Quality gaps, weak logistics, poor certification holding back export diversification: Businesses

Bangladesh's export basket remains overwhelmingly dependent on garments, with business leaders saying years of discussion on diversification have yielded limited results. 

Weak quality control, outdated certification systems, poor logistics, high transport costs, capacity gaps in the SME sector and the absence of targeted international market strategies continue to stall progress, they told a roundtable in Dhaka today (10 December).

Speakers at the event called for urgent policy reforms and structural upgrades to help Bangladesh expand beyond readymade garments.

The roundtable, titled "Export Diversification: Challenges and the Way Forward", was organised by Pran-RFL Group and Prothom Alo, bringing together senior business leaders and government policymakers. 

Certification bottlenecks slowing exports

At the programme, Rupali Chowdhury, managing director of Berger Paints Bangladesh, said Bangladesh must upgrade its quality control, testing and certification systems to global standards if it wants to enter new markets.

"We produce many items domestically, including food-grade cans, but we still have to send them to India or Singapore for certification," she said. "Certification is weak across sectors – from agriculture to industrial products."

She added that even large industries lack adequate laboratories. "We do not have the necessary testing facilities, even for the pharmaceuticals sector, whereas India tests highly complex products used in human health."

"Building these facilities requires investment of several hundred crore dollars. BSTI must be upgraded to international standards and made category-specific," she said.

Rupali also noted that weak compliance and long logistics delays are major barriers for exporters. Customs modernisation, automation and reducing processing times are essential, she said. "Where China and Vietnam face market barriers, we could find opportunities."

'If Vietnam can export $300b, why can't we?'

Pran-RFL Group Chairman Ahsan Khan Chowdhury, addressing the event, said Bangladesh has no alternative to expanding exports. "If Vietnam can export $300 billion, why can't we?" he asked.

He said faster access to the US market requires introducing a direct Chattogram-New York shipping service.

Criticising inefficiencies in port and customs operations, he said demurrage charges have risen even after foreign companies took over some port functions. "Customs must be rationalised. Air freight costs are also hurting competitiveness. India can ship goods by air at lower costs, giving them an edge," he noted.

Speaking at the event about the challenges facing the pharmaceutical industry, Syed S Kaiser Kabir, managing director of Renata and vice-president of the Bangladesh Association of Pharmaceutical Industries, said treating entrepreneurs as "criminals" must stop.

"We supply medicines at the lowest prices in the world. Our net profit has fallen from 15% to 5%. Don't call us bloodsuckers – recognise us as entrepreneurs," he said.

"To earn dollars, we must also allow dollars to go out," he noted, stressing the need to simplify foreign investment rules.

Highlighting the high value addition of the pharmaceutical sector, he said if Bangladeshi companies secure full regulatory approval in the US market, international confidence in local products would grow significantly.

The industry, he added, should be prioritised in efforts to diversify the country's export basket.

Speaking about Bangladesh dependence on garments, HSBC Bangladesh CEO Mahbub ur Rahman said that while exports rose from $9 billion two decades ago to nearly $50 billion today, Bangladesh has failed to scale up non-garment sectors.

"We must first identify which sectors outside garments have billion-dollar export potential," he said. SMEs also need tailored support as "export processes are difficult for them".

He added that the Middle East and Asean markets offer major opportunities for expansion.

Diplomatic commercial wings 'not effective'

Export Promotion Bureau Vice-Chairman Mohammad Hasan Arif said commercial wings at Bangladesh missions abroad are not performing effectively.

"It takes officers four years to learn the job, and then they return home to other ministries. There is no environment for building any lasting institutional knowledge," he said.

Arif proposed forming a specialised trade promotion agency similar to Japan's Jetro or South Korea's Kotra. Such a body would remain stationed abroad and work solely on trade and investment, coordinating between the EPB and commercial wings.

He emphasised market research, participation in international fairs, entrepreneur delegations and product-specific market strategies.
Highlighting the potential of plastic toys from the country, Bangladesh Plastic Goods Manufacturers and Exporters Association President Shamim Ahmed said there is huge export potential for plastic toys and called for deemed export benefits for the sector.

Bangladesh Frozen Foods Exporters Association President Shahjahan Chowdhury said frozen food exports have declined over the past decade and require policy support. He said exports from the sector could reach $3 billion by 2030, up from the current $450 million.

'FTA not a magic wand'

At the event, Commerce Adviser Sk Bashir Uddin said free trade agreements (FTAs) are widely misunderstood. "Many believe FTAs are a magic wand. In reality, the issue is highly complex. Our trade with China is import-dependent; if we sign an FTA, we will lose," he said.

He said Bangladesh already enjoys 99% duty-free access to China, but the trade imbalance makes an FTA risky.

Speaking about non-performing loans, he said, "Mismanagement has created Tk6.5 lakh crore in default loans, many war-torn countries do not have such figures."

Responding to concerns over reserves, he said the interim government inherited net reserves equivalent to one month of imports. "Now we have three to four months of cover."

Adviser Bashir noted that Bangladesh must confront the root causes of inefficiency. "Unless we acknowledge the wounds in our economy – ease of doing business and high operating costs – we cannot improve."