Solving energy, dollar crises must to meet lofty $72b export target: Businesses

Business leaders and economists have described the $72 billion export target announced by the government yesterday as ambitious and expressed concerns that if the gas, electricity, and dollar crises are not addressed, the country's shipments may decrease compared to the previous fiscal year.

They said if letters of credit (LCs) cannot be opened due to the dollar crisis and if industries cannot run at full capacity because of shortages in gas and electricity supply, then the 11% higher target compared to FY23 exports could not be achieved.

In addition, economists and top businessmen emphasised the importance of avoiding political uncertainty around the upcoming elections and maintaining a clear separation between political programmes and economic activities. They also stressed the need to focus on increasing exports to non-traditional markets.

Commerce Minister Tipu Munshi announced the $72 billion export target for the fiscal 2023-24 after a meeting with exporters at the Secretariat on Wednesday. The target comprises $62 billion from merchandise exports and $10 billion from services.

Businessmen said to achieve the target set for garments, the country's main export item, Bangladesh needs to secure 20%-25% of export orders from other apparel exporting countries. Bangladesh has the opportunity to fill the gap that is being created on the supply side due to China's reduced exports to Europe and the US resulting from the current geopolitical situation.

They said if industries cannot operate due to gas and electricity shortages and if the imports of essential commodities are disrupted due to a lack of dollars, the exporters will fail to exploit the opportunities. They requested that the commerce ministry take steps to solve these crises.

To achieve the export target, they emphasised easing the process of receiving cash assistance provided by the government and addressing various issues involving the customs and the National Board of Revenue (NBR).

Md Jashim Uddin, president of the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI), told The Business Standard that achieving this target will be very easy if uninterrupted gas and electricity supply is ensured.

"The gas and electricity crises are the biggest cause of our current headache," he added.

He said exports to Bangladesh's main markets are declining due to a decrease in the purchasing power of consumers in the United States and Europe. At this time, the focus should be on increasing exports to non-traditional markets such as India, China, and Japan.

Additionally, in countries where there is an opportunity to boost exports, international standard expositions showcasing the best of Bangladesh's products should be arranged.

Commerce Minister Tipu Munshi acknowledged the concerns of businesspeople and emphasised the importance of continuing cash incentives for exports to achieve the target. Additionally, he highlighted the need to address the gas and electricity crises.

Emerging from the meeting, he told journalists, "We are aware of the energy supply crisis in the country, and international markets are also experiencing volatility.

"If we can address these issues through collaborative negotiations and provide incentives to businesses in promising sectors like manmade fibre, while maintaining the existing incentives in other export sectors, then we can achieve this ambitious export."

The minister said Bangladesh's potential in the international export market is on the rise. Numerous industries from China and Vietnam are relocating to Bangladesh.

"Our exporters, entrepreneurs, and traders are prepared to take up the bold challenge of achieving the target," he added.

Highlighting that the business and trade situation will remain unaffected during the upcoming general elections, Tipu Munshi assured that there will be no closures in the country due to the polls. Offices, courts, banks, insurance companies, businesses, and trade will continue to operate normally.

Therefore, the minister said there is no risk of any adverse effects on the achievement of the export target due to the election year.

In the last fiscal year, Bangladesh earned $55.56 billion, falling short of the target of $58 billion. The target set for the current fiscal year is 11.59% higher than the previous year.

Mohammad Ali Khokon, president of the Bangladesh Textile Mills Association, who attended the commerce ministry's meeting, told TBS that if the energy and gas crises and the dollar shortages are not resolved, this target cannot be achieved.

"If LCs cannot be opened due to the dollar crisis, if industries cannot run due to the gas crisis, then how will this goal be achieved?"

Asif Ashraf, director of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), who was also present at the meeting, described it as an ambitious target in the current economic reality.

"The global apparel market is shrinking. On the other hand, the target given to us is to bring in 20% to 25% of our business from other exporting countries. It is not an easy task in the present reality," he told TBS.

"There is a shortage of gas and electricity in the country, and there are problems relating to customs and ports. If a conducive environment is not ensured by solving these problems, it is not possible to achieve this goal of export," he added.

Mohammad Hatem, executive president of the Bangladesh Knitwear Manufacturers and Exporters Association, who also attended the meeting, said it is possible to export more than the target set by the government.

"But there are some 'ifs and buts'. If these issues are not resolved, there is a possibility that the current fiscal year's exports will decrease by 10%," he said.

He said the main obstacle to achieving the export target is a gas and electricity shortage. The government has raised the price of gas from Tk16 to Tk30, promising to provide uninterrupted supply.

"But there is no uninterrupted supply of gas. If the supply of gas and electricity is not ensured, industrial production will decrease, and so will exports," he added.

Mohammad Hatem said the procedure for releasing cash assistance should be simplified. Cash assistance should be given against the amount of export earnings repatriated directly.

He further said, "Even though there is no VAT on the export goods, exporters are fed up with the tyranny of NBR officials. Such harassment must stop."

He said due to minor mistakes in the HS code, imported goods are stuck at customs for two to three months. Port demurrage has to be paid. This is causing losses for businesses. This kind of situation needs to change.

Stating that there is an opportunity to increase exports in the international market, Hatem said due to the decrease in China's exports to Western countries, including the United States, a gap is being created on the supply side, which there is no one to fill.

"As a result, export orders will increase. If uninterrupted gas, electricity, and other facilities are ensured at this time, it will be possible to export more than the target," he continued.

The commerce ministry said a number of issues have been analysed in determining the export target. Among them are the export target and export earnings of the last two fiscal years, along with the growth trend achieved in the recent fiscal years, cash assistance and policy support given by the government for product and market expansion and diversification, recent trends in world trade, and the impact of the Ukraine war on the domestic and global economies, it said.

The commerce minister said various organisations have predicted positive growth in most economies in South Asia by the end of this year. If this forecast is correct, then the GDP growth in Bangladesh will be 6.8%.

Taking into account the forecasts of various international trade organisations so far, the ongoing global slowdown will begin to end by the end of the year, and the world economy will return to growth next year. As a result, the demand of buyers in the main export markets of Bangladesh will increase, he hoped.

Considering the ongoing global and domestic economic situation, MA Razzaque, chairman of the Research and Policy Integration for Development, believes that expecting more than 11% growth in exports is a bit ambitious.

Setting ambitious goals is not a bad thing, he said. "But achieving this will depend on overcoming the dollar crisis. If the dollar crisis is addressed, the gas and power situation will also improve."

The economist said the global economy is recovering much slower than expected. Besides, importance should be given to ensuring that there is no political unrest in Bangladesh for a long time around the upcoming elections.