Is the $41b export target a mountain too high amid pandemic?
Aiming high is always a welcome attribute. But, sometimes, in its quest, one ends up setting targets so high that it just seems hopeless.
And looking at the $41 billion export target the government announced yesterday for the current fiscal year, one gets a feeling of futility.
In announcing the target, the government seems to have ignored the elephant in the room: the global coronavirus pandemic, which is still raging on and with no end in sight.
Unless a vaccine is available for the rogue pathogen, the global economic locomotive would not be chugging along as before.
So this begs the question, would there be demand for such volumes of goods between July this year and June next year.
The target is 21.75 per cent higher than the export earnings of $33.67 billion logged in for last fiscal year, when normalcy prevailed for at least half the time.
But this fiscal year started on the back foot and how long this continues is absolutely uncertain.
As usual, the government would rely on apparel, which typically accounts for 85 per cent of the country's yearly export earnings, to pull off the goal, which is $5.5 billion lower than fiscal 2019-20's target of $45.5 billion.
Commerce Minister Tipu Munshi announced the new goal during a virtual meeting featuring senior government officials, lawmakers, trade body heads and exporters.
According to Munshi, the decrease in global demand for various products following the coronavirus outbreak was taken into consideration while setting the target.
"The target is achievable as it is not overly ambitious."
Since stores in the US and the EU have started to reopen, export orders, especially for garments, are on the rebound, Munshi added.
Export revenue in the apparel industry witnessed a year-on-year decline 18.29 per cent in March, 82.85 per cent in April and 61.57 per cent in May as economies were under lockdowns in a bid to curb the spread of coronavirus.
However, as restrictions were slowly being lifted and a state of normalcy returned to the global supply chain, export earnings picked up as receipts of $2.71 billion were recorded in June, just 2.5 per cent less than what it was during the same period the previous year.
Besides, following the coronavirus outbreak, shipments of personal protective equipment such as surgical masks and isolation fabrics have risen considerably.
The fact that Asian markets like China, Japan and India have shown great promise for Bangladeshi products was also a driving factor behind the new export target.
At the meeting, the commerce minister also set a $7 billion target for the services sector in the current fiscal year. Earnings from the offshore services sector were 9.46 per cent higher at $6.39 billion.
"So, our target for the ongoing fiscal year is $48 billion, which is 19.79 per cent higher than the total real export value of the year before," Munshi said.
Sector-wise targets for major items sectors were declared at the meeting. The target for earnings from garment shipments was fixed at $33.78 billion, up 20.88 per cent from the real export value of $27.94 billion in fiscal 2019-20.
The jute and jute goods industry was handed a $1.16 billion target, up 32.26 per cent from its earning the year before.
"The export target is achievable but many consider it to be a challenging prospect. We also have the opportunities to succeed in this regard," said Salman F Rahman, the prime minister's adviser on private industry and investment.
Certain sectors could exceed targets by exploiting new export opportunities in the global supply chain, he added.
Bangladesh's over-reliance on the garment sector for export receipts is a fact that cannot be denied, making the diversification of the country's export basket a crucial task.
In this regard, the government continues to incentivise the shipments of new and innovative products.
Rahman went on to suggest that exporters should tap into potential markets like China, adding that the IT, pharmaceuticals and light engineering sectors are good options to diversify.
The adviser also informed that he would hold discussions with the central bank governor on another stimulus package for the workers of export-oriented industries.
So far, Tk 8,000 crore has been disbursed from the Tk 30,000 crore stimulus package aimed at facilitating recovery for large units that have been adversely impacted by the coronavirus fallout.
"If needed, the government can increase the amount," Rahman said.
The government is also considering whether to set aside Tk 5,000 crore from the Tk 20,000 crore stimulus package to form a credit guarantee insurance scheme for loans going to small-and-medium enterprises, Rahman added.
Rubana Huq, president of the Bangladesh Garment Manufacturers and Exporters Association, agreed that the export target is attainable as apparel shipments, particularly to the US and Canada, are on an upward trend.
American imports of Chinese garment products slumped 52 per cent due to the pandemic and this could be an opportunity for Bangladesh to grab more market share, Huq said.
Shafiul Islam Mohiuddin, a former president of the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI), urged the government to tackle harassment faced by the business community.
Saiful Islam, president of the Leathergoods and Footwear Manufacturers & Exporters Association of Bangladesh, said that policy support from the government will be vital to expanding the country's export basket. He called for improving the efficiency of Chittagong Port.
The FBCCI has coordinated with the Bangladesh Bank for disbursing loans from the stimulus packages, said Sheikh Fazle Fahim, president of the country's apex trade body.
While placing new orders, buyers are offering prices that are at least 15 per cent lower than the past shipments, said Mohammad Hatem, vice-president of the Bangladesh Knitwear Manufacturers and Exporters Association.
"Considering the situation, this is a year of survival, not making profits," said FBCCI Vice-President Siddiqur Rahman.
Almas Kabir Khan, president of the Bangladesh Association of Software and Information Services, said his organisation is working hard to increase exports of IT products.
Earnings from the export of general merchandise in the immediate past fiscal year fell 16.93 per cent year-on-year to $33.67 billion following the coronavirus outbreak, which severely affected production levels and caused the demand for numerous commodities to collapse.
Export receipts in fiscal 2019-20 were 25.99 per cent lower than the annual target of $45.50 billion, according to data from the Export Promotion Bureau (EPB). The merchandise export earnings in fiscal 2018-19 were $40.53 billion.
In June, the last month of the previous fiscal year, export receipts stood at $2.71 billion, down 31.15 per cent from the monthly target of $3.94 billion.
The fall mainly stemmed from the drastic decrease in apparel shipments. The garment industry contributes 84 per cent to the national export annually.
In fiscal 2019-20, garment exports fell 18.12 per cent year-on-year to $27.94 billion. Of the sum, $13.90 billion came from knitwear shipment and $14.04 billion from woven product shipments.
However, knitwear exports declined 17.65 per cent and woven 18.58 per cent.
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