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Export buoyancy

Light at the end of tunnel
5 August 2005
• EDITORIAL
It's a hope-giving sign around an otherwise gloomy economic outlook. On the worrying side are uncertainties stalking the economy such as rising inflation, private sector credit squeeze, depreciation in Taka value, dollar crisis and the pressure building on balance of payments. But positive trends exceeding our expectations, and which basically paid put a couple of doomsday prophesies, have been observed in two areas: remittances from Bangladeshi wage-earners abroad and export earnings by the readymade garments sector. Although manpower export has declined in absolute numbers forex earning from remittances has increased in real terms. This is explained away by the fact that while ordinary labour export dropped, this has been more than offset by a sharp increase in the employment of high skilled Bangladeshi professionals abroad. The higher remittance has had to do, in part, with the value appreciation of dollar.

Evidently, the most hope-giving thing has happened in an unlikely area belying the post-MFA predictions: export earning rose to US$8.58 billion in FY 05 as compared with US$7.60 billion in the preceding fiscal year. Textiles and apparels are the sheet anchor of the country's export earning with a 78 percent contribution to it. Shaking off the initial shock of the quota phase-out when the earning from woven garments dropped by 21 percent export swung back to the original levels after January 2005, even bettered previous records, especially in knit-wear apparels.

Was it a miracle? Not really, because trade world does not admit of it. We have won it by competition coupled with good luck in terms of a fairer deal from the niche market, the US. The United States of America imposed its special safeguard clauses on certain Chinese RMG export items following a petition filed by the US textiles industry which predictably was backed by garments manufacturers from 51 developing countries. Bangladesh is one of the beneficiaries of the safeguard clause. One would have thought that the trend is set there. Our products will hopefully continue to receive a fair deal in the US market. The fact that Bangladesh apparels have a reputation and that our unit costs are cheap are advantages that are going to stay with us provided we don't rest on the oars of complacency over the first year's performance into the post-MFA phase-out.

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