In the same period last year, the figure was $76.5 million. Moreover, most of the nontransparent rules have been drafted to support the bond regime for the apparel sector. However, Covid-19 driven economic slowdown inflicted damage on global export demand. Despite this growth, a fiscal policy priority will be domestic resource mobilization, as tax revenues were only 7.7 percent of GDP in fiscal year 2020-21, according to the Bangladesh Ministry of Finance. More broadly, development is a process of structural transformation, and the dominance of garments in Bangladesh hinders that process. This is because garment manufacturing enables the development of a wide range of capabilities: production skills, organizational practices (like supplier coordination, inventory management, and production layout), and logistic competencieswhich in turn leads to investments in related sectors, such as footwear, light engineering, and eventually more capital-intensive sectors like iron and steel. A resource curse is said to occur when natural resource endowments lead to mismanagement of revenue arising from the resources, which in turn can undermine the broader development of governance institutions because rent-seeking becomes easy. According to the United Nations Conference on Trade and Development (UNCTAD) Bangladesh received foreign direct investment (FDI) net inflows of $2.9 billion in 2021. This website stores cookies on your computer. House Ltd., 1 RK Mission Road, Dhaka-1000. This initial success was then supported by special trade policy schemes for the sector. Diversification helps countries to hedge against adverse terms of trade shocks by stabilising export earnings and domestic output. The apparel industrys success over the last three decades should have spawned a breakthrough in other labor-intensive sectors, such as footwear, which has for long been touted as the next big sector after garments. Bangladesh needs exports for high and sustained growth. Does digital financial inclusion narrow the urban-rural income gap in Bangladesh? The Taliban Detained Me for Doing My Job. The impact of this external shock largely depends on the degree of concentration of the country's export portfolio. South Asia. Available via annual subscription to one or more of CEICs global and premium databases. Want to read more on this topic or region?

But whether the pace of growth in footwear is sustainable, other labor-intensive exports take off, or the garment industrys dominance declines are open questions. Instant access to full history data in excel. In 2026, when Bangladesh graduates out of its least developed country status, it will also start to lose access to attendant preferences and privileges, such as favorable tariffs on its exports, development grants, and low-cost loans from the World Bank and other multilaterals. If you use our chart images on your site or blog, we ask that you provide attribution via a link back to this page. Its focus on a relatively favorable policy regime for garments means most entrepreneurial energies are still devoted to this sector. International Trade Administration These policies were biased against exports, and export earnings therefore remained relatively low in this period.

To be sure, Bangladesh has several constraints to private sector growth that are common to other South Asian economies, including a general anti-export bias, a lack of high-quality foreign investment, and trade facilitation. The government offers a range of investment incentives under its industrial policy and export-oriented growth strategy. Reforming the duty-free scheme, whose exclusivity has become a self-inflicted wound and led to an unwelcome development surprise, would be a good place to start. A locked padlock ) or https:// means youve safely connected to the .gov website. A top Russia advisor to three U.S. presidents explains why the world shouldnt fall for Moscows narrative that it can wait out the West in Ukraine. April 09, 2022 20:49:51. We have provided a few examples below that you can copy and paste to your site: Your data export is now complete. The problem for the rest of Bangladeshs manufacturing sector is this regime is strongly biased toward apparels. In practice, the rules are much more favorable for garments: For example, unlike other sectors, it enjoys longer audit cycles, multiple premises are covered under one bond license, full-time customs staff are not required on the premises, and so on. Click + to receive email alerts when new stories are published on The European Central Bank raised its interest rates for the first time since 2011 on Thursday and unveiled a new bond-buying programme to keep borrowing costs in check for the euro zone's most indebte Ukraine has asked its creditors for a two year payment freeze on its international bonds in a bid to focus its dwindling financial resources on repelling Russia. Bangladesh has enjoyed consistent annual GDP growth of over six percent since 2005, with an exception in 2020 as the economy slowed because of the COVID-19 outbreak. Foreign Direct Investment Attraction Events, Services for U.S. Companies New to Exporting, Services for U.S. Companies Currently Exporting, Leading Sectors for US Exports & Investments, Information and Communication Technology (ICT), Infrastructure Development and Engineering Services, Licensing Requirements for Professional Services. This quick slump in export in Bangladesh than global average suggests a presence of some country specific factors, in addition to the pandemic driven global economic slowdown that played a crucial role in determining export performance during this period. | View Comments (), Bangladesh is feted for its robust growth performance over the last three decades; sterling record of poverty reduction; and well-above-peer-level performance on many health, education, and demographic outcomes. While the agriculture sector employs 40.6 percent of the population, it accounted for only 13.6 percent of GDP in 2017, according to the Bangladesh Bureau of Statistics (BBS). Raw jute and jute goods composed around 87 per cent of merchandise exports during this period. E-mail : [emailprotected], [emailprotected], [emailprotected], 2022 - All Rights with The Financial Express, Export performance of Bangladesh during the pandemic: Impact of export concentration. Dhaka is the primary financial, political, and cultural center of Bangladesh. Bangladesh Is Clothes-Minded LDC graduation would relinquish a number of trade preferences and privileges that Bangladesh is currently enjoying in its major export destinations, creating a risk of losing a significant amount of export in the post-graduation period. With the gradual transformation of the economy into labour-intensive manufacturing from agrarian base, the share of RMG products in total export started rising since the mid-1980s. Want to read more on this topic or region? (Note: the Bangladesh fiscal year is from July 1 to June 20.). Commenting on this and other recent articles is just one benefit of a Foreign Policy subscription. By 2026, Bangladesh should have started to implement a serious road map for tariff reform, particularly to reduce the anti-export bias that incentivizes the non-garment industry to focus on the domestic market.

But Bangladeshs near-single product export concentration is hard to explain except in terms of trade policy. An expert's point of view on a current event. Facing a Foreign Trade AD/CVD or Safeguard Investigation? I agree to abide by FPs comment guidelines. Tax authorities need to give up their fear of potential revenue leakages through duty-free bonds and instead look at the likely growth outcomes for exports and manufacturing. In the first seven months of the fiscal year, earnings from garment exports amounted to $23.96 billion, a 30.30 percent increase year on year. Share sensitive information only on official, secure websites. To find out more about the cookies we use, see our Cookies Policy. In the early 1980s, jute and jute goods accounted for around 70 per cent of its total merchandise exports. A single cookie will be used in your browser to remember your preference not to be tracked. Suitable for enterprise usage. Bangladesh has one of the lowest wage rates in the world, which has fueled an expanding industrial base led by the RMG industry. According to World Bank data, world export declined by 8.98 per cent in 2020. APDF readeris available from Adobe Systems Incorporated. Earlier, he worked at the World Bank for 27 years, with assignments in South Asia, Eastern Europe, Latin America, and the Caribbean. By signing up, I agree to the Privacy Policy and Terms of Use and to occasionally receive special offers from Foreign Policy. The US dollar has soared to record Tk 102.4 on the open market as the Bangladeshi taka has lost more of its value amid a shortage of the foreign currency due to high import costs. Entry level access to the CEIC platform for individual users. The outbreak of pandemic caused a notable global economic downturn, and global export declined considerably due to weak external demand. However, the jute sector did not perform as well as expected last month. But U.S. and European multiple launch rockets alone arent enough to put Ukraine on the front foot for a counteroffensive. RMG products have constituted more than four-fifth of total export earnings since 2015. The plight of migrant workers and the reforms they need, Autocrats have always access to the White House , Interactive engagement between gender and race intersectionality, Allow Least Developed Countries to develop, Budget FY22: Meeting the revenue challenge, Re-gasification of LNG falls, cut in import ahead. Continued success in garments may also have bred a policy complacency, wherein it is assumed that supporting the golden goose is all that is required for manufacturing and export success. Its domestic market is small, and exports have undoubtedly boosted its robust growth performance.

As the U.S. midterms near, Washington is plagued by groupthink and a lack of vision that prevents creative solutions to the problems of a new era. With garments enjoying a head start, diversification will, among other things, require correcting the policy bias and providing timely inputs to all current and future export industries at world pricesin a country highly dependent on imported inputs for manufactured exports and domestic production. Meanwhile, the export of agricultural products brought in $74.9 million between July and January, marking a 26.33 percent growth year on year. Key information about Bangladesh Total Exports. Bangladesh Is Clothes-Minded On the other hand, jute exports dropped 9.13 percent in the first seven months of FY22 to $69.5 million, falling short of the target of $83 million. In theory, the bond regime is available to all sectors. In Europe and the United States, textile and clothing imports have historically been highly regulated to protect domestic production and employment.

This year, the export target has been set at $51 billion. In fiscal 2020-21, Bangladesh raked in $45.37 from the export of goods and services. Powered by Quintype. Bangladeshs export economy is dominated by RMG manufacturing, but the country remains largely rural with an urbanization rate of only 38.2 percent of the population. The third largest export item was jute and jute goods (3.0 per cent) followed by home textiles (2.9 per cent), agricultural product (2.7 per cent), and leather and leather product (2.4 per cent). Published: Last month, exports grew 48.27 percent year on year, overshooting the target by 25.45 percent. Exports of goods and services represent the value of all goods and other market services provided to the rest of the world. PATTERN AND STRUCTURE OF EXPORT OF BANGLADESH: Historically, Bangladesh has been heavily dependent on a narrow range of products for most of its export earnings. Full and unlimited access to CEIC data for multiple users. External links to other Internet sites should not be construed as an endorsement of the views or privacy policies contained therein. The Government of Bangladesh (GoB) actively seeks foreign investment, particularly in the apparel industry, light manufacturing, energy, power, agribusiness, and infrastructure sectors. However, in addition, Bangladesh has created a unique roadblock to diversification. Payable monthly by credit card. The financial sector will also need to address the persistent problem of state-controlled banks high balance of non-performing loans (NPL). During the pandemic, world export shrunk by 8.98 per cent in 2020, while Bangladesh's export earnings witnessed a sharper decline of 16.23 per cent. Although Bangladesh exports covered many other goods (total 98 categories of products at two digit HS code), their share in total export earnings remained relatively small. However, the US is the single largest export destination that accounted for around 15 per cent of Bangladesh's exports. Fortunately, Bangladeshs product concentration may be amenable to policy correction. Bangladesh was the 61st largest export destination for the United States while it was the United States 37th largest supplier of goods imports.

Of course, the growth of every industry has its own specific constraints. Chart 4 shows a gross positive association between export concentration and export loss for the comparable countries, except Vietnam, during Covid-19 pandemic. Comments are closed automatically seven days after articles are published. There is no data available for your selected dates. Bangladesh represents an excellent potential market for U.S. exports. NEW FOR SUBSCRIBERS: A lock ( Moreover, the leather industry, a critical raw material for leather footwear, has been around for five decades. As a rising star in South Asia and a remarkable growth storyin 2026, it will graduate from the category of least developed countryBangladeshs future economic path is of broad global interest, not least for other poor countries that are much further behind on the path to development. Therefore, to strengthen resilience to external shocks and to achieve a higher sustainable rate of economic growth, an open economy should pursue policies to diversify exports. Syeda Ishrat Jahan | Over time, the apparel sectors strong performance justified a perpetuation and consolidation of this special duty-free regime. They exclude compensation of employees and investment income (formerly called factor services) and transfer payments. Export concentration for India was lower than other comparable countries followed by Indonesia, Vietnam, Sri Lanka, Cambodia, Philippine, and Bangla-desh. These cookies are used to collect information about how you interact with our website and allow us to remember you. Syeda Ishrat Jahan is Deputy General Manager, Chief Economist's Unit, Bangladesh Bank. Much of Bangladeshs economic growth continues to be driven by exports from the $31.5 billion ready-made garment (RMG) industry and continued remittance inflows from expatriate labor, which reached a record $24.8 billion in fiscal year (FY) 2020-21. The net result is in 2017 and 2018, non-garment bonds made up only 2.5 percent of total active duty-free bonds. The Multi-Fiber Agreement (MFA), relaxation of rules of origin and duty-free and quota-free access under the Generalised System of Preference (GSP) facility in the European Union (EU) markets helped boost Bangladesh's RMG export. If you decline, your information wont be tracked when you visit this website. Usernames may be updated at any time and must not contain inappropriate or offensive language. Over $83 million worth of home textiles have been exported in FY22, making it the second most fruitful sector in the country. Discusses key economic indicators and trade statistics, which countries are dominant in the market, and other issues that affect trade. Sanjay Kathuria is a 2021-2022 fellow at the Wilson Center, an adjunct professor at Georgetown University, part of visiting faculty at Ashoka University, a senior visiting fellow at the Centre for Policy Research in India, and a nonresident senior fellow at the Institute of South Asian Studies in Singapore. Concentrated export basket and export market amplifies the vulnerability of an economy to external shocks. January's export growth was propelled by ready-made garments as well as frozen foods, agricultural products, chemical products, leather and home textiles sectors. The export sector led by RMG has played a crucial role in achieving this remarkable progress by creating employment and reducing poverty. If you use our datasets on your site or blog, we ask that you provide attribution via a link back to this page. For some, excessive reliance on garments may invoke thoughts of a resource curse. But the analogy may not be quite apposite. In 2001, Bangladeshs merchandize exports amounted to $6.6 billion; in 2019, they were $47.2 billion, which more than doubles its share of world exports from 0.1 percent in 2001 to 0.25 percent in 2019. Bangladesh Total Exports expanded 16.0 % YoY in Mar 2022, compared with an increase of 38.8 % YoY in the previous month See the table below for more data. In January, the revenue from the garment sector was $4.08 billion, making up 84.21 percent of total exports. Among the closest rival for RMG exports, Vietnam and Cambodia's export-GDP ratios were 106.80 per cent and 61.09 per cent, respectively in 2019, remarkably higher than that of Bangladesh. There is substantial scope for U.S. companies to enter the market and invest in these thrust sectors. The MFA was intended to provide developed countries time to adjust to imports, and as a result, exporting countries were shopping around for quota-hopping destinations. Bangladesh is a country the size of Iowa, situated in the northeastern corner of the Indian subcontinent and bordered by India and Burma, with a 2021 population estimated to be 165 million, according to the World Bank. Explore the most complete set of 6.6 million time series covering more than 200 economies, 20 industries and 18 macroeconomic sectors. The logical question then arises: Why has Bangladesh not yet been able to move beyond garments?

Desh, the pioneering firm, provided these setup workers who, in turn, spawned the establishment of secondary sources of transmission. Backlinks from other websites and blogs are the lifeblood of our site and are our primary source of new traffic. Facilitated by the duty-free and quota-free access, the EU became the largest destination of Bangladeshi exports, mainly RMG, accounting for around 45 per cent (excluding UK) of total export in the past few years. But 50 years after independence, an authoritarian turn casts a shadow over the countrys future. For a single product to dominate exports is rare in history; we could call it Bangladeshs second development surprise. Even Vietnam, the fastest growing apparel exporter of the 21st century, has seen its total exports share of garments fall from 12.7 percent in 2000 to 11.3 percent in 2019. It boasts the biggest manufacturing sector (as a share of GDP) in South Asia, and it continues to grow. With a relatively less concentrated export basket, India registered a smaller decline in export, while Vietnam registered a positive export growth. Includes 203 key indicators for Bangladesh, curated by CEIC analysts. Although exports in the 1980s remained broadly stagnant at around 5.15 per cent of GDP on average, the share of jute and jute goods in total merchandise exports declined to 51 per cent by FY86 on account of falling demand for and price of jute in the global market with the emergence of alternatives to jute. Bangladesh on the way to become a global freelancing hub. USA.gov|FOIA|Privacy Program|EEO Policy|Disclaimer|Information Quality Guidelines |Accessibility, Official Website of the International Trade Administration, Comply with U.S. and Foreign Export Regulations. "Even in the midst of a pandemic, the country's industrial production and export sector has managed to find its feet. Bangladesh needs continued export growth to sustain its success in labor-intensive exports and manufacturing, which, in turn, will propel higher quality employment and economic growth. Since the early 1990s, the industrialisation policy of Bangladesh started shifting toward export-led industrialisation strategy, favoured mainly by foreign trade and financial sector liberalisation, exchange rates rationalisation, and private investment promotion policies. The top import categories in 2021 were: woven apparel ($3.89 billion), knit apparel ($2.06 billion), miscellaneous textile articles ($268.5 million), footwear ($230.2 million) and headgear ($168.6 million). Washington, DC 20230. Bangladeshs garment industry has always been highly import dependent, even as the countrys approach to trade has been strongly protectionist, like most of South Asia. The export baskets of Bangladesh's peer countries and main competitors in RMG export markets, such as India, Vietnam, Cambodia, and Indonesia, were much less concentrated than Bangladesh (see Chart 3). The pandemic, which also hit hard Bangladesh economy, slashed real GDP growth to 3.51 per cent in FY20 from 8.15 per cent in FY19 and reduced export sharply by 16.23 per cent to 12.18 per cent of GDP. Click + to receive email alerts when new stories are published on, Ukraine Has Ground Down Russias Arms Business. These workers not only helped Desh grow, but many of them were hired by other firms to impart the training, industry-specific skills and tacit knowledge transfer that could only be provided by on-the-job training. We use this information in order to improve and customize your browsing experience and for analytics and metrics about our visitors both on this website and other media. Such heavy reliance on garmentsalso reflected in the fact that one-third of Bangladeshs total industrial production is garmentsis a source of significant concern for Bangladeshs growth prospects. According to the export concentration index data, published in the United Nation's Conference on Trade and Develop-ment (UNCTAD)'s Commodity Trade Statistics, the concentration ratio of Bangladesh's export was 0.40 in 2020, which was more than double compared to 0.18 of LDCs and more than four times than developing country average (0.09). A sustained and strong economic growth since the beginning of last decade helped Bangladesh qualify for lower-middle income status in 2015 and to remain on the course to graduate from the UN's Least Developed Countries (LDCs) group in 2026. It is well-positioned, however, to diversify its exports and move up the value chain. A big part of Bangladeshs success story comes from labor-intensive, export-oriented industrialization. Russian outages and record-high prices threaten a winter of discontent.. I Can Never Go Back. With these policy supports, Bangladesh's exports continued shifting toward a labour-intensive manufacturing goods and export earnings started rising at a faster pace. In January, exporters shipped goods worth $4.85 billion to surpass the target for the month by almost 20 percent, according to the data released by the Export Promotion Bureau (EPB) on Wednesday. Elbridge Colbys influential take on combating Beijing doesnt add up. Other important sectors include construction, information, and communication technology (ICT) and business process outsourcing, light engineering, ship building, leather products, jute products, and ceramic products. According to the International Monetary Fund (IMF), Bangladeshs GDP reached $354.24 billion in fiscal year 2020-21 with an annual growth rate of 6.94 percent. But this success story derived from exports comes from an extreme concentration in garment manufacturing: The share of garments in Bangladeshs total exports increased from 75 percent in 2000 to more than 86 percent in 2019. U.S. Department of Commerce Therefore, Bangladesh would require devising appropriate policy to overcome these challenges in the post-graduation period. floor), 45, Topkhana Road, GPO Box : 2526 Dhaka- 1000 and printed by him from City Publishing Given this backdrop, this note describes key features of current exports and identifies the potential source of export vulnerability to help appropriate policy formulation for sustainable export growth. Two-way trade between the United States and Bangladesh reached $10.65 billion in 2021, an increase of 35 percent from the previous year when trade was impacted by COVID-19. They include the value of merchandise, freight, insurance, transport, travel, royalties, license fees, and other services, such as communication, construction, financial, information, business, personal, and government services. Liberalisation of trade, reforms in the financial sector, availability of cheap labour, and a shift in global trade regime, among others, contributed to RMG exports of Bangladesh quickly. Twitter:@Sanjay_1818. The services sector accounts for 51.3 percent of GDP and employs 39 percent of the population. In terms of the Observatory of Economic Complexitys product space methodology, leather footwear and garments are clustered close together in terms of the required knowhow to produce them, which means footwear should be relatively easy to export. The sharper fall of Bangladesh's export implies a role of country-specific factors, in addition to the pandemic-driven global economic slowdown. Engineering equipment exports also climbed by 56 percent to $48.9 million. The outbreak of the coronavirus pandemic in 2020 brought the global economy to its knees as countries around the world went into lockdown to contain the spread of infections. U.S. goods exports to Bangladesh totaled $2.35 billion while goods imports totaled $8.3 billion, resulting in a U.S. goods trade deficit with Bangladesh of $5.95 billion in 2021. Although Bangladesh sells goods to nearly 200 countries, its exports are highly concentrated in few destinations. Should its expertise in mass manufacturing of garments not have spawned the growth of other (initially labor-intensive) products? Located on the coast, Chattogram (previously called Chittagong), the second largest economic and financial hub, hosts the countrys major seaport, which handles more than 90 percent of the countrys international trade. But the export sector has seen a resurgence since September. Please follow our comment guidelines, stay on topic, and be civil, courteous, and respectful of others beliefs. South Asia A future economic hub is expected to form south of Chattogram in Matarbari, where the countrys first deep water port is under construction. In this sense, at least, there is some similarity with the natural resource curse, where the abundance of a resource, such as oil, leads to underinvestment in other sectors, such as manufacturing. As part of this partnership, Daewoo sent 126 workers from Bangladesh to Busan, South Korea, for intensive, on-the-job training. Join the conversation on this and other recent Foreign Policy articles when you subscribe now. Published by Syed Manzur Elahi for International Publications Limited from Tropicana Tower (4th An extraordinary large share of RMG in total export has made Bangladesh's export basket highly concentrated compared to that of other developing and low-income countries, implying lack of comparative advantage in most of its products. In the first seven months of FY22, Bangladesh's export earnings stand at $29.54 billion, a 30.34 percent increase from the previous year. Instant access to full history data in excel. 1401 Constitution Ave NW Bangladesh confirmed in 2021 it will graduate from the status of a Least Developed Country (LDC) in 2026 with, according to a World Bank estimate, a Gross Domestic Product (GDP) of per capita of $2,503 in 2021. Secure .gov websites use HTTPS A .gov website belongs to an official government organization in the United States. Even on the export front, where Bangladesh has been a star performer globally, its export growth from 2000 to 2019 (meaning goods and services) has been overshadowed by Vietnam, China, and India: all countries whose export and domestic production is far more diversified. Bangladesh and Philippine experienced a larger decline in export with higher concentrated export basket.