This contribution was 18.75 per cent in the same period last FY.
Commenting on the issue, former advisor to the caretaker government and eminent economist AB Mirza Azizul Islam told The Business Post, “Non-apparel exports have declined due to the ongoing global economic crisis, which in turn has reduced consumer purchase capacity.
“But there are many domestic reasons creating barriers to export diversification.”
He continued, “The RMG sector is enjoying many unique facilities such as bonded warehouse, Export Development Fund (EDF), but other sectors are yet to get such support. Our infrastructure is not up to the mark, and it is difficult for smaller entrepreneurs to avail loans.
“The country is facing severe power and energy shortages since last year, which is also a big reason for the fall in non-RMG exports.”
Apparel sector status
The EPB data shows that the RMG sector earned $31.36 billion in the first eight months of FY23, which is 14.06 per cent higher when compared to previous FY. These earnings occupy 84.58 per cent of Bangladesh’s total exports.
During this period, the knitwear sector earned $17.06 billion, posting a 13.21 per cent YoY growth. The woven sector earned $14.3 billion, posting a 15.08 per cent YoY growth.
In February this year, apparel sector earnings rose by 12.30 per cent to $3.94 billion year-on-year, taking over 85.16 per cent of the total exports.
Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) Executive President Mohammad Hatem said, “Our production costs have increased by nearly 15 per cent due to power and energy price hikes, and higher raw materials prices.
“Higher production costs mean higher product prices. This is why export earnings are showing an upward trend. But most of the factories are facing order shortages, and the government should provide uninterrupted gas and electricity supply at reasonable prices.”
Primary commodity earnings dip
In the first eight months of FY23, earnings from frozen and live fish dropped by 21.65 per cent to $942 million. The figure is also 21.66 per cent lower than the commerce ministry’s target. EPB data shows the sector contributed 0.86 per cent of the total export earnings.
Another major commodity, agriculture sector’s earnings declined by 26.96 per cent to $623 million during the same period, and the figure only takes up 1.68 per cent of the total export earnings.
Home textile down 22.53%
According to the EPB, export earnings of home textile – one of the emerging sectors in Bangladesh – dropped by 22.53 per cent to $770 million in the first eight months of FY23, and the figure is 2.08 per cent of total $37.07 billion earnings.
Industry insiders said due to the ongoing global economic crisis, they are receiving a lower number of work orders. Amid the situation, the severe gas and electricity crisis nationwide has forced them to cut production by up to 40 per cent.
This is why the textile sector’s export earnings declined during this period.
Jute sector earnings falling gradually
Amid the Covid-19 pandemic, export earnings from jute and jute goods stood at $1.16 billion, posting a nearly 31 per cent YoY growth, creating hope among the government and the manufacturers.
However, in early 2022, the sector’s performance failed to meet expectations, and from early FY23, its earnings started to gradually decline.
According to the EPB, earnings from the jute and jute goods sector declined by 23.68 per cent to $610 million in the first eight months of FY23, contributing only 1.65 per cent to the total export earnings.
Bangladesh Jute Goods Exporters Association Director Esrat Jahan Chowdhury said, “Due to a lack of proper marketing and ongoing global economic crisis, we failed to earn enough from the western market. Our traditional markets are also facing this crisis.
“If the Bangladesh government manages to withdraw the anti-dumping duty imposed by India, we would be able to earn at least more $300 million annually.”
Leather, leather goods post growth
Another promising sector, export earnings of leather and leather goods grew 6.04 per cent to $832 million in the July-February of FY23, contributing 2.24 per cent to the total exports.
Tajin Leather Corporation Managing Director Ashikur Rahman said, “It will take another two years to get LWG certification for most of the tanneries. After that, our exports would nearly double.
“However, the government should provide proper policy support to cash in on this opportunity.”
Other sectors perform poorly
According to the EPB data, export earnings from chemical products dropped by 21.31 per cent to $202 million in the July-February period of FY23, and contributed 0.54 per cent to the total exports.
During this period, engineering product exports dropped by 34.63 per cent to $349 million, and contributed 0.94 per cent to total exports. Pharmaceutical earnings dropped by 8.82 per cent to $119 million and contributed 0.32 per cent to total exports.
