Economists and business leaders said excessive reliance on readymade garment and fewer major export destinations and lack of diversification increasingly creating a risk on Bangladesh鈥檚 economy.
Although the diversification issue has been discussed for long in the country, the improvement in the area remains poor due to lack of proper implementations of policies.
They also said that reducing聽Bangladesh鈥檚 overreliance on fewer major destinations like the United States, European Union, or United Kingdom could ease the burden if any destinations introduce punishing tariffs.
According to Export Promotion Bureau data, in FY24, Bangladesh鈥檚 merchandise export was $44.47 billion and the percentage of Bangladesh鈥檚 total exports was to US around 17 per cent ($7.6 billion), 43.87 per cent to the EU ($19.51 billion), and 10.7 per cent to UK ($4.48 billion).
Moreover, in the last FY, the earnings from the RMG sector were more than 80 per cent, EPB data said.
They said these regarding against the backdrop of fresh 37 per cent tariff by imposed the US on exporting goods from Bangladesh as a part of US president Trump鈥檚 sweeping global tariffs.
As part of the new tariff structure, the new tariff based on the Trump team鈥檚 calculation that as they said Bangladesh imposes 74 per cent tariffs on imports from the US, so it has halved the amount making 37 per cent for being 鈥榬eciprocal鈥�.
Currently, most Bangladeshi goods face a 15 per cent tariff from the US.
Economists suggested addressing the issue through the Trade and Investment Cooperation Forum Agreement (TICFA) and focusing on enhancing competitiveness, reducing business costs, and diversifying markets.
Diversified destinations would protect Bangladesh
Talking to 抖阴精品, Professor Mustafizur Rahman, a distinguished fellow of the Centre for Policy Dialogue, said that they have been urging the government for the past few years to consider market diversification.
鈥極ur export heavily relies on a single-destination. If our destinations were diversified, the hurt of fresh US tariff were comparatively lower,鈥� he added.
However, he also warned that this new tariff punishment may negatively impact global trade, growth, and demand and supply chains, noting that the fresh tariff undermined the global trading system of the WTO.
鈥榃hen the global trade will be in sluggish trend, it will hit the all countries even they export outside of the US,鈥� he added.
He also said that they always urge the government to diversify the market, primarily to focus on regional markets, which may protect Bangladesh from the trade wars of big economies.
It鈥檚 time to expand export basket
M Masrur Reaz, chairman of the Policy Exchange Bangladesh, told 抖阴精品 that Bangladesh鈥檚 exports are excessively concentrated on a single product 鈥� readymade garments 鈥� and on a few markets, the US and the EU.
鈥楽o, if there is an instability in the RMG sector and even its destination, it affects almost overall exports of the country,鈥� he added.
He also said that most of Bangladesh鈥檚 competitors have expanded their export baskets and export destinations, but Bangladesh can鈥檛, though experts have been suggesting it for many years.
鈥楳ost of our sectors beside RMG couldn鈥檛 achieve the proper efficiency of the global competitiveness. Moreover, the lacks remain in combined planning, introducing the strategy for these plans, and implementing those plans regarding market and product diversification,鈥� he added.
Bangladesh hasn鈥檛 witnessed sufficient FDI in emerging sectors beside the RMG, and these emerging sectors also have limitations in areas like global competitiveness, skills, and efficiencies.
He urged the government to work for both product and market diversification so that it can navigate issues like the US鈥檚 fresh tariff punishment.
Lack of policy implementation key barriers in diversification聽
Bangladesh Engineering Industry Owners鈥� Association president Md Abdur Razzaque identified the lack of policy implementation as a key barrier to diversifying the country鈥檚 export products.
He said that the political leadership, who should be actively formulating and executing policies, were preoccupied with power struggles and neglected the crucial task of driving economic diversification.
He also blamed the absence of political will and the bureaucratic triangle as significant obstacles hindering export diversification.
Razzaque argued that while several projects had been initiated under the banner of diversification, those had failed mainly due to the dishonesty and self-interest of certain bureaucrats and influential businesses.
The BEIOA president stressed that diversification in export products and markets was essential for the country鈥檚 economic stability.
He warned that without a concerted effort to diversify, the country鈥檚 economic growth and employment prospects would be at risk.
鈥楤angladesh must diversify its export base to avoid potential economic stagnation. The current lack of progress in diversification threatens not only our global competitiveness but also the livelihoods of countless workers, Razzaque said.
Citing the potential of the light engineering sector, he said it should become Bangladesh鈥檚 highest export-earning sector, as the global market for the sector is valued at over $7 trillion.
鈥業f Bangladesh can capture just 1 percent of the global market, the country鈥檚 exports from the light engineering sector would reach $70 billion,鈥� Razzaque said.
He said that earning $70 billion from the light engineering sector is entirely possible with the sincerity and integrity of implementing the Light Engineering Development Policy.
鈥榃e have a very good policy for the sector, with a time-bound action plan, but the lack of implementation according to the timeline by the government has frustrated investors,鈥� Razzaque added.
Unified export policy can help boost other sectors
Md Nasir Khan, vice-president of the Leathergoods and Footwear Manufacturers and Exporters Association of Bangladesh, said that Bangladesh needs to introduce a unified export policy and incentive facilities for all export-oriented sectors.
鈥楾o diversify products, government must remove the discrimination between RMG sector and all other export-oriented sectors. They must introduce unified policy, bond facilities and other incentives,鈥� he added.
He also added that if the government has goodwill, it will take very little time to succeed in product diversification.
鈥楾he leather sector can add value up to 90 per cent as we have abundance of raw materials for this industry. We have opportunity to grow the sector but then government destroyed it by transferring the industry to Savar without proper establishment and required CETP,鈥� he added.
He also said that the same goes for market diversification: If the government wants, it can also diversify Bangladesh鈥檚 market.
鈥楾he US fixed a tariff of 37 per cent. If we have more big export destinations except the US, it won鈥檛 impact us, even they impose 60 per cent or 80 per cent or even 100 per cent,鈥� he added.
He also said that the tariff has been imposed on everyone, including Bangladesh鈥檚 major competitors. In those cases, Bangladesh could avoid the risks if it had alternative markets.
