Speakers stressed on search of new market and proactive policies for export diversification
Export concentration in readymade garments makes the economy, jobs and income extremely vulnerable to external shocks arising from changes in global demand or prices. Given the country’s restrictive trade and tariff regime, export diversification requires mitigating policy measures to continue success, said Dr. Zaidi Sattar, Chairman, Policy Research Institute.
Dr. Sattar suggested some customised approach to addressing the lack of export diversification problem. Firstly, the import-regime must be made seamless to facilitate imported inputs into exports; secondly, the incentive structure for exports must be set right, more specifically removing anti-export bias; thirdly, lowering the costs of trade-related services- improving trade and transport logistics is critical for ensuring export competitiveness, he said, adding that fourth, proactive policies will have to be taken.
Dr. Sattar was addressing a seminar on ‘Reducing Vulnerability: The Export Diversification Challenge in Bangladesh’ as a keynote speaker on 26 May, 2014 at the BRAC Centre Inn. The seminar was jointly organised by BRAC Institute of Governance and Development (BIGD), BRAC University and International Growth Centre (IGC).
BIGD Executive Director and IGC Country Director Dr. Sultan Hafeez Rahman chaired the programme.
Chief Guest of the programme Prof Ali Ashraf, Chairman of the Parliamentary Standing Committee on the Commerce Ministry in his speech said Bangladesh has no alternative but to diversify its export products for sustainable development. The country's population is increasing but its arable land is decreasing, he said, adding that at this situation, export diversification is urgently needed for boosting export earnings to support development of the country. He said the government is giving the business community all policy support for export diversification.
Dr. AB Mirza Azizul Islam, former Finance Adviser to the Caretaker government said steps need to be taken to export those goods that will have maximum value adding to increase export earnings. For export diversification, foreign investment will have to be increased in the country and at the same time, new market will be searched for exports, he added.
In the discussion, Professor Mustafizur Rahman, Executive Director of Centre for Policy Dialogue said, at least 15 products can be added to Bangladesh's export basket, but if the market size of those products is small, then export vulnerabilities will not decrease. To diversify both export products and markets, we need to strengthen the country's institutional capacity. On market diversification, Rahman mentioned, even a few years back, Bangladesh's exports to China were less than $100 million; it is now $400 million. The country's exports to India rose to $500 million from about $200 million a few years ago.
Dr. Md. Mozibur Rahman, CEO, Bangladesh Foreign Trade Institute termed the infectious exchange rate of currency as the number one enemy to exports. He added, the Bangladeshi currency is appreciating, while the exchange rate in India and some neighbouring countries is depreciating. He added, price elasticity of the product is important vulnerability in export diversification. He recommended formulating a flexible and strong export policy for non-RMG exports in order to eliminate anti-export bias and to attract FDI.
Among others, Md. Hafizur Rahman, Director, WTO Cell, Ministry of Commerce; Mr. Shahidul Islam, Research Fellow, BIGD; Dr. Abul Basher, Research Fellow, BIDS were present at the seminar.