Exports to US on the decline | The Daily Star
12:00 AM, June 20, 2017 / LAST MODIFIED: 12:00 AM, June 20, 2017

Exports to US on the decline

Shipments to the US, Bangladesh's single largest export destination, declined 4.93 percent year-on-year to $4.82 billion in the first ten months of the fiscal year due to erosion of price competitiveness and longer lead time.

The declining trend is not a good sign as exports had previously grown at a commendable rate over the years despite internal and external difficulties, said an exporter and an economist.

“We had challenges before too, but we never faced such a declining trend in exports to the US,” said Ahsan H Mansur, executive director of the Policy Research Institute.

For instance, Bangladesh's exports to the US maintained even 20 percent growth in some years in spite of difficulties.

“There is something wrong and we need to find that out sooner than later,” Mansur said, adding that erosion of price competitiveness is the major reason behind the slowdown in exports to the US.

Bangladeshi apparel exports face 15.62 percent duty for entry to the US markets, whereas exporters from competing countries like Vietnam, Turkey, China and India are subjected to 8.38 percent, 3.57 percent, 3 percent and 2.29 percent duty respectively.

“So, Bangladesh is far behind in price competitiveness -- the US retailers prefer to source garments from China and Vietnam,” Mansur said.

The continued appreciation of the local currency against the greenback is another reason for the declining trend in exports.

The Bangladeshi taka appreciated nearly 8 percent in recent years against the US dollar, while the currencies of Turkey, India, China and Vietnam depreciated significantly against the greenback.

“Bangladesh should devalue its currency between 7 percent and 10 percent to recover exports to the US,” Mansur said.

He also suggested cash incentives should be provided against the exports to the US for a certain period but not permanently.

“Both Vietnam and China are well ahead of Bangladesh in lead time for their geographical proximity,” said Siddiqur Rahman, president of Bangladesh Garment Manufacturers and Exporters Association.

Moreover, Bangladeshi manufacturers have to import fabrics from other countries as the local weavers cannot supply the fabrics timely. Bangladeshi weavers can supply only 40 percent of the fabrics to the garment makers and the remaining demand is met through imports.

The BGMEA chief also blamed the inefficiency of Hazrat Shahjalal International Airport and Chittagong port for the longer lead time. For instance, it takes at least 10 days to receive the samples sent by the Western retailers from the Dhaka airport. “The samples should be received within 24 hours.”

“We along with the government worked with the airport authorities to resolve the problems, but the situation remained almost the same.” Still, the goods are left out in the cargo village unattended for many days. “The government should improve the airport efficiency immediately.”

A similar situation is also prevailing at the Chittagong port, Rahman added.

Regarding the appreciation of the taka against the US dollar, he echoed the opinions of Mansur. 

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