Export data mismatch needs to be addressed through better data management

Infograph: TBS

Recent press and media reports have revealed that the export data we have been receiving so far from the concerned government organisations, with great confidence, is inflated, due to double counting and other issues. 
Treating these organisations as a very trustworthy source of updated monthly information on exports, we have exercised the liberty to refer to this data while preparing economic reports and making comparisons with other countries. It is now evident that these figures were overstated, and there are significant discrepancies among data from the Export Promotion Bureau (EPB), Bangladesh Bank, BBS, and even NBR.
If we consider Bangladesh Bank as the basis, there are differences with both EPB and BBS data. EPB data is always higher than Bangladesh Bank data, and BBS data is sometimes much higher than EPB data. The most significant discrepancies were visible in 2023-24 and 2022-23, which likely explains why we have noticed these issues. 
Even the export and import information we refer to country-wise, such as exports from Bangladesh to China and imports from Bangladesh to Austria, were inconsistent. There remains a substantial gap between our information and what other countries claim they have imported from us. 
Although these discrepancies have been pointed out several times in the past, they were never addressed. 
We initially thought that these discrepancies might be due to calculation procedures, time gaps (as some countries calculate their data following the calendar year and others the fiscal year), and various other reasons. However, we have learned that several investigation teams have been engaged by Bangladesh Bank, EPB, and NBR to look into these issues, and they have been able to uncover more troubling reasons.
Reports indicate that the investigation found duplication of data entry, miscalculation of fabric value, sample items classified as products with export value, sales by EPZ-based firms counted twice (likely in the case of deemed export), non-adjustment of the gap between originated LC value and actual export proceeds, loss from stock lot sales, and unadjusted discounts and commissions. 
There may be other reasons cited in the reports prepared by the teams formed inside these organisations, which we are not aware of. These are undoubtedly mistakes; however, it is time to assess their impact and correct them to restore confidence in the data generated by these organisations. Its impact could be pervasive if not addressed transparently.
So far we understand, the EPB receives data from Customs as the main source, and then EPB extracts the export data as per their own format and publishes it monthly. Questions might be raised about how this data has been transferred and channelled from NBR to EPB. 
If it is fully automated, there is no chance of duplication or double counting. However, if there is manual intervention, there might be some manipulation. 
Therefore, the most important issue is data management. Standardisation of data management procedures is not happening in Bangladesh; thus, calculation procedures differ across organisations, causing data discrepancies.
Customs follow Customs Procedure Codes (CPC) to identify the Customs regimes for goods entering and exiting the country. The CPC signals to the system whether the declaration is for an import, export, transit, or any other circumstance possible in a Customs environment. We are not aware of the CPC for export; it needs to be clarified and used accordingly.
Samples valued over $100 and weighing more than 5 kg will require formal clearance through the ASYCUDA WORLD system. In that case, samples can be treated as products, so there is a need to investigate what types of samples have been treated as products and which have not. Some export services are also provided by the private sector. 
There is a need for full alignment and integrated support services so the data cannot be manipulated anywhere. 
Exchange rate fluctuation is another issue. We have seen in the recent past that there were frequent fluctuations of our currency rate against US dollars, which could be a reason for data differences.
The commerce ministry recently fixed the maximum wastage rate in producing apparel items from raw materials to 30%. As per the latest decision by the commerce ministry, maximum wastage rates will be 27% for basic items, 30% for specialised items, and 4% for sweaters and socks, according to a circular issued by the ministry in 2021. It was much less in the past. 
Exporters need an entitlement before finalising raw material for import, and approval is needed from the government. In the case of apparel, it is being provided by the concerned association. With full automation, services provided to the exporters can ensure end-to-end data accuracy. 
Also, with the use of new technology for fabric cutting, sewing waste management can be reduced.
Deemed export is an issue where double counting in the EPZ can take place. In the EPZ, those who prepare accessories and export to other companies within or outside the EPZ through opening L/C might have a chance of double counting. 
Even within the same company having different factories, if it exports and imports semi-finished products, double counting may take place.
The identified reasons would need further analysis and revisiting the calculation process. 
Otherwise, if there remains the scope for double counting, it cannot be referred to the concerned areas. These issues need to be addressed carefully. 
They will have serious implications for policy making and will tarnish the country's image to foreigners, potentially impacting FDI inflow. 
Thus, strong coordination and collaboration among different government agencies is essential to ensure the authenticity of the export data of Bangladesh.
We are aware of the General Data Protection Regulation (GDPR) of the EU, announced in May 2018, which is considered a standard data protection law. A number of countries have started following the process. It can ensure transparency, lawfulness, integrity, confidentiality, accountability, and accuracy for data protection.
The issue needs to be considered with utmost care as it is a long-standing problem, and remedial measures have to be identified correctly so that similar mistakes do not take place in future and hamper economic growth. Both the government and the private sector need to work sincerely to address these issues.

Ferdaus Ara Begum, CEO, BUILD Public Private Dialogue Platform, works for private sector development.

Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the opinions and views of The Business Standard.