Export diversification bid loses steam

Bangladesh's apparel exports to some potential nontraditional markets declined during the first quarter of the current fiscal year, thereby undermining the move to diversify the country's export base, sources said.
Exports to Turkey and Mexico marked drastic drop by 37.54 per cent and 17.69 per cent respectively while to Japan fell by 0.44 per cent.  
On the other hand, shipments to Australia, Chile and South Africa recorded a slow-pace growth of 4.15 per cent, 3.49 per cent and 2.84 per cent respectively.
The total exports of readymade garment products to the new markets grew by a meagre 0.17 per cent in the July-September period of 2014-15 fiscal year, according to official data.
Apparel manufacturers attributed last year's political instability, tragic industrial incidents in tandem in the sector and the safety-and-compliance issues to the sluggish growth.
On the other hand, experts pointed out another factor: import from Bangladesh became costlier due to a better position of the local currency against the US dollar.
Moreover, the currencies are relatively weaker in the importing countries, especially in Turkey and Japan, which led to a decline in demand.
The new emerging markets are Australia, Japan, China, Chile, Brazil, Japan, Russia, South Africa, New Zealand, Malaysia, Korea, India and Turkey.
They are beyond the traditional export destinations like the USA, Europe and Canada, which buy more than 90 per cent of Bangladesh's readymade garment products.
Bangladesh exports to the new destinations had witnessed growth by more than 20 per cent since 2011-12 till 2013-14 fiscal years.
Export earnings stood at $932.29 million from those markets during the first quarter of the current fiscal year.
Md Shahidullah Azim, vice-president of Bangladesh Garment Manufacturers and Exporters Association (BGMEA), said buyers on the nontraditional markets like the US, the EU and Canada were in a wait-and-watch situation following the recent political turmoil , Tazreen fire and Rana Plaza building collapse and a massive inspection programme undertaken by two foreign groups of stakeholders-Accord and Alliance.
Md Hatem, former vice-president of Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), attributed the safeguard duty imposed by the Turkish government to the fall in export to that country.
Admitting the attempts to explore the Chilean market as insufficient, he expressed his hope that export to Chile would increase with the duty-free facility there taking effect in January.
Some problems like high duty, third-party sourcing from Bangladesh in Russia, visa processing for Latin American countries as there is no embassy there yet were still hindering the exploration of new export destinations, he explained.
He is of the opinion that exporters need government support to negotiate and solve the problems.
To grab the new markets, government-to-government negotiation is a must, apparel makers said.
The government should strengthen the commercial wings of its foreign missions in the new markets to help maintain the higher export growth.
Manufacturers said they had started diversifying the markets in the face of the falling demand for local items during the global recession in 2007 and then in 2008.
 The cash incentives offered to the exporters by the government also encouraged the manufacturers to explore the new destinations, they said, demanding continuation of the stimulus in the coming years.

munni_fe@yahoo.com