Sunday, May 05, 2024
Exports to the promising market of Russia witnessed a 27.87 per cent fall in FY23 when compared year-on-year, because of the ongoing Russia-Ukraine war.
Bangladesh exported goods worth $460.39 million to the country during the period, a drastic fall from $638.31 million recorded in FY22.
Moreover, Bangladesh’s exports to Russia in the just concluded FY were the lowest in the last five consecutive fiscal years, according to the Export Promotion Bureau’s (EPB) latest statistics.
Bangladesh’s exports to Russia had fallen since March 2022 as the US and the EU imposed multiple sanctions, including a SWIFT ban, against Russia following its invasion of Ukraine, almost cutting the nuclear power nation off from the rest of the world.
Commenting on the matter, Bangladesh Garment Manufacturers and Exporters Association (BGMEA) President Faruque Hassan said, “We increased our exports to the Russian market, but exports later slipped due to the war.
“Due to invasion, the USA and its allies placed sanctions on Russia. The Society for Worldwide Interbank Financial Telecommunication (SWIFT) barred Russia from using their services. That is why we cannot export directly, and international brands operating in that country are no longer importing from us because they had shut down their stores in Russia.”
However, Bangladesh’s exporters hope to gain momentum in exports to Russia amidst the crisis and ongoing war, thanks to the resolution of the issue of inter-bank transactions in that country.
This development occurred because the Bangladesh Bank has allowed foreign trade in Yuan, and the Russian authority has also allowed Yuan for their international trade.
Besides, Chinese and other Russian allies’ shipping lines are carrying goods to Russia, which also helped Bangladesh ship readymade garment items directly to that country.
Industry insiders say if new problems do not arise, export earnings from Russia will jump soon. They, however, said to avert any new crisis, exporters should be highly aware of buyers’ financial strength, transparency and case study before receiving Russian orders.
Zahid Hussain, former lead economist at World Bank Dhaka Office, said, “The geopolitical conflict created uncertainty over global trade. Now it is a cause of international tension. So, without concluding the war, alternative solutions such as a payment system will not bring in much more benefits to traders.
“If the issue does not get resolved, recovery of exports will be prolonged. However, in that case, the alternative will help us increase exports to Russia.”
Bangladesh has a direct interbanking channel with Russia. However, it receives export payments through third-party banks. As a result, the country's export earnings from the country had been limited.
Since 2019, local exporters, particularly clothing manufacturers, have been focused on the Russian market, and viewing it as high-potential. They also want to do additional road shows in Russia in order to attract buyers and brands.
Because of the low cost of the items and high consumer demand, Russian brands are interested in increasing RMG imports from Bangladesh.
Following the Russia-Ukraine war, most shipping lines ceased transporting commodities to and from Russia, and the Black Sea became dangerous for commercial vessels as a result of the conflict.
Due to the payment gateway and shipping line crisis, there were stocks of clothes worth hundreds of millions in the factories’ warehouses, and they also faced delay in payments. That is why manufacturers started to follow a go-slow policy to receive orders from Russian buyers.
