BD lags behind competitors

Bangladesh could add only a few new products to its export basket during one and a half decades, showing exceedingly high concentration on ready-made garment and poor diversification of products.

The country's export basket is very different from its competitors as majority of the export earnings came from textile and apparel and mostly from basic items.

Over 81 per cent of the country's export earnings came from textile and apparel products in 2021 while it added only nine new products (at four digit HS code) to the export basket from 2006 to 2021.

During the last 16 years up to 2021, Vietnam added 41 new items, Thailand 31 and India 16 products to their respective export baskets.

"Bangladesh fetched $823 million from the nine new products in 2021 while Vietnam earned $145billlion, Thailand $6.61 billion and India $6.12 billion respectively," SANEM executive director Dr Selim Raihan said on Saturday.

He was speaking while making a power point presentation on "Bangladesh's Export Readiness: Post-LDC Graduation Perspective" at a seminar organised by Dhaka Chamber of Commerce and Industry (DCCI).

He said LDC graduation will create many opportunities for the country but to grab those it needs to do massive pragmatic policy reforms, saying import tariffs remains high in Bangladesh while quality of formal institutions in particular regulatory quality is poor.

Bangladesh's export basket is still RMG oriented but it has to have export diversification, he said.

For export readiness after LDC graduation he suggested for harmonization of monetary policy and fiscal policy, regulatory efficiency and regulatory quality, reducing NPL, ensuring long term financing from capital market.

"Moreover, we are lagging behind in trade logistics," he added, recommending improvement in this regard.

He also underscored importance on labour productivity by skill development and public expenditure in education sector saying allocation in education and health in the country is lowest in the world.

The private-sector investment is stagnant as well as FDI inflow is low, Mr Raihan said, adding that right at this moment, Bangladesh has to make its economic zones fully ready as soon as possible.

"We don't have much time for export readiness as Bangladesh is going to graduate from LDC status in 2026 which is knocking at the door. It is true that government is firmly committed to support the business community by all means to create a commendable position in the international market but the private sector needs a sustainable policy reforms in the days to come," DCCI president Ashraf Ahmed said.

The more conducive business environment they will be able to create, the faster they can achieve the 'strategic bets approach' to have more products on the basket, he said, reiterating the need for easy access to finance for export oriented industries and reliable exchange rate.

Speaking on the occasion, Bangladesh Garment Manufacturers and Exporters Association (BGMEA) director Asif Ashraf said special incentives to the RMG sector has been scaled down recently and raised question why this decision is taken before 2026.

Still export is dominated by the RMG sector, he however said, non-cotton market as the most potential sector is still untapped by the Bangladeshi manufacturers.

He also demanded for a conducive exchange rate for being competitive in the international market.

"We have to incentivize the other non-RMG but potential products to grow," said Mohammed Mahbubur Rahman Patwary, managing director of Sonali Aansh Industry Ltd.

He has suggested exploring the examples of managing the main export baskets of the countries that are already graduated as incentives can't be provided after graduation.

He also urged for policy consistency, bond facility and reducing cost of doing business.

In his welcome remarks, DCCI senior vice-president Malik Talha Ismail Bari said Bangladesh needs to diversify its industries by establishing new sectors like FMCG, plastic goods, light-engineering, IT & ITES, and halal products, while simultaneously maximizing the potential of high-priority billion-dollar frontier industries like leather and footwear, agro-processing, jute and jute products, pharmaceuticals, and home-textile, replicating the successful RMG model.

Banks need to provide sector specific tailored export financing, like credit insurance, export development fund, and working-capital loan to address export-related financial challenges, he added.

Speakers at the seminar opined that non-RMG product diversification is now the demand of time for post-LDC export readiness and demanded for subsidy on utility services and development of backward linkage industry.

Terming agro-processing industry the 'most potential' billion dollar industry for Bangladesh in future, they also said that large conglomerates should come up with investment in high-end industry and proposed for arranging more international trade fairs.

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