BB fears fall in exports as global meltdown bites trading partners

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FE Report
The country's export performance, particularly growth in readymade garment (RMG) export, may suffer an adverse impact because of the global financial meltdown that has led to a bleak growth prospect for Bangladesh's major trade partners including the USA.
'.... Bangladesh is relatively insulated from the financial side, but the global growth outlook, especially the growth prospect for the US and the country's other major trade partners, has weakened which could create an adverse impact on our exports, particularly the RMG,' the central bank said in its annual report for the fiscal 2007-08, posted on its website Tuesday.
However, the Bangladesh Bank (BB) said the depth and severity of the recent global financial crisis and their impact on Bangladesh economy are still unfolding.
The central bank of Bangladesh also said the frequent labour unrest in the local RMG sector remains a major concern.
"Therefore, for survival in the increasingly competitive global garment market, a competitive RMG sector needs to be built by upgrading infrastructures, enhancing financial capacity of the manufacturers, ensuring labour compliance standards, raising design and product development capability, advanced production facilities, long term business relationship, and development of internationally reputed customer bases," it added.
Efforts need to be made for greater access of the RMG products to the markets where access still remains limited such as Australia and Japan, the report said.
On the other hand, to reduce the overwhelming dependence on RMG, measures need to be taken to diversify exports, the central bank observed. The BB also said maintaining a favourable investment environment and a sound macroeconomic management are important to enhance the private sector investment in the economy.
'The uncertainty among the investors following the anti-corruption and anti-hoarding drive has started to ease,' the BB noted.
In this regard, the government has officially announced formation of the first-ever public-private business forum, namely Bangladesh Better Business Forum (BBBF), basically designed to improve interaction between the business community and the government high-ups.
'It is also necessary to have such a forum to achieve a sustainable economic growth, especially by maintaining an investment and business-friendly atmosphere in the country,' it noted.
'Simplifying foreign borrowing by the private sector, rationalising the foreign exchange transactions to encourage increased FDI and foreign portfolio investments, particularly in medium and large-scale industries and enterprises, including infrastructure building, and all positive political developments centred on the late 2008 general election with a sound economic environment would make Bangladesh a middle income economy by the end of the next decade,' the report said.