Bangladeshi Products: An Overview for Market Access

Compiled from the Speeches of one of the 

Former Presidents of FBCCI

    Export earnings is one of the main sources of foreign currency in Bangladesh and a means of reducing deficit of balance of trade of the country. Certain preferential treatments extended by the international community and the policy support along with incentives provided by the government have contributed positively towards the rapid overall export growth of Bangladesh. In 1972-73, the export earning was US$ 448 million only, where the country has achieved an export earnings of $6.55 billion in 2002-2003. Bangladesh exported in USA US$ 2211.62 million, in EU countries US$ 2855.48 million, in SAARC countries US $ 2855.48 million, in SAARC countries US$ 83.25 million, in CACCI member countries US$ 366.06 million in 2001-2002. The major export items were readymade garments and knitwear, frozen food and agricultural products, tea, ceramic and melamine products, chemical products, leather and leather goods, raw jute and jute goods, handicrafts and engineering products. In 2001-02, the top 10 importing countries of Bangladeshi products were USA, Germany, UK, France, Netherlands, Italy, Belgium, Spain, Canada and Hong Kong.

     

    The export base of Bangladesh as well as export markets both have remained extremely limited. Bangladesh’s exports faced a setback due to unprecedented floods coupled with fall in prices of export commodities and their demand in the international markets. Besides, frequent currency devaluation in the Asian economies in response to currency crisis, terrorist attack in USA and Afghan War as well as Iraq War slowed the demand for Bangladeshi products.

    Bangladesh has many under exploited and unexploited exports having apparent comparative advantages. The under exploited sectors are textile, particularly yarn, woven and knit fabrics, specialized textiles, leather and leather goods, high fashion readymade garments and knitwear, artificial flowers, frozen food, agricultural products and engineering products. The main unexploited sectors are jewelry, diamond cutting and polishing, electric and electronic items, luggage and travel accessories, computer software, data entry and processing, gas and oil based Petro-Chemical industries, cut flower and orchid, stuffed toys, etc. We have not been able to diversify our exports due to paucity of capital and other constraints at home and abroad.

    Market access issues are becoming increasingly complex and diverse. The major problems faced by Bangladesh relate to: I) non-tariff and para-tariff barriers; 2) binding and standard requirements; 3) stringent rules of origin requirement; 4) strict labor and environmental standards; 5) Eco-labelling; 6) workplace code of conduct; 7) social accountability, 8) human rights.

    Bangladesh is facing market access problems both in USA (quota, labor standards, quality requirements like HACCP for frozen food, eco-labeling in case of RMG) as well as in EC (rules of origin, quality and standard requirement, eco-labeling). Similar problems are also being faced in Japan, Australia and New Zealand. In the past Bangladesh has faced market access problems both country-wise and product-wise. In the USA the quota, while providing guaranteed market access had also put substantial limits to access to the US market in some categories of RMG exports. With phasing out of the MFA these market access problems will be somewhat resolved. However, most of the RMG categories exported by Bangladesh will be integrated into the WTO in the last stage of the phase out planned by the USA.

    Bangladeshi Products: An Overview for Market Access

    Emerging Pharmaceutical Markets in Southeast Asia

    Other constraints that are hindering export expansion and diversification may be categorized into the following broad types:

    1. Supply side constraints: These are impediments, which have kept Bangladesh’s export basket rather narrow and undiversified and also perhaps confined to a narrow market share in global perspective. The major bottlenecks are lack of investable resources in new export industries, re-tooling of the existing ones, lack of infrastructural facilities, lack of institutional, technological and human resource capabilities, etc.
    2. Trade promotion and trade support services: Here the leading constraints are lack of capacity of the exporters to access markets, ensure quality and standardization, lack of adequate access to information and to move along the up market segments. Next comes the weakness of the existing trade-related institutions which are unable to provide required support due to lack of resources, trained manpower and expertise to deal with the new trade regulations etc. These are the factors that pose critical problems to overall industrial growth including export growth in Bangladesh.
    3. Policy induced constraints: It is true that over the years with successive industrial and export policies GOB has been working hard to remove some major anti-export biases. But, still there are certain unhelpful policies and practices that hinder export growth. Therefore, a careful monitoring of the effectiveness of implementations of such policies is exceedingly important.
    Bangladeshi Products: An Overview for Market Access: Bangladeshi Products: An Overview for Market Access

    The manufacturers/ exporters of Bangladesh have been facing a number of difficulties in maintaining, consolidating and expanding their export market. Some of these problems are domestic and some are international.

    • In RMG sector, there is a general lack of technical sophistication in this sector because of using simple machinery. The problem is compounded by a serious lack of technical skills arising from lack of technically trained manpower including mid-level management. Capacity utilization of the sector is quite low, varying between 40 to 60 percent in most cases
    • The bulk of the items produced by the RMG industries are destined for the low to lower end of the export market.
    • Lead times for orders placed in Bangladesh amount to not less than 120 to 150 days from the date of order to the date of to shipment from Chittagong, representing a major obstacle to a steady development of long-term relationship with the foreign buyers and an assured export market outlets.
    • Due to lack of appropriate market information and use of obsolete equipment, quality levels achieved are generally very low. In particular, the achievement of quality consistency appers to be a major problem. Therefore the output of this sub-sector can, with a very few exceptions, only be used for the very basic items in the lowest end of the market, where quality considerations are not important.
    • The Textile sector is also facing the problems like RMG. In this sector a great deal of the spinning equipment installed in Bangladesh is aged or obsolete and not able to produce event to the lowest export standards.
    • As far as spinning sector is concerned, the market share held at present by local suppliers (max. 35%) is likely to decrease considerably in the short term due to the new EU rules of origin for knitwear products.
    • In Leather Sector most of the problems are: poor quality of finished leather, Lack of cohesive and consistent policy package, Cumbersome customs procedures, Import restrictions and red tape, Non-Responsiveness to Market Needs.
    • Agro-processing Sectors are facing the problems like lack of implementation of scientific methods of shrimp culture, Ineffective implementation of the existing policies and programmes, increase of Air-Freight at the rate of devaluation of money, high rate of freight, which is 25% higher than our competitors, offloading, mishandling and lack of cooling system in Biman. Lack of proper monitoring of the changes in international market demand.

    The overall export sector is also facing many problems like bureaucratic procedural delays, uninspiring designs, poor quality, unreliable shipment due to political instability and crisis in ports, dearth of market demanded lack of new design and design development, poor market information and knowledge. Limited infrastructure like electricity, roads & highways, air cargo, cool chain, telecommunication, production centric management rather than market centric, lack of institutional support like sub-sector specific separate wing in EPB, lack of financial support to private sector and export promoting organizations and to the commercial section of embassy.

    Moreover, the manufactures also face unfair competition in the domestic market from dumping of imports as well as smuggled goods. We do not have appropriate anti-dumping and countervailing laws/measures to safeguard the domestic industries. In the international front they have been facing access difficulties which are becoming increasingly complex and diverse day by day.

    Ceramic products

    Ceramic products

    Bangladeshi Products: An Overview for Market Access: Bangladeshi Products: An Overview for Market Access

    Enhancing the economy’s competitive strength and more market access of exportable items, the policy instruments should address the real problems that deny the domestic producers a level-playing field. As exports receive the prime thrust of the government, it should offer special incentives and inducements to boost domestic production and exports of particular priority items having comparative advantages and potentialities. Some of the main policies and incentives, which should be implemented for a successful export oriented growth strategy, are as follows:

    1. WTO System and international standard requirements are quite complex and the Uruguay Round Agreements are comprehensive. Enterprises have to understand these agree-merits fully. As most of our enterprises fall under the category of SMEs, they can not perhaps do it individually. Ministry of Commerce in collaboration with the Chambers of Commerce & Industry have to arrange training courses on various aspects of the WTO System and Uruguay Round Agreement to create awareness among all concerned and to take effective measures to maximize benefit out of it.
    2. SAARC countries should be able to mutually benefit from regional co-operation arrangement. Areas for co-operation include: (i) the possibility of establishing new financing mechanisms for SME development. (ii) joint training programmes to upgrade the capabilities of entrepreneurs, managers and technical workers; (iii) joint technological development in particular industries (iv) co-operation in marketing , collective promotion efforts and negotiations in international forum like WTO; (v) proper location of industries and processing units thereof in a particular country on the basis of comparative advantage. Joint venture in natural-gas based fertilizer industries, power and other potential areas in Bangladesh should be promoted under the SAARC framework. The effectiveness of the concessions under the SAPTA agreement should be analyzed to evaluate as to whether such concessions can substantially alter the current pattern of intra-SAARC trade, effectively contribute towards a reduction of bilateral trade deficit with India and deepen existing economic relations.. As for Bangladesh, she would do better by keeping her options open by way of exploring other possible routes of regional cooperation outside that of SAARC. Bangladesh is already a member of such regional groupings as BIMSTEC and D-8. From a forward looking perspective the possibility of closer economic cooperation with the ASEAN countries should also not be ruled out altogether. Exploring the potential markets of the seven north-eastern states of India should receive priority attention from Bangladesh.
    3. Technical assistance in assessing the needs in the area of infrastructural development from a forward looking perspective, taking into cognizance the prospects for development of regional co-operation, increasingly greater integration with the global economy.
    4. Training facilities for the development of skilled manpower is crucially important. Skill development in quality control (for electronics) and design and fashion (for RMG) would be crucial in stimulating movement up the value scale in the upstream producing sector.
    5. Diversification in areas where labour intensive export-oriented activity have been flourishing in some of the other developing countries that are critically important for achieving increasing market access.
    6. There is a Scientific and Technology Policy in existence in Bangladesh, but the policy has not been properly implemented or updated since its enactment in 1986 and also lacks co-ordination with the commercial policies. Such a policy would require an effective integration amongst R&D organizations, entrepreneurs and policy makers. A policy mechanism to encourage a balanced mix of modern, intermediate and simple technologies in required to be developed.
    7. Most of the entrepreneurs in Bangladesh has neither the in-house capacity to gather the Information is a very cost intensive business and technical assistance in developing an information network needs to be put high on the agenda as a critically important prerequisite for having adequate market access.
    8. The capacity of the trade support institutions in Bangladesh is limited as they lack adequate physical resources as well as skilled personnel and required expertise to deal with the emerging problems in the global context. The role of EPB should be expanded and EPB should be given enough autonomy in taking and implementing crucial decisions for export expansion. Additionally, effective coordination of functions and service delivery by various export related organizations should be ensured in order to achieve greater efficiency and better results.
    9. There is no denying the fact that institutional supports at various stages of development of the export sector in an economy play critical roles in the promotion of export-led development of that particular economy. It has now, therefore, been a vital task for the development of export sector in Bangladesh to identify the institutional factors for achieving high growth in this sector. As far as textile sector is concerned too many ministries are involved (Ministry of Textile, Ministry of Industries, Ministry of Commerce) in the crucial decision making, which on most occasions hampers effective functioning of this sector due to lack of co-ordination among those ministries. Therefore, inter-ministerial co-ordination in policy making and policy implementation is very much important for the development of textile sector. Again, a general picture is that most of professionals. Development of professionalism is thus highly important as far as effective functioning and delivery of support services by the export related institutions are concerned. This will be particularly important in the post WTO phases.. Private sector institutions like FBCCI and various chambers and other trade-associations lack sufficient organizational capabilities required to pursue and implement their agenda. The reasons are lack of expertise and shortage of financial resources. These should attract proper attention.
    10. Special exchange rate benefit may be introduced to make export competitive. The same may be accorded to local raw material based exports on FOB basis and for industries on imported raw materials on value addition basis.
    11. Measures should be taken to facilitate uninterrupted, easy, cheap and quick inland transport and shipment of export consignments and clearance of imports. Special facilities should be arranged for direct air-freighting of perishable agricultural products like fresh fruits, vegetables, cut flowers, etc. from various domestic air-ports.
    12. Bangladesh should be exposed to the process of change and progress at the frontiers of production, development, knowledge, market and changes through the information technology which will enable the country to face global competition. Laws relating to Intellectual Property Rights (IPR) need to be reformed.
    Bangladesh

    Leather and leather goods

    For increasing more market access of Bangladeshi products to foreign markets, it is necessary to strengthen Bangladesh Missions in abroad and Government may recruit a private sector representative in the mission for providing necessary information regarding demand of Bangladeshi product in foreign market. EPB may arrange participation of more international fairs and exhibitions for introduce Bangladeshi product in abroad and also organize more single country fairs for our export products like DIFT. Government may arrange an Exhibition Ccntre for Exhibit our exportable items.  Explore more new markets and overall develop market research. RMG export by our own Brand name is also very important.

    It is encouraging that we have many products which may get more market access with their bright prospects are. These are home textiles, leather and leather based products, ceramic products and tiles, jewelry and fashion jewelry, knitwear and sweater, handicrafts and storage items, fresh fruits and vegetables, agro-based industrial products, IT activities, pharmaceuticals formulations and products, cosmetics and toiletries, jute and diversified jute based products, frozen foods and value added shrimp items, packaging and printing, light and metal engineering products, bakery and confectionery items, tobacco and optic items.

    More market access along with export diversification is the demand of the time for Bangladesh exports. Proactive and forward plans will pave development in this connection.

    Bangladeshi Products: An Overview for Market Access: Bangladeshi Products: An Overview for Market Access

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