Bangladesh's export slowdown: Challenges, realities, and the road ahead

For the past several months, Bangladesh's export earnings have been declining, raising understandable concerns about the health of our export sector and the future of our trade. In my view, this slowdown cannot be attributed to any single factor. It is the result of a complex combination of global and domestic challenges, all unfolding at the same time.

On the global front, demand in our key markets, particularly the United States and Europe—has weakened. This decline in demand is a major contributor to the current situation. If this were the only issue, we could have described the situation as a slowdown rather than a downturn. For a long time, Bangladesh enjoyed steady positive export growth of 10–12%. Today, however, we have moved into negative territory, with exports falling by around 14%. 

The difference between positive double-digit growth and a sharp contraction is enormous, and its impact is deeply felt across the sector.

Domestic factors have further compounded the problem. One of the most significant is uncertainty surrounding the national election. International buyers closely monitor developments in Bangladesh—often more closely than we do ourselves. Many of them have offices here, and Bangladesh remains a major sourcing hub for global brands. These buyers are acutely aware of the law and order situation and the political environment. As long as uncertainty persists, hesitation remains. This lack of confidence will not fully dissipate until the election is completed smoothly and stability is restored.

If Bangladesh aims to reach $400 billion in exports within the next decade, garments alone will not be sufficient. A more realistic first target is $100 billion over the next four to five years, with garments providing the initial momentum

The banking sector has also played a critical role in the current downturn. The Bangladesh Bank governor and senior officials are attempting to restore discipline and order in the financial system. While this effort is necessary, its immediate effects have been disruptive. Many banks today are barely surviving—kept alive through what can only be described as ICU-level support. As a result, industries, particularly garment factories, are no longer receiving the level of banking support they once did.

It is important to note that banking regulations have always existed. The issue is not the rules themselves, but the sudden strictness in enforcing them. When enforcement changes abruptly, it creates shockwaves. The situation is comparable to suddenly enforcing rigid office hours after years of laxity—if people who were used to arriving late are suddenly punished severely, chaos is inevitable. A similar disruption has occurred in industrial financing.

As a result, many factories technically still have full production capacity, but they lack the working capital and banking support needed to operate at that capacity. Some factories have shut down altogether; others are operating far below their potential. All of these factors combined have contributed to the current export downturn.

Despite these short-term challenges, I remain optimistic about Bangladesh's long-term prospects. I prefer to look at economic potential in five-year cycles rather than reacting only to immediate fluctuations. Over a five-year horizon, Bangladesh's prospects remain strong because our export potential is still largely untapped.

The global apparel market alone is worth around $500 billion. Bangladesh's exports stand at approximately $40–42 billion, meaning we currently command only about 8 percent of the market. This leaves an enormous 92 percent untapped. While no country can capture the entire market, the scope for expansion is undeniable.

Our main competitors are China and Vietnam. Vietnam's total exports exceed $400 billion, but apparel accounts for only around $36–40 billion—roughly similar to Bangladesh. Vietnam has the capacity to expand apparel exports to $80–100 billion if it chooses to do so. However, its current focus is shifting toward higher value-added products. In Bangladesh, by contrast, more than 80 percent of exports come from ready-made garments, creating a structural imbalance. China, too, relies very little on apparel exports relative to its total trade.

As fast-growing economies, China and Vietnam are unlikely to remain heavily invested in low-value apparel manufacturing. They are diversifying into more sophisticated sectors, which is actually an opportunity for Bangladesh. Even a modest 3–5 percent annual growth in global apparel demand adds roughly $15 billion to the market each year. If we can build capacity and competitiveness, Bangladesh can capture a meaningful share of this growth.

That said, our challenges are multi-dimensional. Geography is one constraint we cannot change. Shipping from Bangladesh to the US and Europe takes significantly longer than from China or Vietnam. While those countries benefit from direct shipping routes with transit times of around two weeks, Bangladesh typically requires at least four weeks, often more. Our cargo frequently travels south—to Singapore, Sri Lanka, or Malaysia—before heading north to final destinations, extending delivery times to four to six weeks. In an era dominated by fast fashion, time is a decisive factor.

Infrastructure inefficiencies further exacerbate the problem. The development of a deep-sea port must be expedited. Even our existing ports are not being used optimally. While export handling has improved, import handling remains slow. Since garment production relies heavily on imported raw materials, delays in imports can add two to three weeks to lead times—compared to just two or three days in China or Vietnam.

Cost pressures are another major concern. Interest rates in competing countries are often below 5 percent, while in Bangladesh they hover around 15 percent. Energy supply is unreliable, with load shedding occurring even on weekends, forcing factories to rely on expensive diesel. Productivity levels—across workers, middle management, and top management—remain significantly lower than those of our competitors. We also lag in research and development, product diversification, and innovation.

After four decades in this industry, it is fair to ask why Bangladesh has not progressed faster. The answer lies partly in complacency. For many years, we operated comfortably within a niche—basic, high-volume products that required limited R&D. As global competition intensified and value chains evolved, our lack of foresight, investment, and skilled manpower became more apparent. R&D does not deliver immediate returns, which has discouraged long-term investment, while skilled manpower shortages cannot be resolved overnight.

The lack of growth in other export sectors reflects similar structural issues. Despite years of discussion around pharmaceuticals, leather, IT, agro-processing, and light engineering, these sectors have not scaled up meaningfully. Garments remain the most visible and proven success story, shaping investor perception. Starting small is easier in garments, while sectors like pharmaceuticals or engineering require larger capital and involve higher risk. Policy support needs to go beyond incentives and include capital backing and strategic partnerships.

If Bangladesh aims to reach $400 billion in exports within the next decade, garments alone will not be sufficient. A more realistic first target is $100 billion over the next four to five years, with garments providing the initial momentum. Over time, growth must gradually shift toward other sectors to ensure balance. Targets, however, mean little without scientific planning, data-driven strategies, financing frameworks, and disciplined execution.

Bangladesh can dream of exporting $400 billion—or even more. Dreaming is not the problem. The real challenge lies in patience, long-term planning, and consistent execution. That is where we must improve if we are to turn potential into reality.

Fazlul Haque, Former president, BKMEA. Sketch: TBS

The author is the former president of BKMEA

Abridged from an interview conducted by TBS' Executive Editor Shakhawat Liton