Bangladesh sees its services export drop, despite the forex-earning sector holding high potential, for shortage of quality manpower and lack of supportive government policies, analysts said.
The country exported US$7.49 billion worth of services in the last fiscal year (FY 2022-23) that accounts for a fall of 15.65 per cent from the figure in previous fiscal, Export Promotion Bureau (EPB) data showed.
In the previous fiscal, FY2022, the total services export from Bangladesh fetched $8.88 billion.
Analysts say Bangladesh has already been able to create a niche on the global services-export market, but its annual turnover still stays far away from tapping in full potential from the world's nearly $6.0- trillion market.
Bangladesh in the FY2023 could avail only 0.125 per cent of the global market.
According to the UNCTAD report 2021, the United States is the highest service exporter in the world with its $795 billion worth of turnover.
In the Asia-Pacific region, China is the largest exporter with $392 billion, followed by India's $241 billion, Singapore's $230 billion, and UAE's $102 billion.
Trade analysts and businesspeople have said the country's services exports may multiply if supportive-policy framework is in place and quality of services can be improved and new services are included in the supply chain.
Transport, tourism, banking and insurance, telecommunications, construction, computer and ICT and intellectual property are the key services the country can bank on.
Services exports also include fuel refilling from Bangladesh by foreign aircraft or other modes of transport.
An FE analysis has found that although the export of services over the previous four years was showing a better trend, it went down in the past FY2023.
Bangladesh exported $6.34 billion worth of services in FY2019, which declined to $6.08 billion in FY2020 and then it climbed again to $6.61 billion in FY2021.
The export figure rose substantially to $8.89 billion in the FY2022 but it still remained 6.0 per cent below the target.
The FE analysis has also found that some services sectors, including telecommunications and information services, travels, financial services and other business travels, pivoted the export earnings in the last FY.
Exports from education and tourism services dominated the Bangladesh export-earning growth from the overseas market as it posted 26.41-percent expansion during the last FY2023 compared to the previous FY2022.
The earnings were worth $446.87 million in July 2022-June 2023 period from travel (education, business and tourism) against $353.50 million in the previous FY2022, the EPB data showed.
The country's very potential ICT, telecommunications and computer sectors and subsectors have dimmed the export earnings from the services.
According to the official counts, Bangladesh earned $548.10 million worth of funds in the last fiscal as against $592.06 million in the previous FY2022.
From the telecommunications sector, Bangladesh made a shipment of $116.08 million in the last FY against $146.37 million in the previous FY2022, the EPB data showed.
An EPB official says, "Quality is a very important issue in case of services export. For instance, Bangladesh could earn forex instead of imports if its medicare service would have been improved much."
The private sector has to come forward for improving these services--the government has a limited scope for improving those, he said.
Former Bangladesh Association of Software and Information Services (BASIS) President Shameem Ahsan told the FE that the global economic downturn hit Bangladesh's export earnings from the services, especially from IT, computer and telecom sector.
"Globally, giant IT companies like google, facebook, twitter had cut jobs over the last few years. The human resources in those service-importing countries are now available. So, they are getting the services in their own countries with lower payments than previous. It has affected Bangladesh's export," he said.
"We cannot tap the potential for improving the services export as the country has lack of skilled manpower, and weak branding on the international market about our services and the capacity," he added.
Centre for Policy Dialogue (CPD) director Dr Khandker Golam Moazzem told the FE that lack of IT-skilled manpower, emergence of AI, global economic crisis might hit the overall export earnings from the services.
"We have to develop our IT skills compared to international markets, improve services in travel, tourism and transportation sectors, including the local airlines, and searching potential markets," he added.
The national flag-carriers and private airlines should expand their penetration into the Asian destinations, government should have a better fund-transition system and other policies for improving the services exports, Dr Moazzem said.
A study by Bangladesh Foreign Trade Institute (BFTI) found some reasons for the setback.
"Firstly, trade in services is not as simple as that in goods. In case of goods, trade takes place only through one mode, goods flow from one country to another. Trade in services, on the other hand, takes place through four modes of supply,," says the institute.
Secondly, the multilateral service-trading system created by the GATS is quite restrictive with the schedule of commitments of WTO members that contain various limitations and restrictions.
Thirdly, the domestic regulations and other rules relating to services also act as impediments to trade.
Finally, capacity constraints of services sectors resulting from various factors, including the absence of appropriate policy, quality of services and service providers etc, are acting as major barriers to exports in most of the sectors, the BFIT study showed.
"If adequate capacity is developed through necessary measures, ranging from awareness-building to production of quality services, export of various services from Bangladesh may increase significantly," the BFIT study says.
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