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Bashir stresses on export diversification other than RMG

Bashir stresses on export diversification other than RMG

  • 23.03.2025 16:59
  • tbsnews.net
  • Keywords: RMG, export diversification

Bangladesh's Commerce Adviser Sk Bashir Uddin emphasizes the need to diversify exports beyond RMG, highlighting potential growth in sectors like leather, fish, shrimp, and jute. He notes the country's heavy reliance on a single export product makes its economy vulnerable and calls for addressing issues in non-RMG sectors to achieve sustainable growth.

Alphabet Products

Estimated market influence

Bangladesh Investment Development Authority (BIDA)

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Analyst rating: N/A

The BIDA is collaborating with the commerce ministry to promote exports and attract investments by engaging commercial wings abroad.

Jute Diversification Promotion Center (JDPC)

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Analyst rating: N/A

Despite introducing 284 diversified jute products, their combined export earnings are minimal compared to RMG, indicating limited success in diversifying the market.

Context

Analysis of Export Diversification in Bangladesh: Business Insights and Market Implications

Key Facts and Data Points:

  • Export Dependency: Bangladesh's exports are heavily concentrated in RMG (Ready-Made Garments), contributing over 80% of total export earnings.
  • Historical Growth:
    • RMG exports grew from $1 billion in the early 1990s to $47 billion by 2023, at a CAGR of 14.6%.
    • Non-RMG exports grew from $1 billion to $8 billion over the same period, at a CAGR of 7.6%.
  • Market Concentration: Bangladesh's export basket is one of the least diversified globally, with RMG dominating the sector.

Market Trends and Business Impact:

  • Diversification Challenges:
    • The country has untapped potential in sectors like leather, fish, shrimp, jute, and jute goods but lacks consistent growth due to past governance issues.
    • The Jute Diversification Promotion Center (JDPC) introduced 284 diversified products, but their combined export earnings are minimal (~$284 million).
  • Regulatory and Infrastructure Issues:
    • Tannery operators face challenges with CETP compliance at Savar Tannery Estate, which could be resolved by the end of 2023.
    • Leather manufacturers need to achieve LWG certification for global competitiveness.

Competitive Dynamics:

  • RMG Dominance: The sector receives substantial government support, including cash incentives, bonded warehouse facilities, and easy bank financing. This creates a disincentive for exploring other sectors.
  • Market Concentration Risks: Over-reliance on the USA and EU markets makes Bangladesh's exports vulnerable to geopolitical and economic shifts.

Strategic Considerations:

  • Export Promotion Initiatives:
    • The Ministry of Commerce and BIDA are focusing on monthly virtual meetings with commercial wings abroad to facilitate trade goals.
    • Recruitment of capable manpower for overseas commercial wings is prioritized based on eligibility.
  • Sector Development:
    • Leather and leather goods, jute and jute products, agricultural exports, pharmaceuticals, ICT, and light engineering sectors have growth potential but receive less support compared to RMG.

Long-Term Effects and Regulatory Implications:

  • Diversification Imperative: Reducing reliance on RMG is critical for sustainable economic growth and resilience against global market fluctuations.
  • Market Expansion Opportunities: Exploring new markets in Southeast Asia, the Middle East, Africa, Eastern Europe, Latin America, and other regions of North America can mitigate risks associated with over-reliance on traditional export destinations.

Conclusion:

Bangladesh's heavy dependence on RMG exports poses significant risks to its economic stability. While diversification efforts are underway, challenges such as regulatory compliance, infrastructure development, and market access need to be addressed to unlock the full potential of other sectors. Strategic initiatives to promote non-RMG exports and expand into new markets will be crucial for long-term growth and resilience.