Saturday | 11 January 2025 | Reg No- 06
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Saturday | 11 January 2025 | Epaper
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Major challenges for our exports

Published : Saturday, 11 January, 2025 at 12:00 AM  Count : 143
Dr Nasim Ahmed
Bangladesh's economy is significantly dependent on its export earnings. Since July 2024, Bangladesh's export sector has faced several challenges under the interim government. Business insiders opine that the recent political upheaval has created an uncertain business environment. The interim government's efforts to restore stability are becoming visible. Still, the situation has led many international buyers in the garments sector to reconsider placing orders in Bangladesh, forecasting potential disruptions.

The knitwear and woven garments sector accounts for over eighty percent of Bangladesh's export share (knitwear - 45.70% and woven garments- 37.66%, in the financial year 2022-23, Source: Export Promotion Bureau) and has experienced significant obstacles due to worker protests demanding higher wages and better working conditions. 

According to newspaper reports, around 100 factories in the garments sector and 10 textile mills were closed during the last couple of months, and production delays caused concerns among international buyers about the continuity of Bangladeshi suppliers. Industry insiders are attributing the factory closures and stalemate in further investments to political instability, market turmoil, the rise of interest rates, shortages of raw materials due to limited letters of credit, etc.     

Moreover, rising temperatures due to climate change have increased heat stress among garment factory workers, potentially affecting productivity, lead time, and timely shipment. Under new EU regulations, global brands are legally required to address these conditions in their suppliers' factories, exerting influence on Bangladeshi exporters to improve working conditions. 

In July 2024, discrepancies were identified between export figures reported by the Export Promotion Bureau (EPB) and the National Board of Revenue. The EPB acknowledged a $3.16 billion mismatch in export data for the July-September period of the previous fiscal year, causing a temporary suspension of regular export data publication. This has confused stakeholders and may affect trade decisions in the time ahead. 

The government reduced export incentives across various sectors in July 2024, aiming to encourage exporters to raise competitiveness ahead of the country's graduation from least developed country (LDC) status in 2026. Business leaders have expressed concerns that curtailing incentives could adversely impact industries struggling with increased production costs and global competition.

The snowball effect of political turmoil, labor unrest, gas scarcity, and reduced incentives has strained industries and businesses. The interim government seeks international assistance to rebuild the economy, but challenges persist in restoring investors' confidence and ensuring sustainable growth. 

To address the major export challenges faced by Bangladesh since July 2024, the interim government has adopted the following major strategies:
Restoring law and order is crucial to regain the confidence of international buyers. The interim government is working on industrial security and anti-corruption reforms to achieve this goal.

Improving working conditions and ensuring fair wages in the garment sector are vitally important. To prevent further unrest, the government is reviewing the wage structure and addressing legal concerns for workers.

Reducing logistics costs can significantly boost exports. Implementing the National Logistics Policy 2024 aims to lower business costs, enhance competitiveness, and integrate Bangladesh into the global value chain.

Curtailing dependency on the garments sector by supporting other industries such as leather, agriculture, and electronics is an way. Inconsistent policies have been barriers to export diversification, and addressing these can open new markets. Efforts are ongoing to reduce inconsistency.  

While the government has set an ambitious export target of $110 billion by fiscal year 2027, economists and business leaders are pessimistic about its feasibility due to persisting challenges. Setting achievable goals can help in better planning and execution. The interim government is reassessing previously set export targets to establish more realistic and attainable goals, considering recent data discrepancies and global economic trends.

Investing in infrastructure, such as ports and transportation networks, can improve efficiency and reduce costs, making Bangladeshi exports more competitive. The National Logistics Policy 2024 also emphasizes infrastructure development.
Implementing the Export Policy 2024 - 27 would help increase annual export earnings to $110 billion by 2027, focusing on product diversification, infrastructure development, and market expansion.

Strengthening diplomatic and trade ties, particularly with key partners like the United States and the European Union, is crucial. The interim government engages in dialogues to foster these relationships and improve market access and trade conditions. 

Stabilizing the labor market, especially in the garments sector, is crucial. The government is working to resolve disputes and improve working conditions to ensure uninterrupted production and maintain buyer confidence.

 Efforts are underway to rectify data collection processes to provide accurate export statistics, essential for informed policy-making and maintaining credibility. The government is promoting the insertion of new products in the export basket, such as handicrafts, vegetables, and light engineering to reduce dependency on traditional export sectors and tap into unexplored markets.

Developing logistics, ports, and transportation networks is important to enhance export efficiency and reduce costs, thereby increasing competitiveness in the global market. A stable political environment is essential to attract foreign investment and reassure international buyers of Bangladesh's reliability as a global trading partner. Apart from the entrepreneurial and competitive business sector, an efficient, professional-minded, and corruption-free bureaucracy is of utmost necessity to address the challenges at present. 

The writer is Additional Secretary, Public Security Division, Ministry of Home Affairs 



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