Exploring untapped markets in Latin America, Africa stressed to grow export
Commerce secretary said commerce ministry was working on new markets to boost exports
Besides readymade garments, Bangladesh needs to explore untapped markets in the Commonwealth of Independent States, Latin America, and African regions instead of concentrating only on the European Union and the US in order to diversify the export basket, speakers told a webinar on Saturday.
They said the Southern African Development Community is a regional economic community comprising 16 members in this continent. The members have a common customs union which could be a gateway for 29 crore people. If a product enters a member country, it can easily travel to other states without facing customs problems.
Faruque Hassan, president of Bangladesh Garment Manufacturers and Exporters Association, said around 80% of Bangladesh's garment export items include five basic products – trousers, T-shirts, sweaters, shirts, and jackets mostly made of cotton.
The reality is that the industry remained within a volume-driven growth strategy, focusing more on basic garments, he told the "Diversification of Bangladesh's Export Basket: Opportunities and Challenges" webinar organised by the Institute of Chartered Accountants of Bangladesh (ICAB).
He said there is a huge market for textile articles in Bangladesh but "we are still dependent on imports."
"With the rapid expansion of the apparel industry, the textile industry in the country also grew significantly, though not enough to meet 100% requirements of yarn and fabric for the apparel industry yet. To cater to the needs of an industry of around $20 billion, there is still a 20% shortfall of knitted fabrics and a 60% shortage of woven fabrics capacity-wise.
"The capacity of fabric designing, dyeing, and processing is much low in Bangladesh where more investments are required not only to meet the need for basic apparel items but also to support the transformation into higher-value segments," he explained.
He added, "Fibre diversification will be key to sustaining the industry's growth. We are continuously promoting investments in the area of non-cotton both in garments and the backward linkage industry."
Md Saiful Islam, president of Leathergoods and Footwear Manufacturers and Exporters Association of Bangladesh, said leather goods exports had declined during the Covid-19 pandemic as they are luxurious items.
He said buyers had moved from leather goods to synthetic items, adding that environmental issues are big threats for the industry.
"We need to set up a central effluent plant in our tannery area to deal with liquid and solid waste so that leather products could survive in the competitive market. To achieve the Sustainable Development Goals, we have to earn $5 billion from leather goods," said Saiful, also the vice-president of Bangladesh Ship Builders Association.
He further said the shipbuilding sector is completely dependent on raw material imports, emphasising low-interest loans for the sector.
Syed Almas Kabir, president of Bangladesh Association of Software and Information Services, said the youth comprise a large part of the population but they need to be upskilled.
He said with the Fourth Industrial Revolution looming, reliance on technology should increase.
"Our software business does not need much tangible assets," he said, calling for introducing bank loans for which intangible assets like software can be mortgaged.
Bangladesh Handicrafts Manufacturers and Exporters Association, and Bangladesh Jute Goods Exporters' Association stressed free trade agreements.
Shubhashish Bose, chief executive officer of ICAB and a former senior secretary, presented the keynote. He said 80% of Bangladeshi products have duty-free access to 27 countries of the European Union, Australia, New Zealand, Norway, Switzerland, the UK, Turkey, Canada, and Russia under the generalised system of preferences (GSP).
He said six major exportable items are woven garments, knit garments, leather and leather products, jute and jute goods, agricultural products, and frozen food and they comprised 92% of total exports during the 2019-20 fiscal year.
IT, pharmaceuticals, ocean-going ship building industry, light engineering, and ceramic and porcelain wares deserve more attention to earn more foreign currency, he also said.
Commerce Minister Tipu Munshi, who was the chief guest at the event, said his ministry was working with Bangladeshi embassies and foreign missions to expand the export market of Bangladeshi products.
He said export diversification is the highest priority of the government. "To this end, we are providing subsidies for a number of products to encourage exports."
The minister said they had undertaken a Tk1,000 crore project on leather products, plastics and light engineering in collaboration with the International Finance Corporation.
"This will help these sectors enhance their capacities for competitiveness, especially in the post-LDC graduation period."
Md Jafar Uddin, senior secretary to the Ministry of Commerce, said Bangladesh would complete LDC graduation in 2029 and free trade agreements with developed countries would not be possible before that.
The commerce ministry is working on new markets to boost exports, he said.
"For example, halal products worth about $1 billion are exported from Bangladesh annually. But we have found that the annual demand for such products in the Muslim countries is more than $10 billion. We took special initiatives to grab these markets."