Why Bangladesh’s exports fall short of target

Bangladesh’s current fiscal year is set to end on Friday. As of July-May of FY’17, Bangladesh earned $31.79 billion against the target of $37 billion. Dhaka Tribune’s Ibrahim Hossain Ovi talked to stakeholders to learn why export earnings fell short of target

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Mohammad Hatem

Senior vice president, Exporters Association of Bangladesh (EAB)

A good number of RMG manufacturers fail to complete the Corrective Action Plans (CAPs) within the deadline set by the Accord and Alliance – two platforms of global retailers tasked with overseeing safety standards. It is because of fund shortage that prevented the apparel makers from implementing the CAPs. This led to lower production than that in the previous time.

On the other hand, Bangladeshi manufacturers cannot carry out work orders as they have lost competitive edge in the global market due to rise in production cost.

Besides, global retailers have cut product prices, taking the workplace safety and compliance issues as an opportunity.

All these issues have turned out to be factors in missing the export target and slower growth than that in the previous year.

Besides, RMG manufacturers, especially the knitting sector, cannot use 50% of their installed capacity to produce goods due to lack of gas supply. It should be addressed urgently, or else layoffs will happen and the workers will fall in trouble.

If the government provides financial support including low-cost fund to complete CAPs, Bangladesh will be able to increase production capacity. As a result, in the upcoming year, the export target could be met.

The government has to take a holistic approach for all export-oriented products to ensure a level playing field. Incentives should be equal for all export sectors. Otherwise, the much-needed product diversification would be hindered.

Kazi-Belayet-Hossain

Kazi Belayet Hossain

Kazi Belayet Hossain
Vice president, Bangladesh Frozen Food Exporters Association (BFFEA)

Prices of frozen foods including shrimp have seen a decline in the global market due to economic slowdown in the export destinations, especially in the European Union countries.

While fish production in Bangladesh has also declined due to traditional cultivation methodology and diseases, which caused negative growth, affecting the product supply chain. As a result,  export earnings from the third largest export earner have seen downswing.

On top of that, Bangladesh competitors are supplying shrimps at a lower price than that of us since they have higher production capacity.

Bangladesh’s competitors, including Vietnam, Thailand and India, are cultivating vannamei that gives higher production than Bangladeshi black tiger.

Fish production in the country has also declined due to traditional cultivation methodology, which caused negative growth last year, he said, adding modern technology needs to be applied for shrimp cultivation.

Since diseases, especially virus, are a great threat to shrimp aquaculture in Bangladesh, the cultivators have to focus on specific pathogen-free and genetically improved shrimp stocks.

To enhance fish production, we have to produce prawn in a virus-free environment and cultivate in bio-secure place and controlled environment.

In this regard, the government has to take steps to ensure supply of Specific Pathogen-Free (SPF) Litopenaeus Vannamei. This species give high yield with quality and virus-free seeds.

It is costlier than the traditional cultivation. This is why the government should provide low-rate loans for the shrimp farmers. The authority should also allow vannamei cultivation as it gives high production.

Jasim-Uddin

Md Jashim Uddin

President Bangladesh Plastic Goods Manufacturers and Exporters Association

The exploration of new markets, especially in Asian countries, and cash incentives have helped plastic goods exporters to meet the export target set for the outgoing fiscal year.

During July-May period of the current fiscal, Bangladesh earned $110 million, which is $16 million higher than the total target of $93 million set for the FY’17.

The credit goes to the manufacturers as they tried to explore the new export destinations beyond the traditional markets. In the last fiscal year as well as the current fiscal, export performance of plastic goods makers in the traditional market, especially in Europe and United States, were slower.

As a result, entrepreneurs focused on non-traditional market to increase the export volume and the value to remain in a safe zone.

On the other hand, the government cash incentives expedited the export performance as the manufacturers were encouraged by the move. The government offered 10% cash incentives for the plastic goods manufacturers against their export value.

It is very unfortunate that the manufacturers are yet to realise the cash only due to complexity and rigid conditions. If it is not resolved on an urgent basis, the manufacturers will lose their interest.

To earn more from the sector, the government should take steps including branding Bangladesh plastic products to attract buyers. If it is done, plastic goods will see a sharp rise in the coming years.

Bose

Shubhashish Bose

Shubhashish Bose
Secretary in charge, Ministry of Commerce

It is impossible to earn $5.20 in a single month to meet the export target of $37 billion. There are two factors – external and internal – that acted as a catalyst behind the slow growth of export earnings.

External factors include economic recession in the export destinations and price cut by the global buyers.

Exports have seen a rise in terms of volume, but the value did not increase as prices were lower than the previous year. Ultimately, exporters have received lower amount and failed to reach the target.

On the other hand, the internal factors include tannery relocation, safety in the RMG sector, which hit the production capacity hard.

As a whole, the leather sector performed well, but it is not up to the mark. If production in tanneries had been in full swing, earnings from finished and crashed leather would have been more and the target would have been attainable.

Besides, the prices of frozen foods including shrimps have seen a decline and production has also declined in the global market.

I think these issues would be resolved very soon as the government has taken initiatives to diversify products as well as explore new export destinations in its seventh five-year plan.

The overall export earnings, however, remain in the positive territory. It is a positive indicator for Bangladesh’s apparel sector, despite the global demand for clothing products which is on a downward trajectory.

In the years to come, Bangladesh’s exports earnings will exceed the target as remediation will come to an end by 2018.

Bangladesh has already 67 green RMG factories and a good number of green and compliant factories are in the pipeline to join the production line. This would add value to Bangladesh’s image and draw the buyers’ attention.

Apart from this, after the relocation of tannery industry has been completed and production will go up.

Source: Dhaka Tribune

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