While Bangladesh's overall export earnings in the recently finished fiscal year 2022-23 were completely dependent on readymade garments (RMG), the performance of the other major industries was much lower than expected.
Leather and leather goods, jute and jute goods, home textiles, agricultural sectors, and engineering items were among the primary sectors that suffered losses in the previous fiscal year.
Due to decreases in major sector export revenues, two sectors have dropped out of the club of exporting $1 billion in the fiscal year.
According to the Export Promotion Bureau (EPB), the country earned $55.55 billion in the recently concluded fiscal year (FY23), a favorable gain of 6.67%, with roughly 84% or $46.99 billion coming from the RMG. The RMG industry increased by 10.27%.
However, the country's product export objective was not met due to negative growth in the country's top five industries. The government had set a target of $58 billion in export revenues for FY23, but the actual export was 4.28% lower.
Leather sector
According to the EPB data, the leather and leather goods registered a negative growth of 1.74% to $1.22 billion, lower from $1.24 billion in the last FY.
Leather entrepreneurs said that the reason for the decrease in the export of the leather sector is the Russia-Ukraine war, the unsold shoe stock in the United States and the EU has increased.
Shaheen Ahmed, president of the Bangladesh Tanners Association (BTA), told Dhaka Tribune that the industry's export income will not go up until the compliance of Savar Tannery State is ensured.
“If there is no compliance, exports will decrease further. The working environment in factories and waste management is not improving. Another investment of Tk600 crore to Tk700 crore is required to complete the CETP in Savar,” he added.
Home textiles
Home textiles fell from second place, earning $1.09 billion in FY23, a 32.47% decrease from $1.62 billion in FY22.
According to Momtex's head of business, Shahjada Rubel, the reserve constraint discourages banks from opening LCs, which has an impact on exports.
"The Russia-Ukraine conflict has shaped global consumer behavior in an unprecedented way." Their purchasing power has been reduced as a result of increased spending on food and other necessities as a result of inflationary pressure," he noted.
To combat inflationary pressures, banks in purchasing countries are hiking loan rates, influencing consumer behaviour, he observed.
Furthermore, their gas bill has increased by 8.5%, and their total production costs have increased by more than 15%.
M Shahadat Hossain Sohel, chairman of Bangladesh Terry Towel and Linen Manufacturers and Exporters Association, told Dhaka Tribune that the Overall, exports have decreased due to a decrease in purchase orders.
“Moreover, some purchase orders are being missed because the businessmen of our competitor country Pakistan are selling products at 12%-13% lower prices. As the disruptions in gas and electricity supply are on the rise, our production costs are still high,” he added.
He also stated that they are paying more for gas and electricity, but supply problems continue.
“If the war situation improves by the end of this year, the sector will rebound from 2024,” he added.
Jute
Jute and jute goods also lost ground, with a negative growth of 19.4% to $912.25 million in FY23, down from $1.12 billion in FY22, according to EPB data.
Mridha Moniruzzaman Monir, director of the Bangladesh Jute Spinners Association and managing director of Golden Jute Industries Ltd, stated that as the price of jute products rises, consumers all over the world are looking for alternatives. Exports are falling.
"Illegal jute stockpiling must be stopped. Many unlicensed individuals are entering the industry despite lack of industrial experience; they must be controlled," he stressed.
He also stated that steps should be taken to increase domestic consumption by following the government's recommendation to use jute bags for packaging.
Agricultural and engineering sectors
In addition, agricultural products decreased by 27.47% to $843.03 million, down from $1.16 billion in FY22. According to the entrepreneurs in this sector, the exporters of agricultural processed products are losing compete with rival countries due to the increase in raw material costs.
They encouraged the government to intervene to keep raw material prices manageable.
Engineering products, another prospective export sector, also faltered, falling 26.37% to $585.85 million in FY22 from $795.63 million the previous year.
According to industry experts, the economic slump has reduced sales at export destinations, and as a result, export orders have naturally decreased.
Moreover, due to interruptions of gas-electricity supply, the sector faces underproductions which also impacted the export decline.
Overreliance on RMG
Prof Mustafizur Rahman, distinguished fellow of the Center for Policy Dialogue (CPD), told Dhaka Tribune that, with the exception of the RMG sector, all major sectors had negative growth.
"A growing reliance on a single sector is a cause for concern. The proportion of the RMG sector to export was intended to be preserved at 75% by focusing on other sectors, but currently, it is more than 84%," he observed.
He also stated that value retention is high in other sectors, over 90%, however, RMG's value retention is 55%-60%, implying that net export earnings are not increasing.
