The target of $48 billion still appears to be a gigantic task given the uncertainty of the pandemic situation
The Covid-19 pandemic and its aftermath have forced Bangladesh to set an export target for the current fiscal year that is lower than that of the previous year's – for the first time in the country's history.
While disclosing the target, Commerce Minister Tipu Munshi, who himself is a garment entrepreneur, said the government has set the export target considering the present global economic condition.
Yet, the figure – $48 billion – down from last year's target of $54 billion, appears to be a gigantic task, given the uncertainty that remains with the novel coronavirus situation.
Only a quarter's (April-June) impact brought down the country's export by nearly 17 percent to $33.67 billion in the just-concluded fiscal year.
Exporters and an economist said the target is achievable, but there are some real challenges as the deadly virus has already disrupted the global economy and made millions of people jobless, hitting hard their purchasing power.
Khondaker Golam Moazzem, research director of the Centre for Policy Dialogue, said the new target is not a very big one with 21 percent growth. However, it will be difficult to achieve the target, considering the capacity of the entrepreneurs and the current situation of the export markets.
He said garment entrepreneurs are receiving new export orders after a break caused by the Covid-19.
"But, we have to keep in mind that our export destinations are currently facing a second wave of the virus. As a result, there is uncertainty over when the market will come back to normal," said Moazzem.
The economist also opined that in the future, a large number of exports will be conducted online due to health safety reasons.
He feared that this market might move to other countries because of a lack of skills and infrastructure in Bangladesh.
He talked about the diversification of export products and markets, which, according to him, will help boost Bangladesh's exports.
Overdependence on the apparel export – nearly 85 percent of total shipment – has exposed Bangladesh's vulnerability in the wake of the coronavirus pandemic. Despite bright prospects in jute and jute goods and leather and leather goods, their exports remain within a billion US dollar for years.
Exporters demand more incentives to achieve the target
"If the government provides us with a 10 percent cash incentive instead of the current 4 percent for next two years, the apparel sector will be able to rake in the targeted export earnings," said Mohammad Hatem, first vice-president of Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA).
The export target is achievable as most export destinations, including the European Union (EU) and the United States (US), have already resumed their operations, Said Syed Almas Kabir, president of Bangladesh Association of Software and Information Services (BASIS).
The post-Covid-19 markets will open up a new window of opportunity for the ICT sector, he added.
He also alleged that most ICT business entities are getting access to the government-announced stimulus packages as most of them are the first time borrowers.
The BASIS president demanded a 20 percent cash incentive as most of them have been paying their employees for the last 4-5 months with no work.
The government should look into whether there is any corruption going on in the name of cash incentives as some sectors are enjoying a 20 percent cash incentive, said Siddiqur Rahman, vice-president at Federation of Bangladesh Chambers of Commerce and Industries (FBCCI).
The apparel sector's export target is achievable as they experienced a 10.55 percent growth in the Canadian market, said Rubana Huq, president of the Bangladesh Garment Manufacturers and Exporters Association.
The apparel sector has incurred losses amounting to about $4.33 billion between April and June of the last fiscal year, she added.
She urged the government to provide them with a fund from a Tk30,000 crore stimulus package for giving salaries to their workers from July to September. The central bank's circulars also require some changes.
Covid-19 has created lots of challenges, at the same time, it has given new opportunities for exporters, said Saiful Islam, president of Leather Goods and Footwear Manufacturers and Exporters Association of Bangladesh.
It is now time to reduce dependency on a single country that is China, he added.
"Leather export mainly requires environmental compliance, but unfortunately, we do not have that."
He demanded that large tanners be allowed for setting up an individual central effluent treatment plant at the Savar leather industrial park.
The commerce minister also echoed with Saiful and said the prime minister has already talked about allowing the tanners for that.
The minister said big tanners also agreed to pay charges for their respective effluent plants.
Export products and markets need diversification
Md Fazlul Hoque, managing director at Plummy Fashions Ltd, the greenest knitwear factory of the world, told The Business Standard, "I believe that the target is achievable, but it will be very tough at this time without a strategy."
"We should make a strategy containing marketing, industry policy support, products diversification in the sector and market diversification."
"Every year we are setting a target based on a prediction, but there should be a strategy and the industry people's commitment for achieving the target," he added.
"We should diversify our export markets and products with the Middle East and African countries still remaining untapped," said Shafiul Islam Mohiuddin, a lawmaker and former president of the FBCCI.
"Some may think this target is challenging. New opportunities have come up and if we can utilise those, we will achieve more than the target," said Salman F Rahman, private sector industry and investment adviser to Prime Minister Sheikh Hasina.
As the largest export earner, the apparel sector is still having good opportunities as personal protective equipment and masks have good demand in the EU and US markets, the PM's adviser said adding that the US wants to buy 2 billion pieces of civilian mask.
He also mentioned that they are going to set up an international standard lab for testing PPE, as it is one of the main challenges to export this health product.