The importance of export diversification
Monday, 4 January 2010
Bangladesh's export trade is largely centred on one item, the readymade garments (RMG) products. About three-fourths of its current annual export earnings come from the RMG sector. And what is also worth noting is that the greatest volumes of RMG exports go to a few countries in North America and Europe. After RMG, the only other mentionable exported items are shrimp, leather and jute. Even the buyers of these latter export items are limited in number. The very narrow product range of the country's export cargoes and their large concentration on a few markets, in terms of export destination, mean that its export flow is vulnerable to any downturn in the external environment. Price fluctuation, reduced demand and other unfavourable developments in a few countries and also of a very few items can expose the country's overall earnings to serious crises.
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. This diversification can substantially contribute to safeguarding the economy from a fall in export earnings as reduced earnings of some traditional export goods or from some countries, can be offset by new earnings or growing earnings from other sources.
Hence, there is a very compelling need for diversification of export activities of the country. Prime Minister Sheikh Hasina rightly highlighted this aspect of the economy, while she inaugurated the other day the month-long Dhaka International Trade Fair (DITF). It is imperative to exploit export opportunities for the highly prospective agro-products, leather industries, pharmaceutical industries, ceramic industries, light engineering industries, computer software, electric and electronic products and products of horticulture and floriculture. Success in these ventures will require ensuring quality and safety of products and even maintaining an edge over the competing exporters from other countries.
The fiscal policy in the recent years incorporated some supportive measures to enable the country to break new grounds in the export of agro-products, mainly foodstuffs in processed and other forms. The export destinations of these products would mainly be the developed countries where the prospective markets are located. The importers of such products are very likely to be keen about the quality of agriculture-oriented products or food products. Thus, 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 its expected role. 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. There is great potentials in this sector. But, consolidation and expansion of success in this sphere also depend to a large extent on maintaining the expected quality of the medicines to be exported. The Department of Drug Administration will require to improve its performance and play a significant role for ensuring the production of quality medicines.
Some countries in recent years declared that they would admit certain Bangladeshi products in their markets on a duty-free basis. However, full exploitation of these opportunities will depend on the exporters doing their homework well and the government extending truly facilitating support, more in deeds than in words. Exporters on their own are seen taking measures in some cases to enhance their competitiveness through training of their workers and adoption of new methods. These initiatives should be encouraged.
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. This diversification can substantially contribute to safeguarding the economy from a fall in export earnings as reduced earnings of some traditional export goods or from some countries, can be offset by new earnings or growing earnings from other sources.
Hence, there is a very compelling need for diversification of export activities of the country. Prime Minister Sheikh Hasina rightly highlighted this aspect of the economy, while she inaugurated the other day the month-long Dhaka International Trade Fair (DITF). It is imperative to exploit export opportunities for the highly prospective agro-products, leather industries, pharmaceutical industries, ceramic industries, light engineering industries, computer software, electric and electronic products and products of horticulture and floriculture. Success in these ventures will require ensuring quality and safety of products and even maintaining an edge over the competing exporters from other countries.
The fiscal policy in the recent years incorporated some supportive measures to enable the country to break new grounds in the export of agro-products, mainly foodstuffs in processed and other forms. The export destinations of these products would mainly be the developed countries where the prospective markets are located. The importers of such products are very likely to be keen about the quality of agriculture-oriented products or food products. Thus, 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 its expected role. 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. There is great potentials in this sector. But, consolidation and expansion of success in this sphere also depend to a large extent on maintaining the expected quality of the medicines to be exported. The Department of Drug Administration will require to improve its performance and play a significant role for ensuring the production of quality medicines.
Some countries in recent years declared that they would admit certain Bangladeshi products in their markets on a duty-free basis. However, full exploitation of these opportunities will depend on the exporters doing their homework well and the government extending truly facilitating support, more in deeds than in words. Exporters on their own are seen taking measures in some cases to enhance their competitiveness through training of their workers and adoption of new methods. These initiatives should be encouraged.