[ Business ] 2018-01-13
Bangladesh needs to ‘add new products’ to export basket
According to EPB data, Bangladesh achieved an export growth rate of only 1.72pc in 2016-17

Notwithstanding the government’s huge efforts, the diversification of export products has remained a far cry over the years, experts said. This was because of non-addition of new products to the export basket, except for pharmaceuticals and ceramics.

Moreover, there was product concentration within the sectors as well, they said. For example, a handful of products such as shirts, trousers, jackets, t-shirts and sweaters comprised around 74 per cent  of the total export share of the RMG sector.

According to Export Promotion Bureau (EPB) data, Bangladesh achieved an export growth rate of only 1.72 per cent  in 2016-17, with an export volume of $34.66 billion, which was below the target of $37 billion.

The data revealed that the European Union (EU) and the USA remained the major export destinations with respective shares of 56 per cent and 17 per cent.

Adviser to the former caretaker government Dr AB Mirza Azizul Islam told the Independent that the government has the intention to diversify exports as a strategy for trade growth.

EPB has provided several incentives and developed schemes to diversify export products as well as markets, Aziz said. The incentives include tax brackets, duty drawbacks and cash incentives among others, he added.

Aziz opined that the government could promote the private sector to diversify export products.

He said ceramics and pharmaceuticals were being exported, but the quantity was very small. “Now, at least 1100 items are exported. The quantity is not remarkable. The government should address the weakness of the supply side to improve the quality of the products,” he added.

The annual export earnings from pharmaceuticals were still below $100 million a year, but drug makers were optimistic about reaching the $1-billion mark as the industry was growing at 16 per cent a year.

Meanwhile, a couple of domestic companies, including Beximco Pharma, have also gained access to the highly regulated US and UK markets.

Products pertaining to agriculture, light engineering, plastic, jute, various fibres, etc. were getting cash incentives from 5 per cent  to 20 per cent .

For market diversification, around 3 per cent cash incentives were also provided for exports to non-traditional markets.

Many of the beneficiary sectors such as agriculture, halal meat, frozen fish and shrimp, and bicycle under the category of light engineering products had experienced negative growth rates of 22.34 per cent, 49.19 per cent, 6.43 per cent, 5.57 per cent and 16.83per cent, respectively, in 2016-17.

Lead economist of World Bank (WB), Dr Zahid Hussain, said lack of improvement in export diversification was due to four reasons—infrastructure deficit, present global economy and trade policy, lack of exportable industrial products, and withdrawal of generalized system of preferences (GSP).

Hussain said compared to its competitors, Bangladesh’s exports were much more concentrated on limited items.

He said the impact of GSP withdrawal on the non-readymade garment sector was one of the major hurdles in the diversification of export products in the US market.

Hussain emphasised special economic zones with sufficient gas and power supply, to expand the export market.

Earlier, the WB had suggested that the NBR and commerce ministry should develop a trade tariff policy that reconciled revenue mobilisation with investor incentives.

A WB report said Bangladesh has so far failed to make a mark in the export of non-factor services.

Export of services is driven by the 3Ts—technology, transportability, and tradability. Technology, especially information and communication technology (ICT), increases the digital transportability of services, making them more tradable.

The report said ICT in Bangladesh was still underdeveloped and this affected the export of services, even though the services sector accounted for over 50 per cent of the GDP.
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