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Australia becomes billion dollar export market for Bangladesh

Arifur Rahaman Tuhin with Rafikul Islam
22 May 2023 00:00:00 | Update: 22 May 2023 18:35:29
Australia becomes billion dollar export market for Bangladesh

With exports earning of $1.05 billion Australia, an emerging and high-potential non-traditional market, has become 12th export destination for Bangladesh defying the ongoing global economic headwinds.

In the first ten months of the fiscal year 2022-23, Bangladesh earned $1.05 billion from the market, posting a 34.3 per cent year-on-year growth, which was 2.3 per cent of total $54.68 billion export earnings, according to the Export Promotion Bureau (EPB) data.

Industry insiders and experts said that duty-free market access to Australia, product diversification, massive marketing in that country and China-Australia geopolitical conflict helped Bangladesh achieve the milestone.

If businesses continue their current trajectory, their earnings may double or even triple in near future, they expressed hope.

Commenting on the matter, Research and Policy Integration for Development (RAPID) Chairman Mohammad Abdur Razzaque told The Business Post, “It’s a piece of good news to all amid the ongoing economic crisis and we welcome it.”

“This has happened because duty-free market access to Australia will continue after the country’s graduation from LDC status in 2026. We have been able to gain the confidence of Australian importers due to the long-term policy declaration. That’s why they are also focusing on Bangladesh for more apparel sourcing.”

He added: “We are now manufacturing high-end items and the country’s people are also using them. China-Australia geopolitical tension has inspired the country’s importers to diversify their import destination which has helped us achieve growth. I think the trend will continue for a long time.”

Bangladesh Garment Manufacturers and Exporters Association (BGMEA) President Faruque Hassan said, “We are performing well in non-traditional markets thanks to 4 per cent cash incentives for exporters and initiatives taken by BGMEA and exporters.”

“We are using high-technology machinery and manufacturing high-value clothes which help us achieve the target. We have a lot of chances to increase export of non-cotton goods and that is why we are seeking 10 per cent cash incentives for product exports which will help us earn more.”

Which products are in demand in Australia?

Though Australia imports goods worth about $275 billion annually, Bangladesh has a limited export basket. Bangladesh exports readymade garment (RMG), home textile, leather and leather goods, footwear, jute and jute goods, pharmaceuticals, live and frozen foods, crustaceans and plastics items etc to Australia. 

The EPB data showed that during the July-April period of FY23, $961 million out of a total $1.05 billion in exports came from the RMG sector while $46.59 million from home textiles.

Besides, $8.5 million in export earnings came from trunk and suitcase, $5 million from non-leather footwear, $3.3 million from hats, $2.47 million from sugar confectionary, $1.64 million from basketwork, $1.61 million from bread and pastry, $1.25 from jute fabrics, $1 million from jams and jelly, $1.03 million from crustaceans.

Md Mahtab Uddin Khan, Secretary General of the Australia-Bangladesh Chamber of Commerce & Industry, told The Business Post that though the RMG sector is performing well in Australia, Bangladesh has a huge opportunity to earn from the export of other goods.

“Bangladesh could earn by exporting agro-processing items, processed food, jute diversified goods, fruits, vegetables, leather and leather goods. But the problem is that enough initiatives for road show, trade fair and business-to-business dialogue have not been taken to boost export. Even there was not any joint chamber just three years back. But India is trying to increase its exports to Australia since last five-six years.”

“Australian customers are using high-end items and they never compromise with low quality products. If we can maintain the quality of products and take pragmatic steps, exports of non-RMG items will also grow,” he added.

Tulika Eco Chief Executive Officer and Bangladesh Jute Goods Exporters Association Director Esrat Jahan Chowdhury said, “Due to a lack of marketing, jute goods exporters could not increase exports to Australia despite having its huge demand.”

“As Bangladesh has limited communication with Australian businesses, the government should organise several expos in Australia. India already did it.”

High-end RMG, home textile shine

The World Bank data showed that Australia imported $11 billion worth of textile and apparel products in 2020 amid the Covid-19 pandemic, which was $9.58 billion in 2019. During these two years, China exported apparel products worth $7.19 billion and $5.67 billion respectively.

On the other hand, Bangladesh exported $713 million and $749 million worth of textile and apparel goods to Australia in 2020 and 2019 respectively, though Bangladesh is the second largest apparel sourcing country for Australia while India holds the third position.

According to media reports, Australia imported apparel products worth $7.40 billion in 2021 while Bangladesh exported goods worth $765.47 million to the country.

Sparrow Group Managing Director Shovon Islam said, “We are performing well in the new markets. Among the new markets, Australia is in the second position after Japan.”

“Now we are manufacturing high-priced clothes by adopting the state-of-the-art technology. Besides, our production cost is lower than any other countries. That is why Australian buyers are showing interest in boosting trade with Bangladesh.”

The EPB data showed that in the first 10 months of this fiscal year, the RMG sector earned its maximum portion by exporting high-value and luxury clothes. During the period, export of knitwear items fetched $643 million while oven items $318 million.

Among the knitwear and woven items, $368 million earnings came from suit and blazer export, $269 million from T-shirt, $125 million from jersey and pullover, and $47 million from shirt.

Besides, bed and table linen earned $33 million and tarpaulins $10 million.

“We, especially sweater and winter clothes manufacturers, face an order crisis during the August-January period. The Australian buyers are important for us because they buy the same items during our lean period,” Southeast Sweaters Chief Executive Director Mahbubur Rahman Lucky said.

Rapid Chairman Razzaque said, “Due to the geopolitical crisis, Australia will come out from Chinese dependency. That is why we have a chance to increase our market share in Australia from 10-12 per cent to 35 per cent within a few years.”

“Besides, though New Zealand is a small market, they are using high-value items. We can export goods to the country through Australia.”

“Many Australians are likely to invest in Bangladesh’s RMG backward linkage as their import from the country has rising, and the government should focus on this area,” he said.