Small policy supports can help new export sectors grow

How serious are the challenges ahead of us in 2023?

As we all know, Covid-19 has ravaged the world for two years and then, just as the economies began recovering, the Russia-Ukraine war broke out. Both the shocks compounded the global challenges. The global economic growth has slowed down, inflation has soared worldwide, people's purchasing power has dropped, and demand has also declined. A fresh surge of Covid-19 in China has created a new concern as the Asian economic superpower is an irreplaceable supplier to the whole world for many goods and services. 

Though we source our industrial input from many countries, we depend on China for many of our supplies. So there are worries for us as well. The world is now in a race for cost-cutting as part of its drive to cope with the energy crises. On top of these global challenges, we have many local issues too. All along, our macroeconomy was faring well, but it came under sudden shock with reserves depleting and inflation remaining high despite some downtrends following various government measures. Such measures, though resulting in short-term relief, have also had long-term impacts as less imports mean less revenue income of the government. 

Steps to deal with the forex volatility has put the local currency under stress. Budget deficit is widening, which is another matter of concern. A deficit is also feared in international resources. These are all internal challenges. Problems in banks are surfacing in recent days — many banks are in trouble and Islamic banks have been cleaned out by some borrowers — are among the headlines in the last few months. If these irregularities in the financial sector are not addressed, all good aspects of our economy would be shrouded. 

There are some positive things too. The opening of the Padma Bridge is contributing to our transportation and economy greatly. As forecasted earlier, the bridge will genuinely contribute to the GDP growth as the connectivity has already spurred investment across the Padma River. The metro rail has also come as a great relief for people in Dhaka city, which is often clogged by traffic congestion. The Matarbari power plant is scheduled for commissioning soon. Some other infrastructures are also being readied, which will definitely stimulate the economy. 

But we need to see if discipline is restored in the financial sector and how the political situation turns out in the election year. Much of our strong economic growth in recent years was possible because of political stability. If the situation becomes unstable, we do not know what will happen. 

How is the dollar crisis affecting external trade?

Letters of credit cannot be opened for necessary imports due to the dollar crisis. There is a mismatch in dollar rates too, priced at Tk102 per dollar at one place, Tk112 at another place. These should be sorted out. Dollar should have one rate. If we want to give incentive to wage earners, we should give it separately. Banks are taking the chance from various rates of dollar; they are buying dollars at a rate and selling it at much higher rates. Major reforms are needed to set this right. 

Restoring discipline in the banking sector is the prime task of the time. Banks must be freed from the grips of families. There is also a need to revisit if this many banks are required for Bangladesh's economy. If these financial institutions are not streamlined and merged where necessary, our economy will take two steps forward and one step backward. 

For attracting investment, certain things are required. One is infrastructure, then utility, and a stable situation. When uncertainties loom, people are scared to invest. We had expansion plans in the garment segment. But we could not anticipate how long the gas crisis would continue and we stopped taking additional export orders and reduced our marketing too.  

What should be done to keep exports growing?

We overcame the challenges of Covid-19 with the government's great success in mass vaccination. The government had also extended low-cost fund support to industries to pay wages and stay afloat during tough times. It handled the Covid-19 situation smartly. 

But things turned out to be different after the Russia-Ukraine war. The global shocks are bigger now. Europe is suffering with surging expenses for gas, utility and food. Unemployment is going high and large industries in countries like Germany, UK, France are missing delivery deadlines. We also suffered delays for at least five months for textile machinery supplies from Europe. 

The Ukraine war is a global crisis and Bangladesh has nothing much to do here. But we must review and update our policies and measures from time to time and fix those to minimise the impacts of external shocks.

We need to be more conscious about global compliance and newly-incorporated due diligence in Europe. We are much ahead in green industries and this positive aspect needs to be focused on. If we fail to showcase our achievement in industrial compliance, pressure will be increased on us. The garment industry has walked a long way in industrial safety and workplace improvement. 

The number of green factories is growing. We are the world's leader in gold-certified, platinum-certified green factories. Work has been going on for sustainability. These successes should strongly be highlighted globally to nullify various pressures from the west. It is the task of Bangladesh's missions abroad to disseminate these achievements across the world. We succeeded in fully eliminating child labour, which was once a major threat for our apparel export. 

We need to explore new markets, embrace new systems. We need to renovate our factories and realign our production lines to match the changing needs of the global market. 

Global volatility sometimes creates scopes for more marketing. It is high time for Bangladesh's government and the private sector to make concerted efforts to highlight our achievements and positive aspects. Despite challenges, our apparel sector will continue to move forward as we believe that there is no country to replace us at this moment.

How can we diversify our export basket, going beyond a single product?  

We need to prepare ourselves to meet the post-LDC criteria one by one. With improvements in sustainability and workplace safety issues, we are almost ready to qualify for European GSP+ even. Now we need to mainstream all our efforts and let the world know how our apparel sector is creating jobs for millions, which is one of the key components of SDGs.

We have many examples of almost stopping imports of goods by enhancing local productions, say ceramic, tiles, wall tiles. Importing these goods is not viable any more. We have a crisis in gas supply. If we can overcome this, we are self-sufficient in this sector. Since we have almost stopped importing these items, we should now look towards the global market, where a slew of supplementary and other duties remain a roadblock. 

The existing government policy support applies to 100% export industries, but nothing is specified for industries which cater to both domestic and export markets. At the initial stage, if the government offers even a 15% waiver in import duties for raw materials, it will be of great help for new export sectors. This will help product diversification in exports and bring in new entrepreneurs in emerging sectors. Europe is in crisis as the cost of production has soared there due to the energy crisis. Various duties imposed on imports should be reviewed to help export industries become competitive. 

Agro-processing can be another potential export sector. Duty rationalisation is important for the local market too. For example, at Bengal Meat, we use special vehicles for our cold storage chain for carrying processed meat from Pabna to Dhaka. But there is no duty waiver for import of such vehicles. If a high-powered committee is formed, if necessary, with the prime minister as its chief, we could have explained how such incentives would help new sectors enter the export market and at the same time substitute import of many products. 

Agro-processing can also be an export sector. It is even possible by importing cattle from Africa. Only some small duty supports are needed. But it is not possible to run processed meat business even in the domestic market by maintaining a cold chain with a fleet of highly expensive specialised vehicles imported at high duties.                   

What opportunities do you see ahead in 2023?

I am always optimistic. I believe we will march forward and our exports will continue braving all odds. It will be good for all if political stability remains and the next election is held peacefully. Otherwise, the economy will be disrupted. 

Are there any further threats from the cotton price volatility as seen in the last year?

Problems will always be there in business. You will have challenges and obstacles, and you will see successes and achievements. In times of crises, we have to learn how to survive. We need to have the strength in mind to overcome any odds. To me, running a business is a responsibility as it involves the livelihoods of many people. It gives me pain when someone goes back to his family and says that he has lost his job. That is why we did not cut a single job during Covid-19 and the gas crisis. We treat our people as our assets.