Tuesday, February 20, 2024

Increase in Bangladesh’s garment exports of earnings bears ‘good news’ at this time of dollar shortage: The initiative must be continued

Mehjabin Bhanu is Bangladeshi culuminst, security and strategic affairs analyst, teacher.

Export earnings are very important in the overall progress of the country. If export earnings increase and this trend continues, it is very promising. The Export Promotion Bureau (EPB) has released country-wise export data for July-April of FY 2022-23. During this period, Bangladesh’s total garment exports reached 42.63 billion US dollars with a growth of 10.67% compared to the same period of the previous year.

Of these total apparel exports, USD 21.22 billion worth of apparel (49.78% of total exports) went to the EU market. The United Kingdom had a share of 10.77% and exported a total of US$ 4.59 billion to the United Kingdom; $7.73 billion worth of apparel was exported to the US market – which was 18.14% of total exports; The share was 3.26% and a total of USD 1.39 billion in apparel exports to Canada. Besides, USD 7.69 billion was exported to non-traditional markets – which had a share of 18.04%.

The European Union has contributed significantly to this growth. This is because it is the largest destination for Bangladesh’s apparel exports, with a growth of 9.94% in July-May 2022-23 as compared to July-May 2021-22 fiscal year, and apparel exports increased from USD 19.30 billion to USD 21.22 billion. Exports in Germany declined by 7.22% during the same period of the previous fiscal year (July-May 2021-22), from USD 6.50 billion to USD 6.03 billion. Exports to France and Italy reached USD 2.6 and 2.06 billion respectively. Export growth was 23.4% and 44.81% respectively.

After lagging behind for two consecutive months, May’s exports have surged again. Export earnings gave this ‘good news’ at a time when coal imports are uncertain due to the dollar crisis. Export earnings in 11 months have reached close to 12 months of last year. If this trend of growth continues, Bangladesh is going to set a record by the end of June. As a result, there is a promising situation in terms of export earnings. Taking this into consideration, it is the duty of the concerned to take necessary initiatives and ensure their proper implementation.

Due to the Russia-Ukraine war, many kinds of crisis situations have arisen all over the world. Which has had an impact on the price of various products starting from food products. Just as the overall issues should be taken into account for good reason, the necessary initiatives should be maintained subject to monitoring the overall condition of the export sector to deal with the critical situation. Garment exports should be increased further. It should be remembered that export income is very significant in the overall prosperity and progress of the country. As a result, it is necessary to take necessary steps to increase exports.

The Export Promotion Bureau (EPB) has released the country-wise export data for the July-May period of FY2022-23. The total RMG export during this period has reached $42.63 billion with 10.67 per cent year-over-year growth. Out of this total RMG export, $21.22 billion went to the EU market with a share of 49.78 per cent of total export.

A recent study says that low productivity, shortage of mid-level management professionals and limited backward and forward linkages are among major challenges that need to be addressed for further expansion of the country’s RMG sector.  The other challenges identified by the study included dependency on import of raw materials, inadequate supply of utilities, transport services and high production costs, limited facilities in ports, lack of interest in financing small and medium producers, administrative and regulatory constraints. Hence, relevant authorities should come up with effective measures to tackle the challenges in no time. Also, Bangladesh now needs to devise measures to develop skilled manpower in RMG sector in order to invite more foreign investments in the coming days. Bangladesh needs to pay more attention to devise an alternative strategy that encourages diversification of exports, both in terms of products and destination

RMG exports from Bangladesh rebounded strongly in the last year, recording 24 per cent annual growth. Reportedly, Bangladesh holds the second position in the European market and the third position in the US market in the export of ready-made garments. However, Bangladesh needs to diversify its export basket in order to sustain accelerated economic growth, increase investment opportunities and create more jobs.

Over the last few years, we have seen some remarkable changes in our industrial infrastructures. Also, international retailers have got back their confidence to invest in Bangladesh. Besides, some of the biggest apparel exporters have been losing their share in global market because of higher costs of production and shortage of workers. As a result, work orders are being diverted to Bangladeshi factories. Therefore, we should take the privilege of low-cost production that we are enjoying in Bangladesh. 

New and potential markets must be explored for diversification and sustainability of the sector. The government’s recent initiatives to promote thrust sectors including pharmaceuticals, agro-products, plastics, ICT, shipbuilding, furniture, are moving in the right direction. But at the same time, it is true that in order to sustain the current tempo of the country’s export growth, our efforts to solve infrastructure, power, and institutional bottlenecks need to be followed through. A comprehensive policy package coupled with supportive governmental incentives will help our export industry grow further.  Bangladesh needs to pay more attention to devise an alternative strategy that encourages diversification of exports, both in terms of products and destination.

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