Tracking export diversification

Bangladesh is heavily dependent on a single product that fetches a lion's share of its foreign exchange earnings. The ready-made garment (RMG) accounts for the biggest share in the export basket. For more than a couple of decades, the government has been trying to diversify its export basket. However, in recent years, it has been noticed that there are some signs of export diversification. Maybe, the government's policy is working. Let us try to analyze how the changes have taken place over the last few years.
It is true that the share of RMG in the export earnings is still very high, but some other products have already cut their niche in international markets as is evident in their growing shipments. The Export Promotion Bureau (EPB) data show that at least six sectors have moved past the half a billion US dollar mark in export earnings. As many as four other sectors have touched the billion US dollar mark over the last one decade.
Among the six sectors, the agricultural products, jute & jute goods, leather & leather products, and home textile have already crossed the billion dollar earnings mark. On the other hand, light engineering, and footwear products (except leather) have also touched the half a billion dollar mark.
In addition, some other products like chemical, rubber, carpet, furniture, specialised textiles, plastic products, glass & glassware, and headgear & caps are also showing signs that they can help in export-diversification to a great extent. Earnings from export of those products are also increasing year-on-year.
If we analyse the export of those above mentioned products, we can notice that their earnings are rising year-on-year. If we compare their earnings 10 years back with the figures in the last fiscal year (FY) 2021-22, it will be clear that shipments of all those products are rising.
Agri Products: Agricultural products including corn, vegetables, fruits and processed foods are holding out a good prospect as their shipment is rising every year. Ten years back in FY2012, the export earnings from the agri products were recorded at only US$402.70 million. The earnings swelled almost three-fold to $1162.25 million in the last FY2022. Of the agro-based products, Bangladesh exported vegetables and some sort of root and tubers worth $99.91 million in the last FY2022. The earnings from coffee, tea, and spices stood at $49.54 million.
According to the EPB data, Bangladesh earned $55.20 million exporting the oil seeds and oleaginous fruits; miscellaneous grains, seeds and fruit; industrial or medicinal plants; straw and fodder in FY2022. The earnings from animal or vegetable fats and oils and their cleavage products; prepared edible fats, animal or vegetable waxes were recorded at $230.09 million. It means diverse products are there in Bangladesh's export basket from the agriculture sector.
Bangladesh exports its agricultural products to different destinations including Singapore, Brunei, Middle Eastern countries, the UK, Hong Kong, Australia, Korea and European countries.
Jute and Jute Goods: Bangladesh's another hope is the jute and jute goods sector. Although the sector decades ago was the largest export earner, but the exports fell over the last couple of decades due to several problems at home and abroad. But the jute and jute goods have overcome the complexities and now are fetching more than a billion USD in foreign exchange every year. The earnings from the jute and jute goods were $816.27 million four years back in FY2019. It has now crossed the billion USD-mark. The country earned $1127.63 million worth of foreign exchange in last FY2022.
Light Engineering: The light engineering sector of Bangladesh has a great potential to aid export diversification as it has emerged as one of the main products in the export basket over the last few years. The earnings from this sector stood at only $355.96 million 10 years back in FY2012. Now the earnings almost touched the billion USD mark in the last FY2022. According to the EPB data, the Bangladeshi light engineering product manufacturers had made shipments worth $795.63 million in the last FY2022. The earnings may cross the billion dollar mark in the next couple of weeks. Iron steel, copper wire, stainless steel ware, engineering equipment, electric products and bicycle are the dominant items in the light engineering sector.
Leather and Leather Products: This sector is also showing a ray of hope in export diversification. Ten years ago in FY2012, earnings from the export of leather and leather goods were only $429.52 million. In the last FY2022, the earnings crossed the billion dollar mark to $1245.18 million.
As long as the raw leather is available in Bangladesh and its price is cheapest, there is a big prospect for expanding its export to the overseas market. Bangladesh's leather products including footwear, bags, and belts have already attracted some overseas buyers including those in Europe, South Asian, Africa and Middle Eastern countries. The export will grow further, if the country's leather industry can comply with the global standard of production. The government has already set up a leather industrial estate in Savar with availability of central effluent treatment plants for checking the environmental pollution.
In the meantime, scores of Bangladeshi leather industries have emerged as exporters of leather and leather goods to overseas markets. Many of them are trying to upgrade their factories to make them compliant in a bid to get more export orders.
Home Textile: This is another promising sector which is helping diversify exports beyond the RMG. The shipment of home textile products is rising year-on-year.
In last fiscal FY2022, export earnings from the home textile sector were recorded at $1621.93 million. A decade ago in FY2012, the earnings were only $906.07 million. Bangladesh achieved 43.28 per cent year-on-year growth in the last FY2022.
The local home-tex makers export blankets, bed-sheets, sacks and bags, floor cloths, bed cloths, life-jackets, life-belts, etc. to many European, American, African, Australian and Asian markets.
Other Footwear: Bangladesh is also showing its better capacity in exporting footwear which is not made of leather. Within a decade, the country has made a remarkable progress in exporting those kinds of shoes and footwear to different overseas markets. Ten years ago, the export earnings from this sector were only $335.51 million. It increased to $449.15 million in the last FY2022, the EPB data showed. Among the products, the water-proof footwear, ski-shoes, ski-boots, sandals, sport shoes are remarkable.
Plastic Products: These are also promising products added to the export basket. Export earnings from this sector have doubled in a decade. The earnings from the plastic product export reached $166.25 million in the last FY2022 from only $88.69 million 10 years ago in FY2012. Some plastic manufacturing companies like Pran-RFL, Bengal, Akij, Taj Plastic are emerging as big players in diversifying exports.
Chemical Products: The chemical products are also showing a ray of hope as their export earnings are rising year-on-year, especially in recent years. The earnings from this sector reached $364.07 million in last FY20-22 from $103.01 million in FY2012.
Glass and Glassware: The export of glass and glassware increased many-fold over the last 10 years. Its earnings from shipments were only $0.37 million in FY2012. Now it has reached $18.65 million.
Not only export, the local glass industries also meet a good portion of local demand. A decade ago, Bangladesh fully almost depended on the import of glass and glassware.
Headgear and Cap: This is another sector which is playing a vital role in export diversification. Bangladesh has been earning a good amount of foreign exchange from this small industry over the years. The earnings from the items under this sector increased at least seven-fold in last one decade. The EPB data showed that earnings from headgear and cap exports rose to $364.63 million in the last FY2022 from $53.23 million only in FY2012.
Comparison with RMG: It is true that the share of RMG in the export basket is the highest. About 82 per cent of the foreign exchanges come from the RMG export. It is also true that the export earnings from RMG have been increasing year-on-year. Export of some other products is also rising. Their share in the total exports may still be negligible, but the uptrend raises a hope of export diversification. Now, those sectors need a special focus of the government and other players. If the government can encourage those sectors properly through policy and fiscal support, hopefully any of those sectors could exceed the RMG within next 15-20 years.

The writes is a special correspondent of the FE.
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