Export trade under strains

Despite political stability since January 05 elections, the country's export trade registered a negative growth during the first four months of the current financial year. It was surprising that the country's export business had performed better during the turbulent times preceding the polls.
Experts and exporters alike now are of the opinion that the country's export trade is now under strains due to lack of initiatives in some areas and reduced competitiveness of the garment sector.
Exports registered negative growth of 0.97 per cent for the first time in last five years during the first four months of the current fiscal. The downward trend has been attributed to lower earnings from our major export item, readymade garments, said a report released by the Export Promotion Bureau (EPB) recently. The export growth in October fell for the second consecutive month due mainly to fall in export earnings from major buyer, the USA, according to exporters. The news is indeed disconcerting, if not alarming.
Export circles fear, if the readymade garment (RMG) sector fails to ensure improved working conditions and safety safeguards of its workers, it is likely to lose more buyers in the international market.   
Analysis of information released by the EPB reveals that the country is not being able to achieve the export target and the shortfall is rising every month. In fact, export earnings started falling short of target from the beginning of the financial year 2014-15 and in September, it signalled a downward trend. During the first four months of the current financial year, export earnings fell short of target by $793 million. The shortfall was about $500 million in a space of one month only.
Last year, despite political turmoil, 16.47 per cent growth was achieved. If the present trend of negative growth continues, target of $ 33,200 million can not be achieved, according to the EPB and people concerned.    
Export target for woven and knitwear for 2014-15 was fixed at $33,200 million with a growth rate of 10.02 per cent. Last year, earnings against curtailed target stood at $7,695 million and earnings fell short of target by 2.03 per cent in July also. Combined shortfall of July and August stood at 9.16 per cent, while that of September experienced a nominal growth of 0.97 per cent. Actual income during the first four months of FY15 is $ 9,652.6 million against targeted $ 10,444.7 million compared to $ 9,747.2 million during the corresponding period of last financial year. This year, 4.45 per cent growth was achieved in primary commodities sector against the target of 7.11 per cent.   
Alongside a shortfall of 8.24 per cent from targeted growth rate, income earned was 1.35 per cent less than that of the corresponding period of last year. There had been 19.78 per cent shortfall in October and a negative growth of 7.63 per cent was achieved. Knitwear sector recorded a shortfall of 2.39 per cent from target. Negative growth of 2.39 per cent was recorded in jute and jute goods, 23.76 per cent in specialised textiles, 4.40 per cent in woven garments, 1.14 per cent in home textiles, 7.92 per cent in frozen foods, 4.44 per cent in shrimps, 10.61 per cent in leather, 2.98 per cent in yarn and yarn-made products.     
According to EPB statistics, negative growth was recorded in all major sectors except knitwear and leather products. Leading sectors like woven garment, leather, frozen foods, yarn and yarn products, jute and jute goods, raw jute and home textiles experienced negative growth. The export earnings from engineering products including iron steel, copper wire, stainless steel ware, engineering equipment, electric products and bicycle amounted to $138.38 million with a 7.31 per cent negative growth.
Based on the export performance of a handful of sectors, overall export earnings somehow managed to register a positive figure during the first quarter of the current fiscal which could not be retained in later months. The exporters are worried and according to them, export earnings will further drop if the conditions proposed by Europe and America are not complied with.
In a recent report titled 'Bangladesh Development Update', the World Bank has observed, there is a risk of losing GSP (generalised system of preferences) facilities in European market also if work environment and workers' safety in garment factories are not ensured. This will be a serious blow to our export sector and create a great risk for the economy.   
Export is the lifeline of any economy. If the garments sector that contributes 80 per cent of the country's exports, is affected, it would seriously impact overall export earnings. From a narrower perspective, if the RMG sector is in a bad shape, the textiles and yarn sectors are likely to be adversely affected and will register negative growth. Furthermore, pressure for compliance is mounting from the European Union and competitiveness is declining.
The government should come forward with adequate policy supports that different potential sectors need to boost our exports. Badly needed is diversification of export products so as to seize the benefits of duty- and quota-free access offered by many industrialised countries.
 

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