Export is a critical component for our growth
Agriculture can be given special attention.
OUR Export Promotion Bureau (EPB) and the Ministry of Commerce, both organs of government, have set ambitious targets for fiscal 2009-10 (FY10). They feel that despite clouds on the horizon, our economy can generate around US dollar 17.5 billion of exports during the current fiscal. In comparative terms this means almost 13 percent growth over that of the previous year (which stood at US dollar 15.565 billion). Various stakeholders -- leaders of trade bodies, economists, entrepreneurs and industrialists -- involved with export and relevant government officials were consulted before setting the target. The EPB, it is understood, while fixing the target, also took into consideration the existing bottle-necks and the prevailing situation in other regional countries like Vietnam, Cambodia and India -- particularly with regard to apparel export (our main thrust sector). EPB's decision in setting the target appears to have been based on cautious optimism. They have relied on the views of analysts that despite the worst recession in living memory, the Bangladesh economy has managed to avert a major economic slowdown and has relatively emerged unhurt compared to its competing Asian peers. In this context, it has been noted that despite dampening demand exacerbated by slower growth, export statistics last fiscal did not show signs of retreat into negative territory. This has been attributed to its natural resilience. It is also this awareness that has driven the US-based Citigroup to state in its latest projection that Bangladesh's export is expected to grow at a rate of 9.0 percent in the current fiscal (less than EPB estimates but still very healthy). There has been a slight re-adjustment in this figure. Earlier, in June, the same body has projected a 10 percent growth. They have explained this downturn through the suggestion that international economic demand recovery will be slower than expected. This group has also factored in import growth at 5.5 percent and believes that the steady growth of inward remittance from our expatriate migrant workers will result in a current account surplus and economic growth at around 5.7 percent (as opposed to Asian Development Bank's forecast of 5.2 percent). They believe that remittances will increase despite slight loss in employment and that this will partially be due to Taka assuming a depreciating trend. It is clear that within the mixed signals are rays of hope. It is this which persuades me to state that time is opportune to plan realistic steps for initiatives to be eventually undertaken over the next critical six months. From this point of view, it is significant that the government has formed a task force to counter recession in the country's textile sector. It has been a correct step. This body will assess the impact of the global meltdown and recommend remedial measures by this October. It will also consider the effects on this important sector being brought about because of uncertainty in the steady supply of gas and power. The task force hopefully will also seriously examine the causes for the growing uncertainty and insecurity within the labour force within the garment sector. It is anticipated that if the government agencies, economists and industrialists work together, there is likelihood of increasing investor confidence within this important sector. Such investment will be required if we are to move up the ladder from basic items to accessories and high end products. The BGMEA has been critical of the government for not having channelized sufficient financial support towards them. They have pointed out that of the total amount of the government 'stimulus package' of Taka 3,424 crore announced on April 19 this year, about Taka 450 crore will be spent on supporting three export sectors -- the jute and jute goods sector, the leather and leather goods sector and frozen foods sector. This will be done by raising the cash incentive for these sectors by another 2.5 percent above existing rates. The BGMEA feels that comparably, they are being neglected. The government will, hopefully, through this newly constituted task force, carefully review the entire scenario so that the meager resources available at its disposal are suitably spent. It is however very obvious that if Bangladesh is to enhance its export performance, there is need for diversification. This will require planning and also closer public-private sector cooperation. It will be difficult, but it can be done. In this context one has to welcome the latest initiative by EPB modeled on the principles being followed in certain parts of Japan and China. Three products have been selected within this 'one district one product' (ODOP) scheme. It has been decided to provide special support to Moulvibazar for production of Agarwood, to Sakthira for production of clay tiles and to Chittagong Hill Tracts for production of rubber. While doing so, care would also be taken to ensure that the products are consistent with global standards. It is being hoped that this will be achieved through the provision of technical consultancy at the grassroots level. Success in such diversification will also create additional employment opportunities within the rural heartland. Diversification of our export potential is crucial. We have to move away from being virtually dependent on readymade garments alone. The European Union funded Global Enterprises Network of Iron and Metal Industries (GENI) project, in all likelihood, will help us in achieving this scenario. The Dhaka Chamber of Commerce and Industry (DCCI) who have been focusing on this will need to be very professional in their approach. The success of this project can stimulate and increase trade between small and medium enterprises in Bangladesh and European companies not only in Sweden and Denmark (associated with the iron and metal sector) but also elsewhere. It will also help our nascent shipbuilding industry. I feel that this scheme would be greatly facilitated if we bring China and South Korea into the loop because of their better understanding of market conditions and product possibilities. The other sector that needs to be given special attention is the agriculture sector. It is true that the government plans to provide 20 percent cash incentive for export of agro products, but this needs to be expanded to include processed agro products (consistent with phyto-sanitary standards). We should in this regard think of hiring consultants from Thailand so that we can replicate their success. Our export potential is also slowly emerging in products like pharmaceuticals, home textile, electronics, light engineering products and table ware. The export volumes of these products, still relatively small, can be improved upon by streamlining the applicable import regime tariff and tax structure. To succeed in our export diversification efforts will require improvement of our inadequate infrastructural facilities by attracting investment. This, however, will only be possible, if we reduce the cost of doing business in Bangladesh. That will then enhance our global competitiveness. Muhammad Zamir is a former Secretary and Ambassador and can be reached at mzamir@dhaka.net
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