Experts call for market diversification
The lion's share of Bangladesh's export is limited to only 10 countries, leaving the country highly dependent on these markets in absence of initiatives to explore new destinations.
The ten countries imported over 71% or $28.89 billion of Bangladesh’s total exported goods in the just concluded fiscal year, with the United States of America taking the lead with 17% exports share.
According Export Promotion Bureau (EPB) data, in the fiscal year 2018-19 Bangladesh earned $40.53 billion, of which $28.89 billion or 71.27% of the total exports came from the USA, Germany, the United Kingdom, Spain, France, Italy, Canada, Japan, the Netherlands and Poland.
Of the total amount, $25.53 billion came from the apparel goods.
The US, the single largest export destinations for Bangladeshi goods, especially apparel, imported goods worth $6.88 billion, which is 16.96% of Bangladesh’s total exports.
Bangladesh’s exports to the US market rose by 14.92% or $893 million to $6.88 billion, which was $5.98 billion in the previous fiscal year. Apparel goods earned $6.13 billion, posting a 14.60% growth over the previous years’ earnings.
Exports to US market rose sharply due to US-China trade war, which prompted global buyers to shift work orders from China to Bangladesh. This is because of rise in tariff, which ultimately pushed the production cost, exporters have said.
In March this year, the Asian Development Bank (ADB), said Bangladesh merchandise exports would increase by additional $400 million and its gross domestic product (GDP) by 0.19% by the next one or two years if the prevailing international trade conflicts involving the US and China escalated.
Exporting goods to Germany, the second largest destination, Bangladesh earned $6.17 billion, up by 4.79%, which was $5.90 billion in the FY18. Germany imported 15.23% goods of Bangladesh’s total exports.
Of the total exports $5.84 billion came from the apparel products, which posted 4.68% growth.
On the other hand, export earnings from the UK rose by 4.51% to $4.17 billion, which is 10.29% of total exports of Bangladesh.
Talking to Dhaka Tribune, trade analyst and exporters called for measures to explore new markets to reduce dependency on a few markets and diversify export destinations.
“The situation has improved now. Once, 65% of Bangladesh's total export was limited to the US, which is a now 17%. This is a great achievement. This is because of government incentives and manufactures efforts to explore new markets,” former BGMEA senior vice president Faruque Hassan told Dhaka Tribune.
United States of America, Germany and Britain would remain the bigger markets for Bangladesh due to its population and economy size, Hassan observed.
But the sector people were trying their best to expand to new markets, which already showed a positive signs, he added.
For exploring more markets to reduce dependency, Hassan urged the government to go for bilateral trade agreement to avail duty-free market access to new counties such as the Russian Federation and South Africa.
Meanwhile, economists have expressed concern over the high dependency on some big markets and called for diversifying the markets.
“Higher dependency on single product and few export markets is not good for a country. To sustain the export growth as well as enlarge the export volume, Bangladesh should focus on market and products diversification,” Policy Research Institute (PRI) executive director Ahsan H Mansur told Dhaka Tribune.
"I think, the government should continue the existing incentives for exploring new markets but there is a need for assessment for calculating the impacts of incentives," said the economist.
Currently, Bangladesh is providing 4% cash incentives against exports of apparel goods to non-traditional export markets in a bid to diversify export destinations.
In addition, the Bangladesh government also has offered 1% incentives for the all the traditional export destinations.
Even incentives can vary based on the potentials of markets, more attention should be given on those countries where there were more scopes, he added.
"On top of that, it is high time we thought beyond the apparel sector as we are number two in the global markets. For reducing the dependency, we should focus on the countries having need for products what Bangladeshi manufacturers produce," he added.