Export diversification
Sunday, 3 June 2007
BANGLADESH'S export trade presently is largely centered on one item, the readymade garments (RMG) products. Presently, 75 per cent of its exports is dominated by these products. The largest volume of these products is exported to a few countries in North America and Europe. After RMG, the only other mentionable items are shrimp, jute and leather. Even the buyers of these secondary export items are limited. The composition of the export basket of a small number of goods and their limited number of buyers means that the country's external trade is vulnerable to any downturn in the external environment, be it price fluctuation or reduced demand. Clearly, export growth can be maintained at a satisfactory level if steps are taken adequately and effectively to achieve diversification of both export goods and their markets. In that case, the country would be hedged considerably against fall in export earnings -- reduced earnings of some items or from some countries-- can in the process be offset by good or steady earnings from other sources.
Relying only on comparative advantage of labour costs, Bangladesh so far could go some way ahead in producing and marketing abroad a few items. But to substantially further increase earnings from exports it has to diversify the product basket, and to that end it must create export opportunities for agro-based industries, leather industries, pharmaceutical industries, ceramic industries, light engineering industries, computer software, electric and electronic products and products of horticulture and floriculture. But in these new ventures its success will essentially come from sustaining in quality and safety standards of products -- essentially in maintaining an edge over its rivals in prices and in other areas. It is heartening to note that the Japan International Cooperation Agency (JICA) will draw up a master plan for the diversification of Bangladesh's export products and this was reported in this paper. But plans are one thing while their implementation is another. Even the best of plans proves to be of little or no value, if not well implemented or executed in time.
The national budget during the last three years declared some helpful fiscal policies to break new grounds in the export of agro-products including mainly foodstuffs in processed and other forms. The export destinations of these products would be mainly the developed countries where the prospective markets are located. But the importers of such products are very likely to be keen about the quality of agriculture-based products or food products from Bangladesh. The exporters of food products from Bangladesh must be exceptionally conscious from the outset to build up an unassailable reputation to these ends in order to get a foothold in these markets and go on increasing their market shares on a sustainable basis. The Bangladesh Standard and Testing Institution (BSTI) ought to be also playing the role expected from it. It will have to be made stronger with equipment and personnel -- where necessary -- and also obliged to work regularly in the clearly defined areas.
Some entrepreneurs in Bangladesh are trying to build up an export market for locally produced medicines. Potentials are particularly good in this sector. But continuation of success in this sphere also depends to a large extent on maintaining the expected quality of the medicines to be exported. The department of drug administration of the government has a regulatory role to ensure the production of safe medicines. But there are allegations of underperformance against this organisation. However, recently there have been some developments which the country's exporters may find favourable. Some countries have declared their intention to admit Bangladeshi products to their markets on a duty-free basis. There could be no better news than this for our export trade. But full exploitation of these opportunities will depend on the country's exporters doing their homework well and the government extending truly facilitating supports.
Relying only on comparative advantage of labour costs, Bangladesh so far could go some way ahead in producing and marketing abroad a few items. But to substantially further increase earnings from exports it has to diversify the product basket, and to that end it must create export opportunities for agro-based industries, leather industries, pharmaceutical industries, ceramic industries, light engineering industries, computer software, electric and electronic products and products of horticulture and floriculture. But in these new ventures its success will essentially come from sustaining in quality and safety standards of products -- essentially in maintaining an edge over its rivals in prices and in other areas. It is heartening to note that the Japan International Cooperation Agency (JICA) will draw up a master plan for the diversification of Bangladesh's export products and this was reported in this paper. But plans are one thing while their implementation is another. Even the best of plans proves to be of little or no value, if not well implemented or executed in time.
The national budget during the last three years declared some helpful fiscal policies to break new grounds in the export of agro-products including mainly foodstuffs in processed and other forms. The export destinations of these products would be mainly the developed countries where the prospective markets are located. But the importers of such products are very likely to be keen about the quality of agriculture-based products or food products from Bangladesh. The exporters of food products from Bangladesh must be exceptionally conscious from the outset to build up an unassailable reputation to these ends in order to get a foothold in these markets and go on increasing their market shares on a sustainable basis. The Bangladesh Standard and Testing Institution (BSTI) ought to be also playing the role expected from it. It will have to be made stronger with equipment and personnel -- where necessary -- and also obliged to work regularly in the clearly defined areas.
Some entrepreneurs in Bangladesh are trying to build up an export market for locally produced medicines. Potentials are particularly good in this sector. But continuation of success in this sphere also depends to a large extent on maintaining the expected quality of the medicines to be exported. The department of drug administration of the government has a regulatory role to ensure the production of safe medicines. But there are allegations of underperformance against this organisation. However, recently there have been some developments which the country's exporters may find favourable. Some countries have declared their intention to admit Bangladeshi products to their markets on a duty-free basis. There could be no better news than this for our export trade. But full exploitation of these opportunities will depend on the country's exporters doing their homework well and the government extending truly facilitating supports.