Desperate search for export diversification
Sunday, 28 March 2010
Continued from page 9
Other than RMG, there are plenty of export opportunities for the highly prospective agro-products, leather industries, pharmaceutical industries, ceramic industries, light engineering industries, computer software, electric and electronic products, tea, jute, handicrafts, wooden furniture and products of horticulture and floriculture.
But success in these ventures will require ensuring quality and safety of products and even maintaining an edge over the competing exporters from other countries. Value-addition to these rising 'export-starts' is vital to achieve the goal and securing the future of the country's export earning in coming years.
According to latest statistics of export earning, the country's jute and jute goods exports have registered a record growth that was never witnessed in Bangladesh for decades. And for the first time, its benefits have reached every segment of the industry, including the farmers, some of whom got even Tk 2400 for every maund (37.5 kilograms) of jute, according to available statistics.
It was the outcome of a sudden surge of interest in natural fibre in both developed and developing countries that helped usher in "the new jute revolution" with this year's earnings set to cross more than US$600 million. Consumers -- both individual and industrial -- are ditching synthetic fibres for natural ones such as jute.
They are now more conscious about the harmful effect of synthetic fibres. Moreover, timely product diversification has also played a big role in helping jute reclaim some of its lost glories in the country.
This is now evident that jute has reclaimed its honour as the second largest export item after nearly a decade. The Golden Fibre hit the jackpot this year, with the export of raw jute growing more than 38 per cent in the first seven months of the fiscal year to US$111.22 million and jute goods 49 per cent to US$229.6 million.
Together, the export earnings of raw jute and jute goods have outstripped frozen food as the country's second largest shipment.
"This year is the year of jute," said Sheikh Faruk Hossain, chairman of the Bangladesh Jute Association - a grouping of businessmen who export raw jute and jute goods abroad.
"We have never witnessed such a fabulous growth in jute exports for decades," optimistic Mr Hossain added.
Once, raw jute and jute products were the biggest foreign-exchange earner of the country. Jute had then a flourishing international market of its own, spreading its superiority in the world market. But the situation is completely reverse now. With the closure of a number of jute mills, tragedy fell on the jute growers and traders as there were no buyers in the country, opening the flood-gates for smuggling of raw jute to India.
Nazmul Huq, whose Janata Jute Mills is at the forefront of the revival of the Golden Fibre, said timely product diversification has also played a big role in helping jute reclaim some of its lost honours. "Jute goods accounted for 68 per cent of the country's total jute exports in the current fiscal year. And the main reason is timely product diversification," he said. Bangladesh exports raw jute mainly to India and jute goods to Turkey, Belgium, Iran, Spain, Syria, Uzbekistan, China, India and Pakistan. Carpet yarns and jute sackings are the top selling products, now seeing huge demand in East Europe, Middle East, and central Asian countries. Main export items of jute based products are --jute carpet, jute manufactures, jute yarn & twine, raw jute.
Mr Huq claimed that the jute could become the country's next billion dollar industry after the apparels, leaving behind frozen food and footwear, in the next few years.
"I can't give any timeframe, but it will happen as Bangladeshi jute millers are for the first time fulfilling the promise they have shown for years," he added.
To achieve this goal, experts have suggested that raw jute needs to be declared as agricultural product and the export of raw jute, as agro-based industrial operation. It is time that jute industries get a befitting policy focus, they added. Pharmaceutical export, another most vibrant export for the country, witnessed 6.21 per cent growth in the fiscal 2008-09, earning US$45.67 million, EPB statistics showed.
According to record, export value of pharmaceuticals, though small, is growing at 50 per cent per year. Despite the effect of global recession, the sector hatched a 20.70 per cent growth within the first six months of the current fiscal year (2009-10), posted an earning of US$22.86 million. Government set an ambitious target of US$ 52.52 million for the current fiscal that exporters are expecting to over-grow.
With over US$250 million investments in the pharmaceutical industry of Bangladesh, the sector has emerged as the country's most developed hi-tech one that contributes significantly to the national economy.
Meeting over 97 per cent of total domestic requirements, pharmaceutical products from Bangladesh have reached the international market spreading over 72 countries around the world including Pakistan, Nepal, Sri Lanka, India, Thailand and China. Pharmaceutical companies are now trying to penetrate into the medicine market of European and African continents.
"We are the largest manufacturer of pharmaceutical products among the less developed nations in the Asian region," President of Bangladesh Association of Pharmaceutical Industries - BAPI, Salman F. Rahman told the FE. Expressing optimism, the BAPI president also said that export value of the country's pharmaceutical sector is growing significantly. "With favourable government policy, we are expecting a vibrant growth in domestic and overseas business in the coming years," he added.
Pharmaceutical industry experts however opined that Bangladesh can export drugs worth Tk200 billion a year if the local medicine makers upgrade their facilities to a level that will enable them to do contract manufacturing for foreign pharmaceuticals. Drug manufacturing is becoming costly in the highly regulated western market, prompting major pharmaceutical companies to contract out drug making to companies in low-cost countries, they said.
"Contract manufacturing is one of the major growth areas in global drug industry. And Bangladeshi companies can be one of the major beneficiaries of the fast growing sector," said ABM Faroque, president of Bangladesh Pharmaceuticals Society (BPS).
"The country's top 10-12 drug makers have state-of-the-art drug plants and if they upgrade their facilities further, they'll be in a position to sign lucrative contract manufacturing deals with foreign companies," Mr Faroque, also a professor of pharmaceutical technology at Dhaka University said.
BPS study has also found that the contract manufacturing by the local companies could alone fetch export orders worth Tk200 billion. Presently India, Turkey and China dominate the sector.
Bangladesh's software industry marked an impressive 33 per cent growth in export in the last fiscal year (2008-09) -- indicating towards a brighter future-- as many western and European firms shifted focus on the South Asian country for low-cost IT services, sector insiders said.
A healthy chunk of US$32.91 million export earnings of the industry in the last fiscal year (FY2008-09) came from computer software developmental services, EPB data revealed. Bangladesh's Ministry of Commerce has set an export target of US$38 million for the current FY 2009-10.
Industry experts says, recent recession has made Bangladesh's software industry a very suitable harbour for outsourcing as many western and European companies shifted their focus on the country for low-cost IT services. The country's software export has achieved hefty growth in recent months, as more than 400 software and IT companies are exporting their services to around 30 countries in the world.
Bangladesh fetched over US$19 million from export of software in the first six months of the current 2009-10 fiscal year.
According to Habibullah N Karim, president of Bangladesh Association of Software & Information Services (BASIS) the country has already become a large ground of potential human resources with bright aptitude, quality and natural ability in software development.
"Bangladesh's software industry will become a US$500 million export earning sector by 2013-2014 fiscal if the current trend of robust growth continues," the BASIS president claimed.
Bangladesh's approximately Tk20 billion (about US$285.71 million) software industry currently employs nearly 20,000 skilled and semi-skilled professionals.
Industry experts however complained over poor investment is still hindering the desired growth of the sector, which is the second largest avenue of graduate employment in the country.
The country's income from both fresh and frozen vegetable exports has increased to US$45 million in fiscal year 2008-09, almost reaching its target.
"Bangladeshi frozen vegetables are already being exported to the UK market. With growing demand, it can be a major commodity for the country but it is losing competitiveness due to high freight cost," said Moinul Islam Chowdhury, managing director of Eurasia Food Processing Ltd.
But we can't increase export volume despite having huge demand, he mentioned.
High freight cost, lack of testing laboratories and other infrastructure facilities are some of the hindrances that are holding back Bangladesh's potential of becoming a major frozen vegetable exporting country, experts claimed.
Bangladeshi exporters have to pay US$4800 to US$5800 a container as freight charge for exporting their products while its competitors pay only US$1000 to the same markets, exporters said adding that India, Malaysia, Pakistan and Singapore are dominating the global market.
Government's immediate supports are required in this industry in order to exploit the full potential; traders said adding that government's promised vegetable and fruits exporting special zones can be encouraging. They said the government should also encourage and provide concessions for the development and growth of packaging industries and infrastructure facilities in this sector.
Bangladesh exports vegetable mainly to U.K, Saudi Arabia, Kuwait, U.A.E, Qatar, Bahrain, Oman, Italy, U.S.A, Singapore, Germany, Pakistan, Canada, Greece, Malaysia and France.
Bangladesh has around 60 cement manufacturing companies, including multinational cement giants - Lafarge and Holcim. Shah Cement, Meghna Cement, Aramit, Crown, Premium and Holcim export cement to the north- eastern states of India. They now weigh the feasibility of several import proposals they recently received from Sri Lanka, Myanmar, Saudi Arabia, Sudan and Kenyan companies, company sources said. According to EPB, cement manufacturers during the first six months of current fiscal year earned Tk276.9 million while it was Tk262.9 million during the corresponding period of last fiscal.
Wooden furniture is another promising export item for Bangladesh that can stand strong in its trouble time.
Export Promotion Bureau (EPB) data shows that the country exported furniture items worth US$2.44 million in the 2008-09 fiscal year, which is as little as 0.02 per cent of the US$8926 million global market.
Top wooden furniture export destinations for Bangladesh are Sweden, India, Thailand, U.S.A, U.K, Germany, Canada, The Netherlands, Malaysia, Sri Lanka, Denmark, Italy, U.A.E, Kenya, Vietnam, Japan, Brunei etc.
Proper government supports could raise the country's foreign currency earning from handicraft exports by at least ten times, exporters claimed. But thy blamed the government for not providing them with the commercially useful information and assistance in developing and increasing exports from the sector.
'We can earn US$50 million from handicraft export if the government helps us to build up infrastructure, including a design training centre,' general secretary of Bangladesh Handicrafts Manufacturers and Exporters Association (Banglacraft) Shahjalal said.
Commerce Ministry sources said Bangladesh earned only US$6.44 million by exporting handicrafts in 2008-09. For the current fiscal, the target has been set at US$7.4 million.
Bangladesh's handicrafts, which have huge demand in the global market, include basket ware, hand made furniture, leather goods, terracotta, hand-made paper items, jute and wood goods, Christmas decorative, handloom, cane, grass, bamboo, mixed media and traditional jewelleries.
Italy, Belgium, England, Germany, Sweden, Portugal and Austria, United States, Saudi Arab, United Arab Emirates and Japan are the main buyers of Bangladeshi handicrafts, commerce ministry sources said.
Despite present pitiable export performance in the country's Frozen Food, Footwear, Tea, Leather and Leather goods exports, these also can play vital role in securing the country's export earning in the trouble time.
Elaborating this situation, EPB Vice-Chairman Shahab Ullah said the country is too much dependent on too few countries when it comes to export. "We export 171 items to 189 countries. But only four items dominate the 81 per cent of the export."
This situation heightens the need for taking adequate and effective steps at the soonest for achieving diversification of both export goods and export markets. Otherwise, maintenance of export earnings and growth at a satisfactory level will be too difficult to achieve on a sustained basis.
As the world's local bank, HSBC enables businesses to go international. In Bangladesh, HSBC facilitates approximately 9 per cent of the country's total export.
HSBC Export Excellence Awards 2009 is the latest efforts of the Bank to recognise the business excellence of the exporters of Bangladesh.
Other than RMG, there are plenty of export opportunities for the highly prospective agro-products, leather industries, pharmaceutical industries, ceramic industries, light engineering industries, computer software, electric and electronic products, tea, jute, handicrafts, wooden furniture and products of horticulture and floriculture.
But success in these ventures will require ensuring quality and safety of products and even maintaining an edge over the competing exporters from other countries. Value-addition to these rising 'export-starts' is vital to achieve the goal and securing the future of the country's export earning in coming years.
According to latest statistics of export earning, the country's jute and jute goods exports have registered a record growth that was never witnessed in Bangladesh for decades. And for the first time, its benefits have reached every segment of the industry, including the farmers, some of whom got even Tk 2400 for every maund (37.5 kilograms) of jute, according to available statistics.
It was the outcome of a sudden surge of interest in natural fibre in both developed and developing countries that helped usher in "the new jute revolution" with this year's earnings set to cross more than US$600 million. Consumers -- both individual and industrial -- are ditching synthetic fibres for natural ones such as jute.
They are now more conscious about the harmful effect of synthetic fibres. Moreover, timely product diversification has also played a big role in helping jute reclaim some of its lost glories in the country.
This is now evident that jute has reclaimed its honour as the second largest export item after nearly a decade. The Golden Fibre hit the jackpot this year, with the export of raw jute growing more than 38 per cent in the first seven months of the fiscal year to US$111.22 million and jute goods 49 per cent to US$229.6 million.
Together, the export earnings of raw jute and jute goods have outstripped frozen food as the country's second largest shipment.
"This year is the year of jute," said Sheikh Faruk Hossain, chairman of the Bangladesh Jute Association - a grouping of businessmen who export raw jute and jute goods abroad.
"We have never witnessed such a fabulous growth in jute exports for decades," optimistic Mr Hossain added.
Once, raw jute and jute products were the biggest foreign-exchange earner of the country. Jute had then a flourishing international market of its own, spreading its superiority in the world market. But the situation is completely reverse now. With the closure of a number of jute mills, tragedy fell on the jute growers and traders as there were no buyers in the country, opening the flood-gates for smuggling of raw jute to India.
Nazmul Huq, whose Janata Jute Mills is at the forefront of the revival of the Golden Fibre, said timely product diversification has also played a big role in helping jute reclaim some of its lost honours. "Jute goods accounted for 68 per cent of the country's total jute exports in the current fiscal year. And the main reason is timely product diversification," he said. Bangladesh exports raw jute mainly to India and jute goods to Turkey, Belgium, Iran, Spain, Syria, Uzbekistan, China, India and Pakistan. Carpet yarns and jute sackings are the top selling products, now seeing huge demand in East Europe, Middle East, and central Asian countries. Main export items of jute based products are --jute carpet, jute manufactures, jute yarn & twine, raw jute.
Mr Huq claimed that the jute could become the country's next billion dollar industry after the apparels, leaving behind frozen food and footwear, in the next few years.
"I can't give any timeframe, but it will happen as Bangladeshi jute millers are for the first time fulfilling the promise they have shown for years," he added.
To achieve this goal, experts have suggested that raw jute needs to be declared as agricultural product and the export of raw jute, as agro-based industrial operation. It is time that jute industries get a befitting policy focus, they added. Pharmaceutical export, another most vibrant export for the country, witnessed 6.21 per cent growth in the fiscal 2008-09, earning US$45.67 million, EPB statistics showed.
According to record, export value of pharmaceuticals, though small, is growing at 50 per cent per year. Despite the effect of global recession, the sector hatched a 20.70 per cent growth within the first six months of the current fiscal year (2009-10), posted an earning of US$22.86 million. Government set an ambitious target of US$ 52.52 million for the current fiscal that exporters are expecting to over-grow.
With over US$250 million investments in the pharmaceutical industry of Bangladesh, the sector has emerged as the country's most developed hi-tech one that contributes significantly to the national economy.
Meeting over 97 per cent of total domestic requirements, pharmaceutical products from Bangladesh have reached the international market spreading over 72 countries around the world including Pakistan, Nepal, Sri Lanka, India, Thailand and China. Pharmaceutical companies are now trying to penetrate into the medicine market of European and African continents.
"We are the largest manufacturer of pharmaceutical products among the less developed nations in the Asian region," President of Bangladesh Association of Pharmaceutical Industries - BAPI, Salman F. Rahman told the FE. Expressing optimism, the BAPI president also said that export value of the country's pharmaceutical sector is growing significantly. "With favourable government policy, we are expecting a vibrant growth in domestic and overseas business in the coming years," he added.
Pharmaceutical industry experts however opined that Bangladesh can export drugs worth Tk200 billion a year if the local medicine makers upgrade their facilities to a level that will enable them to do contract manufacturing for foreign pharmaceuticals. Drug manufacturing is becoming costly in the highly regulated western market, prompting major pharmaceutical companies to contract out drug making to companies in low-cost countries, they said.
"Contract manufacturing is one of the major growth areas in global drug industry. And Bangladeshi companies can be one of the major beneficiaries of the fast growing sector," said ABM Faroque, president of Bangladesh Pharmaceuticals Society (BPS).
"The country's top 10-12 drug makers have state-of-the-art drug plants and if they upgrade their facilities further, they'll be in a position to sign lucrative contract manufacturing deals with foreign companies," Mr Faroque, also a professor of pharmaceutical technology at Dhaka University said.
BPS study has also found that the contract manufacturing by the local companies could alone fetch export orders worth Tk200 billion. Presently India, Turkey and China dominate the sector.
Bangladesh's software industry marked an impressive 33 per cent growth in export in the last fiscal year (2008-09) -- indicating towards a brighter future-- as many western and European firms shifted focus on the South Asian country for low-cost IT services, sector insiders said.
A healthy chunk of US$32.91 million export earnings of the industry in the last fiscal year (FY2008-09) came from computer software developmental services, EPB data revealed. Bangladesh's Ministry of Commerce has set an export target of US$38 million for the current FY 2009-10.
Industry experts says, recent recession has made Bangladesh's software industry a very suitable harbour for outsourcing as many western and European companies shifted their focus on the country for low-cost IT services. The country's software export has achieved hefty growth in recent months, as more than 400 software and IT companies are exporting their services to around 30 countries in the world.
Bangladesh fetched over US$19 million from export of software in the first six months of the current 2009-10 fiscal year.
According to Habibullah N Karim, president of Bangladesh Association of Software & Information Services (BASIS) the country has already become a large ground of potential human resources with bright aptitude, quality and natural ability in software development.
"Bangladesh's software industry will become a US$500 million export earning sector by 2013-2014 fiscal if the current trend of robust growth continues," the BASIS president claimed.
Bangladesh's approximately Tk20 billion (about US$285.71 million) software industry currently employs nearly 20,000 skilled and semi-skilled professionals.
Industry experts however complained over poor investment is still hindering the desired growth of the sector, which is the second largest avenue of graduate employment in the country.
The country's income from both fresh and frozen vegetable exports has increased to US$45 million in fiscal year 2008-09, almost reaching its target.
"Bangladeshi frozen vegetables are already being exported to the UK market. With growing demand, it can be a major commodity for the country but it is losing competitiveness due to high freight cost," said Moinul Islam Chowdhury, managing director of Eurasia Food Processing Ltd.
But we can't increase export volume despite having huge demand, he mentioned.
High freight cost, lack of testing laboratories and other infrastructure facilities are some of the hindrances that are holding back Bangladesh's potential of becoming a major frozen vegetable exporting country, experts claimed.
Bangladeshi exporters have to pay US$4800 to US$5800 a container as freight charge for exporting their products while its competitors pay only US$1000 to the same markets, exporters said adding that India, Malaysia, Pakistan and Singapore are dominating the global market.
Government's immediate supports are required in this industry in order to exploit the full potential; traders said adding that government's promised vegetable and fruits exporting special zones can be encouraging. They said the government should also encourage and provide concessions for the development and growth of packaging industries and infrastructure facilities in this sector.
Bangladesh exports vegetable mainly to U.K, Saudi Arabia, Kuwait, U.A.E, Qatar, Bahrain, Oman, Italy, U.S.A, Singapore, Germany, Pakistan, Canada, Greece, Malaysia and France.
Bangladesh has around 60 cement manufacturing companies, including multinational cement giants - Lafarge and Holcim. Shah Cement, Meghna Cement, Aramit, Crown, Premium and Holcim export cement to the north- eastern states of India. They now weigh the feasibility of several import proposals they recently received from Sri Lanka, Myanmar, Saudi Arabia, Sudan and Kenyan companies, company sources said. According to EPB, cement manufacturers during the first six months of current fiscal year earned Tk276.9 million while it was Tk262.9 million during the corresponding period of last fiscal.
Wooden furniture is another promising export item for Bangladesh that can stand strong in its trouble time.
Export Promotion Bureau (EPB) data shows that the country exported furniture items worth US$2.44 million in the 2008-09 fiscal year, which is as little as 0.02 per cent of the US$8926 million global market.
Top wooden furniture export destinations for Bangladesh are Sweden, India, Thailand, U.S.A, U.K, Germany, Canada, The Netherlands, Malaysia, Sri Lanka, Denmark, Italy, U.A.E, Kenya, Vietnam, Japan, Brunei etc.
Proper government supports could raise the country's foreign currency earning from handicraft exports by at least ten times, exporters claimed. But thy blamed the government for not providing them with the commercially useful information and assistance in developing and increasing exports from the sector.
'We can earn US$50 million from handicraft export if the government helps us to build up infrastructure, including a design training centre,' general secretary of Bangladesh Handicrafts Manufacturers and Exporters Association (Banglacraft) Shahjalal said.
Commerce Ministry sources said Bangladesh earned only US$6.44 million by exporting handicrafts in 2008-09. For the current fiscal, the target has been set at US$7.4 million.
Bangladesh's handicrafts, which have huge demand in the global market, include basket ware, hand made furniture, leather goods, terracotta, hand-made paper items, jute and wood goods, Christmas decorative, handloom, cane, grass, bamboo, mixed media and traditional jewelleries.
Italy, Belgium, England, Germany, Sweden, Portugal and Austria, United States, Saudi Arab, United Arab Emirates and Japan are the main buyers of Bangladeshi handicrafts, commerce ministry sources said.
Despite present pitiable export performance in the country's Frozen Food, Footwear, Tea, Leather and Leather goods exports, these also can play vital role in securing the country's export earning in the trouble time.
Elaborating this situation, EPB Vice-Chairman Shahab Ullah said the country is too much dependent on too few countries when it comes to export. "We export 171 items to 189 countries. But only four items dominate the 81 per cent of the export."
This situation heightens the need for taking adequate and effective steps at the soonest for achieving diversification of both export goods and export markets. Otherwise, maintenance of export earnings and growth at a satisfactory level will be too difficult to achieve on a sustained basis.
As the world's local bank, HSBC enables businesses to go international. In Bangladesh, HSBC facilitates approximately 9 per cent of the country's total export.
HSBC Export Excellence Awards 2009 is the latest efforts of the Bank to recognise the business excellence of the exporters of Bangladesh.