Bangladesh's export sector has of late been facing headwinds mainly from the dual impact of the fall in demand in the international market and the reciprocal tariff imposed by the USA. According to the Export Promotion Bureau (EPB), last November Bangladesh exported merchandise worth US$3.89 billion. This is less than what the country exported in the same month last year by 5.54 per cent, the earning from exports was worth US$4.11 billion. Garments as usual is obviously the most exposed to any negative development in the world market. So, by earning about US$3.14 billion in November, the largest share of last month's fall in merchandise export was also borne by this sector (at 4.8 per cent) since in the same month last year, the apparel sector fetched US$3.30 billion.
The result is a revenue ceiling, when fashion downgrades to value lines during global slowdowns. A country concentrated in basics absorbs the price hit, while diversified competitors cross subsidize with higher margin categories that buyers cannot easily bargain down. Leather and footwear should be first in line with modern effluent treatment across the Savar tannery estate, traceability systems and design support. Bangladesh can develop branded original equipment manufacturer (OEM) footwear and leather goods where per pair realizations exceed basic apparel. Incentives should reward environmental compliance, LWG certification and higher local value addition in accessories.
Agro processing is another natural winner. The country already exports processed foods to scores of markets, but Sanitary and Phytosanitary Standards (SPS) compliance, cold chain logistics and packaging finance are chronic bottlenecks. A ring fenced incentive for Hazard Analysis Critical Control Points /Brand Reputation Compliance Global Standards, formerly British Retail Consortium (HACCP/BRC) certification, zero interest loans for cold storage, and faster testing at accredited labs would unlock scale.
Pharmaceuticals have a strong domestic base and growing exports. What holds back the next step is regulatory recognition and approvals.
While neighboring countries invested in developing technological capabilities and high-value manufacturing, Bangladesh remained complacent with its garment-centric model. The absence of forward-looking industrial policies has left the country unprepared for shifting global demand patterns and vulnerable to sector-specific downturns. The government's export incentive structure further compounds this problem by reinforcing existing imbalances. Of the Tk 7,500 crore allocated for export incentives in FY2023-24, approximately 65 per cent went to the already-dominant garment sector. Meanwhile, emerging sectors with significant growth potential received disproportionately small allocations despite their need for support to achieve competitive scale.
This misallocation represents a missed opportunity to nurture promising sectors that could diversify our export base. The pharmaceutical industry, for instance, has demonstrated remarkable potential, growing at 15.6 per cent annually with exports reaching US$188 million in 2023. With appropriate incentives, industry experts project this figure could exceed US$1.0 billion by 2030. Similarly, the ICT sector, which currently contributes just US$1.3 billion in exports, has the capacity to reach US$ 5.0 billion within five years if given proper policy support.
Light engineering products represent another untapped opportunity. Countries like Taiwan and South Korea transformed their economies by focusing on this sector, yet Bangladesh's light engineering exports remain below US$500 million annually despite a skilled workforce and growing domestic capabilities. Redirecting even 20 per cent of current garment incentives towards these sectors could catalyse exponential growth and create a more resilient export economy.
Individual success stories demonstrate what becomes possible when innovation receives proper support. Kazi IT Center, starting as a small software development firm, now exports specialised healthcare management systems to seven countries, generating US$12 million annually. Similarly, Dhaka-based Bengal Plastic has successfully penetrated high-value European markets with specialised industrial components, commanding prices comparable to Chinese competitors.
These examples illustrate that Bangladesh can compete globally in diverse sectors when entrepreneurs receive adequate support and policy backing. The path forward requires a fundamental rethinking of our export strategy-one that balances continued support for established sectors while aggressively developing new export capabilities.
For Bangladesh to reverse its declining export revenue, policymakers must implement a balanced incentive structure that nurtures emerging sectors, invest in skills development beyond traditional manufacturing, and establish specialized export promotion agencies for high-potential industries. Without these changes, the country risks watching its hard-earned export gains continue to erode in an increasingly competitive global marketplace.
The choice before Bangladesh is clear: continue down the path of dangerous concentration or embrace the challenging but necessary work of diversification. Our economic future depends on making the right decision.
sfalim.ds@gmail.com