Bangladesh needs to expand export markets beyond traditional routes

Another constraint on Bangladesh's export trade is its overreliance on a limited number of countries. Specifically, Bangladesh's export market has become heavily dependent on the United States and the European Union. However, there exist numerous other countries and regions to which Bangladesh could expand its exports with concerted effort. There are promising opportunities to export Bangladeshi products to Eastern European countries, as well as to Muslim-majority nations in the Middle East, and Russia, Japan, Malaysia, and Singapore. To tap into these markets, proactive initiatives are essential. Bangladeshi embassies situated abroad can play a pivotal role in identifying potential export markets. Encouragingly, there are signs of improvement in exports to new destinations, including Japan.

Currently, Bangladesh primarily exports lower-end products that are not heavily reliant on modern technology. However, looking ahead, it's imperative for Bangladesh to transition towards manufacturing and exporting high-technology products. With its sizable population, Bangladesh must aim to incorporate modern machinery in its industries and effectively utilise its manpower. Quality should be prioritised in the production process, while also maintaining competitive pricing. Survival in the international market demands proving worth through competition rather than relying on external factors. Efficient training programs should be implemented to enhance the skills of workers in various industries, thus boosting productivity and ensuring competitiveness.

It's indeed heartening to note that 207 factories in Bangladesh have received international recognition as green factories, marking a significant shift towards eco-friendly manufacturing practices. This positive development signals a departure from the negative branding crisis following the Rana Plaza tragedy. Entrepreneurs are now proactively establishing environmentally sustainable factories, not only for ethical reasons but also recognising the business benefits. Many factory owners are meeting their energy needs through solar power installations and even supplying surplus electricity to neighboring factories, showcasing a commitment to sustainability and innovation.

This shift towards eco-friendliness has improved the international perception of Bangladeshi factories, not only in terms of environmental impact but also regarding labor conditions. As part of a strategy for product diversification, it's imperative to prioritise the production of eco-friendly goods. By doing so, Bangladesh can further enhance its reputation as a responsible global player while also tapping into the growing demand for sustainable products worldwide.

The textile industry in Bangladesh heavily relies on cotton yarn, necessitating significant imports as domestic production falls short of demand. This reliance on imported cotton drains foreign currency reserves. To mitigate this dependency, it's crucial to explore alternative fibers to cotton. Fortunately, advancements in technology have opened avenues for utilising fibers such as jute and banana trees to produce yarn.

Capitalising on these opportunities is imperative. To do so effectively, there must be a concerted effort to expand research and development in this area. Government support can play a pivotal role in facilitating the development of alternatives to cotton. By fostering innovation and supporting those working on alternative fiber projects, Bangladesh can diversify its textile industry and reduce its dependence on imported cotton.

Embracing such alternative products not only promotes sustainability but also positions Bangladesh for significant advancements in industrialisation.
The pace of industrialisation in Bangladesh can indeed be accelerated by leveraging recent advancements in the infrastructure sector. However, one significant challenge lies in the scarcity of fuel, which could potentially impede industrial growth. Currently, the industrial sector benefits from subsidised electricity and fuel oil, but this may not be sustainable in the long term.

As subsidies diminish, the price of fuel is expected to increase substantially, posing a threat to industrial operations. To mitigate this risk, it's imperative to ramp up investments in the renewable energy sector. Encouragingly, there are already examples of companies in Bangladesh making strides in this direction. For instance, a company in Gazipur has invested Tk 9 crore in renewable energy, meeting all its electricity needs through solar energy while also supplying surplus electricity to neighboring factories.

Additionally, initiatives such as water recycling in platinum-grade factories and waste recycling demonstrate a commitment to sustainability and resource efficiency. By promoting self-sufficiency in electricity generation through renewable sources, factories can reduce their reliance on government subsidies and even contribute excess electricity to the national grid.

Offering financial incentives, such as providing favorable pricing for electricity supplied to the national grid by private companies generating their own electricity, can indeed be a powerful strategy to encourage investment in renewable energy initiatives. For instance, providing a price of 12 taka per unit for electricity supplied to the grid, while charging a lower rate of 10 taka per unit for electricity purchased from the grid, creates a favorable economic environment for such initiatives.

By implementing such policies, Bangladesh can stimulate widespread adoption of renewable energy technologies and decentralised electricity generation. This not only promotes energy independence and sustainability but also fosters innovation and economic growth in the renewable energy sector.

Indeed, to keep pace with global trends and ensure sustainable industrial development, Bangladesh must embrace new initiatives and diversify both production processes and technological applications.

Diversifying export destinations is crucial for Bangladesh's economic growth, and the government's efforts in this direction have yielded promising results. Increasing exports to countries like Russia, Japan, China, India, and various African nations is a significant achievement, reflecting the potential for further expansion. Continued efforts to enhance export partnerships with these countries, particularly India and China, hold immense promise. Even a small percentage increase in exports to these large markets could lead to substantial growth in overall export earnings for Bangladesh.

Smart economic diplomacy is essential in this endeavor, emphasising negotiation and collaboration to bolster export opportunities. Bangladesh can leverage its competitive advantages and tap into the demand for its products in neighboring countries like Bhutan and Nepal, particularly in the jute sector. Increasing diplomatic activities and effective management of trade relations are crucial for maximising export potential to these markets.

By seizing these opportunities and navigating the competitive landscape effectively, Bangladesh can strengthen its position in the global market and ensure sustainable economic growth. The development of an industrial zone in Saidpur utiliding surplus cloth or 'Jhoot' from various RMG factories showcases innovative entrepreneurship. However, it's unfortunate that these entrepreneurs faced challenges in accessing support from the Export Development Bureau and didn't receive cash incentives. During my tenure as the Governor of Bangladesh Bank, I personally intervened by writing a DO letter to the Export Development Bureau to include this industry in their list of incentives.

Regulatory bodies must play a proactive role in encouraging and supporting such new initiatives. This includes providing necessary support and incentives to foster growth and innovation in industries utilising local resources.

It's crucial to recognise the interdependence between exports and imports. A significant portion of the products exported from Bangladesh relies on imported raw materials. Any increase in import costs could negatively impact export earnings, especially if exporters are unable to adjust product prices in the international market.

To mitigate this risk and enhance profitability, there's a pressing need to increase the presence of locally sourced raw materials in Bangladesh's export product list. This would not only reduce dependency on imported raw materials but also strengthen the competitiveness of Bangladesh's exports by offering more cost-effective solutions in the global market.

Indeed, facilitating easy access to imports, particularly raw materials, capital machinery, and intermediate goods used in industries, is essential for fostering industrial growth and competitiveness. The government's initiative to reduce import duties on essential items like edible oil and wheat is a step in the right direction. However, further measures are needed to provide comprehensive support to entrepreneurs, ensuring that they can import industrial products at relatively low costs.

One crucial aspect is the removal of tariff barriers in the import of industrial goods. By reducing or eliminating tariffs on these imports, the government can lower the overall cost of production for industries, thereby enhancing their competitiveness in both domestic and international markets. Moreover, streamlining import procedures and reducing bureaucratic hurdles can also contribute to making imports more accessible and cost-effective for businesses. Simplified import processes can expedite the importation of essential goods, allowing industries to operate more efficiently and effectively.

Overall, adopting a proactive approach to facilitate easy and affordable imports of industrial inputs is vital for supporting the growth and development of industries in Bangladesh. In conclusion, it's essential to engage with stakeholders directly affected by the challenges faced by industries. By opening channels of communication and understanding their concerns, we can address logistical issues effectively. National-level initiatives should be implemented based on these discussions to alleviate the challenges faced by entrepreneurs. Building trust is paramount in this process, as it instills confidence in businesses and encourages them to operate with assurance.

Moreover, understanding the nuances of foreign markets is crucial, especially for industries exporting goods originally designed for domestic consumption. Foreign buyers' tastes and needs differ from those of the local market, emphasising the importance of adaptation and customisation. Simply exporting products designed for the local market may not suffice. Instead, companies must tailor their offerings to meet the preferences and requirements of foreign buyers.

Absolutely, aligning product offerings with the preferences and needs of international buyers is crucial for success in the global market. This requires a deep understanding of target markets and conducting thorough research to identify trends and consumer preferences. Encouraging participation in international trade fairs provides valuable exposure to new entrepreneurs and facilitates networking opportunities, helping them better understand global market dynamics.

Furthermore, support for export-oriented industries should not be limited to the ready-made garment sector alone. Other industries with export potential should receive equal attention and assistance. Allocating resources for research and development is essential for identifying strategies to increase exports, explore new markets, and introduce value-added products to the export portfolio. Policy dialogues can foster collaboration between government agencies, industry stakeholders, and research institutions to address challenges and formulate effective strategies for promoting industrial growth and export expansion.

Investing in research aimed at enhancing the use of modern technology in the manufacturing sector is also critical for improving productivity and competitiveness. By fostering innovation and embracing technological advancements, Bangladesh can position itself as a leader in various industries and strengthen its presence in the global market.

Rethinking the manpower export sector is indeed imperative, considering the prevalent challenges. Currently, many workers sent abroad are unskilled and lack proper training, leading to difficulties in their work overseas. By enhancing the skills of these workers through short-term training programs before their departure, they can be better equipped to handle their jobs effectively and increase their earning potential.

Moreover, it's crucial to address the issues surrounding illegal visa practices and airport harassment faced by workers. These practices not only undermine the dignity and rights of workers but also tarnish Bangladesh's reputation in the international community. Measures should be implemented to combat illegal visa cycles and ensure the protection and welfare of workers throughout the migration process.

Furthermore, there is potential to export skilled and trained manpower, as well as professionals, at higher rates. By focusing on training programs that equip workers with specialised skills and qualifications, Bangladesh can tap into higher-paying job opportunities abroad and maximise the benefits of manpower export.

Indeed, reducing overreliance on a handful of countries in the Middle East for manpower export is crucial for diversifying opportunities and mitigating risks. Expanding to new markets worldwide not only broadens employment prospects for Bangladeshi workers but also reduces vulnerability to fluctuations in any single market. Skill development plays a central role in ensuring workers' success in diverse job environments, making it essential to invest in training programs that equip them with the necessary competencies.

Connecting university innovation centers with local industries fosters collaboration and knowledge exchange, leveraging the creative talents of Bangladeshi entrepreneurs. This synergy can lead to groundbreaking advancements and innovations in various sectors, driving economic growth and competitiveness. Moreover, staying abreast of global technological developments and integrating suitable technologies into local industries enhances productivity and efficiency, positioning Bangladesh as a leader in technological adoption and innovation.

Furthermore, nurturing the SME sector is vital for fostering entrepreneurship, creating jobs, and promoting inclusive economic growth. Providing support and resources to small and medium enterprises empowers them to thrive, contribute to the economy, and realise their full potential.
Establishing stronger links between light engineers in places like Dholaikhal or Bogura and researchers in universities and government institutions is crucial for unlocking this potential and driving economic growth.

By fostering collaboration and knowledge exchange between these groups, we can harness the creativity and technical expertise of engineers and researchers to develop innovative solutions and drive industrial progress. This collaboration can lead to the development of new technologies, improved production processes, and enhanced competitiveness in both domestic and international markets.

Furthermore, it's essential to remain optimistic about Bangladesh's future in international trade. With its strategic location, skilled workforce, and growing industrial base, Bangladesh is poised to play an increasingly important role in global trade.

Author: Professor Emeritus, Dhaka University and former governor, Bangladesh Bank

Transcribe: M A Khaleque