The International Finance Corporation (IFC), a member of the World Bank Group, has identified leather and footwear, plastics, and light engineering sectors as potential areas for diversifying the country’s export basket, which is currently highly dependent on apparel sector.
The IFC suggestion came at the launching of a report “Building Competitive Sectors for Export Diversification: Opportunities and Policy Priorities for Bangladesh” at a Dhaka city hotel on Sunday.
The IFC and the Policy Research Institute jointly organized the event.
IFC senior economist M Masrur Reza and IFC private sector specialist Hosna Ferdous Sumi presented the report in which they stressed building supply-side capacity of the industries to gain competitive advantage in export.
The report showed that leather and footwear, plastics, and light engineering would help create greater access to international markets for Bangladeshi products. It said that 84% of the country’s export earning was solely coming from the RGM sector.
The country’s export earnings in the first five months of the 2019-20 fiscal year stood at $15.77 billion, which was 12.59% less than the target and 7.6% lower year-on-year.
“To sustain its growth trajectory and reduce over dependence on any single item, Bangladesh needs to build a strong manufacturing ecosystem and develop new products, while paving the way for large scale job creation and poverty reduction,” said Wendy Werner, IFC Country Manager for Bangladesh, Bhutan and Nepal.
Leather Goods and Footwear Manufacturers and Exporters Association of Bangladesh (LFMEAB) President Md Saiful Islam said the country was currently using only 20% of its capacity of leather goods manufacturing and export.
“If we can use our full capacity, the country will earn five billion dollar a year from this industry. But we need better policy support from the government. The cost of fund is very high and holding back business from growth,” he said.
Bangladesh Plastic Goods Manufacturers and Exporters Association (BPGMEA) President Md Jasim Uddin mentioned that the per capita plastic consumption of the country was only 5 kg where in developed market this rate was 130 kg per year.
“So there is a huge domestic market. If the government provides proper policy support, we can go for plastic export with new products. Currently the plastic export is also based on RMG industry,” he said.
He said that although there was a 10% incentive on the plastic industry, most of the manufactures were failing to avail the facility because of bureaucratic complexities.
“Bangladesh’s economy is moving forward at a stable pace. The government has launched a concerted effort to diversify its exports and we sincerely hope this pioneering publication will help inform the policy discourse on sustainable export-led growth,” said Dr Mashiur Rahman, adviser to the prime minister on economic affairs and chief guest at the publication launching.
Special guest Mohammad Jafar Uddin, secretary, Ministry of Commerce, said: “Exporting is one pathway to leveraging the dynamic potentials of the global economy. We strongly believe that trade is a powerful engine of growth, not just for the world economy, but very much for a developing economy like Bangladesh.”
PRI Chairman Zaidi Sattar sounded caution that most new products introduced by exporters did not sustain beyond the first year and stressed the need to address export sustainability on a priority basis as it was a critical challenge for maintaining diversification.
“In recent times, the exchange of currency also become an issue of concern which needs more attention while promoting export,” he added.
