Reaching the export target
Friday, 19 October 2007
The government has fixed the export target for the current fiscal year at US$ 14.5 billion marking a rise over the target that was set for last year by 19.07 per cent. But the target for this year may appear overambitious in the backdrop of the prevailing situation in respect of export activities. Export receipts during the first three months of the current fiscal, according to unofficial estimates, have not been impressive enough to achieve the target that has been set for the whole year. Official export earning figures are not available yet for the period between July and September, 2007. The records have not been fully compiled. But when these would be disclosed, the earning trends may not be considered as decisively better than what has so far been unofficially estimated about the same.
The country's readymade garments (RMG) sector is the predominant one in the sphere of export activities, earning some 75 per cent of the total annual export earnings. The contributions of other sectors in the export trade are relatively much smaller. Even if these sectors generally do well, even then the effect of the same on export performance would not appear so impressive. Some millions of extra dollars earned in these smaller sectors would not be able to compensate for the lagging performance of the main export sector which makes the heaviest contribution to the country's export activities . Nor is it realistic to assume that exports of one or some unconventional products would soar to remarkable new heights in the remaining period of the current fiscal year. Therefore, the pulling up of the lagging export performance in the first quarter of the currant fiscal would require going all out to improve export performance in the RMG sector at least in the short run. This is the main area of export activities in the country and effecting improvements here would lead to the substantial positive impact in export earnings.
As it is, the latest situation in the RMG sector is, however, not so disquieting as it appeared only a month ago. Things are looking up with RMG industries starting to get orders afresh from the buyers. Some 20 per cent rise in export orders was noted last month after the drying up of orders in the previous months. But the RMG operators will need some enabling to maintain and improve their competitiveness. They had to absorb quite a lot in recent times from meeting the compliance demands of foreign buyers that escalated their production costs from paying more as wages and other benefits to workers. The resources of many RMG industries were under severe pressure from the government directive to pay up-to-date wages and bonuses to workers before Eid.
Thus, many of the RMG units are short of finance and the government ought to make a contribution to help them overcome their finance-related problems. Speedy disbursement of cash incentives to RMG sector entrepreneurs can be particularly helpful. The association of garments exporters, BGMEA, has implored the government to persuade the banks to extend credits to them on more flexible and easier terms. They particularly want lending rates to be reduced, specially for RMG enterprises. The Bangladesh Bank (BB) cannot dictate the lending rate to the private commercial banks but it certainly can exercise its consultation mechanism and influence to score some results to this end. The BB Governor pledged before the Eid that he would sit with the management of the banks with the aim of persuading them to push down the lending rate. This pledge should be redeemed at the earliest.
The government is also expected to fine-tune a surveillance and prompt response mechanism in relation to attempts to brew up violence targeting the RMG industries. The complete physical safety and uninterrupted functioning of the RMG industries must be aimed for in doing these tasks. Uninterrupted power supply to RMG industries needs to be ensured. The improvements that have so far been achieved in areas of handling conditions at Chittagong port should be consolidated further in order to shorten the lead time in exporting RMG products on a sustained basis.
The country's readymade garments (RMG) sector is the predominant one in the sphere of export activities, earning some 75 per cent of the total annual export earnings. The contributions of other sectors in the export trade are relatively much smaller. Even if these sectors generally do well, even then the effect of the same on export performance would not appear so impressive. Some millions of extra dollars earned in these smaller sectors would not be able to compensate for the lagging performance of the main export sector which makes the heaviest contribution to the country's export activities . Nor is it realistic to assume that exports of one or some unconventional products would soar to remarkable new heights in the remaining period of the current fiscal year. Therefore, the pulling up of the lagging export performance in the first quarter of the currant fiscal would require going all out to improve export performance in the RMG sector at least in the short run. This is the main area of export activities in the country and effecting improvements here would lead to the substantial positive impact in export earnings.
As it is, the latest situation in the RMG sector is, however, not so disquieting as it appeared only a month ago. Things are looking up with RMG industries starting to get orders afresh from the buyers. Some 20 per cent rise in export orders was noted last month after the drying up of orders in the previous months. But the RMG operators will need some enabling to maintain and improve their competitiveness. They had to absorb quite a lot in recent times from meeting the compliance demands of foreign buyers that escalated their production costs from paying more as wages and other benefits to workers. The resources of many RMG industries were under severe pressure from the government directive to pay up-to-date wages and bonuses to workers before Eid.
Thus, many of the RMG units are short of finance and the government ought to make a contribution to help them overcome their finance-related problems. Speedy disbursement of cash incentives to RMG sector entrepreneurs can be particularly helpful. The association of garments exporters, BGMEA, has implored the government to persuade the banks to extend credits to them on more flexible and easier terms. They particularly want lending rates to be reduced, specially for RMG enterprises. The Bangladesh Bank (BB) cannot dictate the lending rate to the private commercial banks but it certainly can exercise its consultation mechanism and influence to score some results to this end. The BB Governor pledged before the Eid that he would sit with the management of the banks with the aim of persuading them to push down the lending rate. This pledge should be redeemed at the earliest.
The government is also expected to fine-tune a surveillance and prompt response mechanism in relation to attempts to brew up violence targeting the RMG industries. The complete physical safety and uninterrupted functioning of the RMG industries must be aimed for in doing these tasks. Uninterrupted power supply to RMG industries needs to be ensured. The improvements that have so far been achieved in areas of handling conditions at Chittagong port should be consolidated further in order to shorten the lead time in exporting RMG products on a sustained basis.