Robust H1 export earnings buy time to chalk out new gameplan
Experts and RMG manufacturers say this is not the time to be content or complacent as in order to maintain this relief and the historic growth level, Bangladesh must move forward with a proper strategy
Publish : 03 Jan 2022, 08:35 PMUpdate : 03 Jan 2022, 08:35 PM
Bangladesh has earned $24.7 billion from exports in the first six months (July-December) of the current 2021-22 fiscal year, buying the country time to chalk out a long-term plan to hold on to this growth.
According to the Export Promotion Bureau (EPB), this is a 28.41% year-on-year growth from the $19.23 billion earned in the last fiscal year.
Earnings for December alone shot up nearly 48% to $4.91 billion — the highest ever for a single month in Bangladesh.
However, experts and industrialists say that to maintain this state of relief and historic robust growth, Bangladesh must move forward with strategic plans.
“Bangladesh is receiving a good number of purchase orders and it can be said that the growth will be sustained throughout the current fiscal year, and may even exceed the pre-Covid-19 level,” according to Professor Mustafizur Rahman, distinguished fellow of the Centre for Policy Dialogue (CPD).
But in the next six months, the country is likely to come across several challenges.
For instance, the export earnings are mainly volume-driven, not price-driven, the economist pointed out.
Manufacturers increase exports to make up for losses triggered by the rising prices of intermediate goods or raw materials.
“Last year, the price of yarn and cotton increased by about 45-50%. Although the manufacturers export the goods at a large volume, the profit margins of exporters are declining,” Rahman added.
He suggested Bangladesh take some initiatives to continue this growth of exports, such as by strengthening the forward linkage industry to boost the bargaining power of entrepreneurs.
The CPD fellow also said that the exporters have to look at brand development and the use of e-commerce in the field of export, and they also need to strengthen the connection with all buyers — big and small.
“The demand for non-cotton or synthetic fibre products has grown significantly in the global market. We need to increase our investment in non-cotton fibre and implement proper policies in this regard,” he further said.
Rahman, however, noted that export earnings from the sectors such as engineering, agriculture, home textiles are increasing, which is “a good sign from the aspect of export diversification.”
The economist said that the export of apparel items was good as always, with increased exports of knitwear, which is also a positive sign.
“There is a lot of opportunity to add domestic value in the knitwear sector. Domestic value addition is 60% in knitwear, which is about 45% in woven,” he added.
The country also needs to increase competitiveness, productivity, invest in technology-based skills growth, and inter-industry diversification of apparel items and other sectors.
He also said that after LDC graduation, Bangladesh may face many more new challenges.
“That is why we have to put importance on the regional market. We need to grab the regional market by signing preferential and free trade agreements,” he added.
Shahidullah Azim, vice-president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), also said they have to take necessary initiatives to sustain this trend of export growth.
“But the world has not yet recovered from the coronavirus. The spread of new variants could still hamper world trade. Coronavirus is still the biggest obstacle to our process of turning things around and moving forward,” he added.
This is not the time to be content with success, Azim further said, adding that while the order numbers are growing, infrastructural development is urgent to sustain it.
“Business-friendly government policies and improving ease of doing business will keep the industry afloat for years to come. However, the repayment time for incentives also needs to be extended,” he added.
He also said that they need to further develop and modernize the existing infrastructure including all seaports and airports for smoother trade.
Mohiuddin Rubel, director of the BGMEA, said that though the export data looks promising, challenges are also mounting.
“Cost of raw materials, including textile, freight costs, dyes and chemicals, are at their peak — but prices did not increase to that extent,” he added.
Moreover, the new Omicron variant of Covid-19 has initiated a tsunami in the major markets, as countries are adopting measures to flatten the curve; this may impact the retail industry further, he added.
According to EPB data, readymade garments (RMG) — the highest export earner — bagged $19.9 billion during July-December of FY22, which is 28.02% more than the corresponding period of the previous fiscal year’s $15.55 billion.
Export earnings for agricultural products rose by 24.62% to $654.04 million, while that for leather and leather products rose by 26.41% to $563.96 million.
Engineering product exports rose by 67.91% to $444.32 million and home textile rose by 30.77% to $715.95 million.
However, the earnings from jute and jute products dropped by 11.68% to $590.05% million.
“Jute export growth has been consistently negative, though it is eco-friendly and biodegradable. It is important to find out the causes behind it,” said Professor Rahman.
Moniruzzaman Mridha, vice-president of the Bangladesh Jute Spinners Association (BJSA), said that the jute industry has been lagging behind for a long time due to the pandemic.
He also said that steps should be taken to boost domestic consumption by implementing the governmental instructions of using jute bags for packaging.
Robust H1 export earnings buy time to chalk out new gameplan
Bangladesh has earned $24.7 billion from exports in the first six months (July-December) of the current 2021-22 fiscal year, buying the country time to chalk out a long-term plan to hold on to this growth.
According to the Export Promotion Bureau (EPB), this is a 28.41% year-on-year growth from the $19.23 billion earned in the last fiscal year.
Earnings for December alone shot up nearly 48% to $4.91 billion — the highest ever for a single month in Bangladesh.
However, experts and industrialists say that to maintain this state of relief and historic robust growth, Bangladesh must move forward with strategic plans.
“Bangladesh is receiving a good number of purchase orders and it can be said that the growth will be sustained throughout the current fiscal year, and may even exceed the pre-Covid-19 level,” according to Professor Mustafizur Rahman, distinguished fellow of the Centre for Policy Dialogue (CPD).
But in the next six months, the country is likely to come across several challenges.
For instance, the export earnings are mainly volume-driven, not price-driven, the economist pointed out.
Manufacturers increase exports to make up for losses triggered by the rising prices of intermediate goods or raw materials.
“Last year, the price of yarn and cotton increased by about 45-50%. Although the manufacturers export the goods at a large volume, the profit margins of exporters are declining,” Rahman added.
He suggested Bangladesh take some initiatives to continue this growth of exports, such as by strengthening the forward linkage industry to boost the bargaining power of entrepreneurs.
The CPD fellow also said that the exporters have to look at brand development and the use of e-commerce in the field of export, and they also need to strengthen the connection with all buyers — big and small.
“The demand for non-cotton or synthetic fibre products has grown significantly in the global market. We need to increase our investment in non-cotton fibre and implement proper policies in this regard,” he further said.
Rahman, however, noted that export earnings from the sectors such as engineering, agriculture, home textiles are increasing, which is “a good sign from the aspect of export diversification.”
The economist said that the export of apparel items was good as always, with increased exports of knitwear, which is also a positive sign.
“There is a lot of opportunity to add domestic value in the knitwear sector. Domestic value addition is 60% in knitwear, which is about 45% in woven,” he added.
The country also needs to increase competitiveness, productivity, invest in technology-based skills growth, and inter-industry diversification of apparel items and other sectors.
He also said that after LDC graduation, Bangladesh may face many more new challenges.
“That is why we have to put importance on the regional market. We need to grab the regional market by signing preferential and free trade agreements,” he added.
Shahidullah Azim, vice-president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), also said they have to take necessary initiatives to sustain this trend of export growth.
“But the world has not yet recovered from the coronavirus. The spread of new variants could still hamper world trade. Coronavirus is still the biggest obstacle to our process of turning things around and moving forward,” he added.
This is not the time to be content with success, Azim further said, adding that while the order numbers are growing, infrastructural development is urgent to sustain it.
“Business-friendly government policies and improving ease of doing business will keep the industry afloat for years to come. However, the repayment time for incentives also needs to be extended,” he added.
He also said that they need to further develop and modernize the existing infrastructure including all seaports and airports for smoother trade.
Mohiuddin Rubel, director of the BGMEA, said that though the export data looks promising, challenges are also mounting.
“Cost of raw materials, including textile, freight costs, dyes and chemicals, are at their peak — but prices did not increase to that extent,” he added.
Moreover, the new Omicron variant of Covid-19 has initiated a tsunami in the major markets, as countries are adopting measures to flatten the curve; this may impact the retail industry further, he added.
According to EPB data, readymade garments (RMG) — the highest export earner — bagged $19.9 billion during July-December of FY22, which is 28.02% more than the corresponding period of the previous fiscal year’s $15.55 billion.
Export earnings for agricultural products rose by 24.62% to $654.04 million, while that for leather and leather products rose by 26.41% to $563.96 million.
Engineering product exports rose by 67.91% to $444.32 million and home textile rose by 30.77% to $715.95 million.
However, the earnings from jute and jute products dropped by 11.68% to $590.05% million.
“Jute export growth has been consistently negative, though it is eco-friendly and biodegradable. It is important to find out the causes behind it,” said Professor Rahman.
Moniruzzaman Mridha, vice-president of the Bangladesh Jute Spinners Association (BJSA), said that the jute industry has been lagging behind for a long time due to the pandemic.
He also said that steps should be taken to boost domestic consumption by implementing the governmental instructions of using jute bags for packaging.
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