Assignment on

“Diversification of export in Bangladesh”

ECO-502 (Macro Economics & Business Forecasting)

Section: 01

Submitted To:

Dr. Salehuddin Ahmed

Professor
BRAC Business School
BRAC University

Submitted By:

Israt Jahan

Id: 19164006

Date of Submission: August 08, 2020

Introduction

The economy of Bangladesh depends on export. The foremost critical achievement is sending
out segment within the Gross Domestic Product. But, dependence on couple of products or one
item isn't a rational decision. For development of trade, it requires broadening of both export
items and export goals. Within the viewpoint of send out execution of Bangladesh, the nation is
still subordinate on Ready-made garments product with commitment of about 80% inbound
export. If the domestic material and particular knitted product are with knitwear and woven piece
of clothing things the commitment will reach about 85 percent. So, it is clearly taken note that
the nation is subordinate on apparel division. On the off chance that examine markets,
Bangladesh is subordinate on little conventional markets counting United State, European Union
and Canada. On that full exports of Bangladesh 23% goes to the United State, about 60% to the
European Union, 5 percent to Canada and 12% to the rest of the nations of the world. So, many
of country send out market. But, the trust is that, Bangladesh begun investigating unused send
out goals like Japan, Russia, South Africa, Mexico, Brazil, Chile, Malaysia, New Zealand, India,
South Korea, China and Australia. The export development of this nations is high over the
several years. Export broadening may be a persistent prepare. The operation by both govt. and
private segment will offer assistance growing on items and markets. Seeking out for unused
markets with modern items will offer assistance increment the send out bushel. Export
diversification is conceivable to limit the dangers in trade. Export expansion is not as necessary
as it were for limiting dangers, but moreover to make work with unused abilities of specialists.
Full uses of normal assets is additionally conceivable through item diversification.

Major Issue of Export Diversification of Items

Ready-made garment (RMG) sector

Ready-made garment (RMG) is the most elevated division within the export advertise.
Bangladesh includes a part of diversify its article of clothing items. Bangladesh primarily
manufacture basic garment things, in spite of the fact that the nation features a scope to profit
good thing about upscale showcase through expansion of piece of clothing items.
Ship building industry

Ships or little transport are a developing segment for Bangladesh. Two or three companies have
as of now traded ships to a few nations like Germany, Denmark and Mozambique. This industry
is work seriously ones, so that the unemployment issue seem moreover be illuminated through
expanding trade of ships.

Pharmaceuticals sector

Pharmaceuticals segment is one of the most important export diversifiable item. Right now, one
billion dollar pharmaceuticals can meet 97% request for market. Bangladesh have 270 enlisted
pharmacy related companies. More than ninety country, Bangladesh trades pharmaceuticals
things. Bangladesh also send out its items for developing counties just like the United Kingdom,
Germany, Singapore, France, Kenya, Nigeria, Sri Lanka and Vietnam.

Jute and jute goods

Jute and products made from jute are recapturing past sparkle. After many years, jute and jute
merchandise reached $1 billion stamp trade in final monetary year. After RMG, jute and jute
merchandise got to be the moment biggest send out things within the final financial year. Jute
and jute merchandise have higher request especially in Turkey and in a few middle-east nations
and African nations.

Light engineering sector

Light engineering sector have colossal possibilities for export. The request for light building
items of Bangladesh is exceptionally tall especially in North-Eastern sides of India. Bangladesh
utilize this potential.

Cement

In Bangladesh, cement division is a developing sector. Many cement industrial facilities do their
activities with the developing sector. The nearby cement fabricating production lines can meet
nearly the whole request of Bangladesh for. Besides, a few manufacturing plants are trading
cement to neighboring nations.
ICT sector

In Bangladesh there are tremendous talented labor at low cost. So the ICT industry can take this
advantage. Bangladesh has as of now begun trading ICT and IT empowered administrations to
many countries. We are now recognized by all inclusive famous magazine GARTNER for one of
the driving ICT and IT empowered administrations region.

Agricultural and agro-processed food industry

Bangladesh send many agricultural and agro-processed food now. The request for Bangladeshi
vegetables, natural products and agro-processed food is high among the non-Bangladeshis
dwelling totally from another country.

Leather and footwear sector

Bangladesh has as of now gotten to be a well-known nation for trading quality leather, leather
products and footwear. Bangladesh export leather items to Germany, Britain, Netherlands, the
United State and other country as well as. Having cheap labor and raw materials is a great
number of footwear and leather products producers are trading quality items all inclusive.

Export Diversification Tools

The components which the issues of diversification can be tended to and arrangements found is
known as export diversification tools. Bangladesh has to continue its limit. Bangladesh’s send
out segments that has ended up subordinate on RMG which the need of enhancement trades its
circumstance. At the end of 2004, shares will disappear, a handle of rebuilding of the RMG
division is anticipated to evolve. In Bangladesh’s conventional markets, China, India, Pakistan,
Turkey, and Egypt will be penetrating for share free administration. A stimulate backward
linkage exercises have to be planned for comprehensive technique and executed on a pressing
basis. As government has not endorsed for ensuring the nearby material mills, central fortified
product house is required to diminish the lead time in making conveyance. RMG segment can
hold within the post-MFA period. Few kind of agreement with China, Pakistan and India for
collecting textures straightforwardly may attempt by Bangladesh. Special showcase is targeting
modern item by the industry. The gigantic arrangements to conduct article of clothing trades in
the changed circumstance is needed by Bangladesh. For diminishing bank interest, insurance
premium, harbor charges, BGMEA is working it with government. Government now pulled back
VAT from exports.

Challenge of Export Diversification

In 2009 before long after accepting control, the government driven by Prime Minister Sheik
Hasina perceived that the improvement challenges for the nation were numerous and advance
would require a long-term vision and a orderly approach to improvement. In like manner, the
government received the Vision 2021 that looked for to change over Bangladesh from a low-
income economy to a center pay economy inside the following 10-12 a long time. It moreover
imagined a Bangladesh in 2021 that would be significantly free of destitution, where individuals
will be enabled with great wellbeing, instruction and aptitudes that are vital for securing high-
income business, where financial and social equity will win, and where the supportability of
advancement will be guaranteed by lessening helplessness to normal fiascos and climate alter.

To change over Vision 2021 into reality, the government created and embraced a 10-year Point
of view Plan 2010-2021 (PP2021) that verbalized long-term advancement objectives with a
extend of quantitative and subjective targets steady with Vision 2021.

However, there are a few regions where more grounded advance is required, particularly in
preparing incomes, accelerating private venture, moving forward administration, building up
solid open teach and guaranteeing economic improvement.

Progress in Macro-Economy: At the macroeconomic level, the preeminent objective of the

PP2021 is to secure middle-income status for Bangladesh by FY2021. The steadiness of the
macro economy has been a trademark of macroeconomic administration amid the primary half of
the PP2021. This solidness has been protected over the past three a long time FY2016-18, but
there are a few worrisome signs of delicacy within the managing an account segment since 2016
that must be carefully observed. Too, whereas monetary shortage is beneath control, the tax to
GDP proportion is stagnant that might make financing issues for the budget within the coming a
long time. On the trade front, two major concerns are: heavy dependence on RMG and lull
within the development of trades amid FY2016-18. A major reason for this is often the
overwhelming inclination against sends out due to exchange assurance. Furthermore, the sharp
appreciation of the genuine compelling trade rate has harmed trades. The government will got to
address the trade broadening challenge through changes in exchange arrangement and way better
trade rate administration.

Agriculture and Food Security: The Point of view Arrange 2021 perceived that proceeded
advance in agribusiness and nourishment security was fundamental to back developing
industrialization and urbanization. Cultivate salary and efficiency development are moreover
fundamental to decrease country destitution. In spite of a lull within the development of the edit
segment, normal rural GDP developed at 3.5 per cent per year which may be a commendable
execution amid the primary half of PP2021. A few imperative advance was made in broadening
as offers of non-crop farming expanded.

Digital Bangladesh: P2021 perceived the significance of innovation and information as major
rebellious of competitiveness and human welfare. This found it’s put within the Digitization
Activity of PP2021 driven by Prime Minister Sheik Hasina. Significant advance was
accomplished since the appropriation of PP2021. Provincial and farther zones of Bangladesh are
presently associated through versatile phones and the web and financial and money related
exchanges are happening through advanced innovation at a fast pace and in low fetched.

Infrastructure and Urban Development: PP2021 put major accentuation on rapidly

progressing foundation and urbanization administrations. Significant advance was accomplished
within the control division in terms of both introduced capacity and the spread of power
association to the individuals. Add up to era capacity expanded by a phenomenal 13.4 per cent
between FY2010-18. Commensurately, get to power surged from as it were 48 per cent in
FY2010 to 72 per cent in FY2018.

Human Development, Social Protection, and Poverty Reduction: The PP2021 put a strong
emphasis on lessening poverty, moving forward human advancement and organization a sound
framework of social assurance. This accentuation on value and social equity may be a trademark
of PP2021. Advance on the destitution front has been strong. Moving forward, a major challenge
is to actualize the National Social Security Strategy (NSSS) that was embraced in 2015.
Commensurately, the allotment for social security barring respectful benefit annuities must be
expanded to at slightest 2 per cent of GDP by FY2020.
Sustainable Development: Owing to its deltaic topographical arrangement and tall populace
thickness, Bangladesh is exceedingly powerless to normal calamities and climate alter. The
PP2021 looked for to start a comprehensive long-term approach to address natural debasement
and climate alter through laws, controls, arrangements, and programs. The PP2021 perceived that
unless these limitations were coordinates appropriately with the advancement technique, the
supportability of advancement will be debilitated.

Governance and Institution: Achieving the points of reference of Vision 2021 verbalized
beneath PP2021 basically depends on tending to key administration challenges, specifically,
lacks in open organization capacity, inadequacies in financial administration, and upsetting
malfeasance influencing execution over all portions of open administration. The methodology for
organization improvement beneath PP2021 rests on four key columns: reinforcing the gracious
benefit, advancing devolution to nearby governments, reinforcing public-private organizations in
open administrations, and transforming arranging and budgetary forms.1

Problem Facing Bangladesh’s Exports

Growth in Export is one of the necessary way in which Bangladesh can develop. This
development has been made conceivable by a satisfactory availability of cheap work and duty-
free to get EU and US markets. Be that as it may, the send out bushel and goals are profoundly
concentrated; readymade articles of clothing made around 70% of sends out, and European
Union and United State assimilate 49% and 12% of sends out separately.

Much reliance on a one sort of item and a number of markets clears out Bangladesh powerless to
exterior staggers. A spike inside the fetched of cotton or a sudden change inside the indicate
controls of a major objective would have an essential impact on the economy. So Bangladesh
should look for other items into which it can expand. It too has to broaden its send out goals by
picking up advertise share in non-traditional nations. Enhancement will moreover offer
assistance sends out to develop at a speedier rate.
1
https://thefinancialexpress.com.bd/views/challenge-of-export-diversification-reforming-trade-
policy-1566917312
Diversifying into new markets and products: Bangladesh can increase as there are many
markets. In Bangladesh, modern markets will offer assistance but broadening crucial thing will
stay as far as other items don't give a manifest part of the trade bushel. The offer assistance its
sends out to grow into other labor-intensive merchandise.

Bottlenecks for growth: China shift a high range of manufacturing and US-China business war
have transfer export to other region. This causes the growth of garment export of Bangladesh.
But Bangladesh cannot attract much more than other country. So Bangladesh didn’t expect
diversity export because of basic obstruction.

Lack of Adequate Infrastructure: Infrastructural development is very important for export

diversification. Optimal channel is major hindrance. Transport and cargo is another crucial
bottlenecks. Due to deficiency of hardware, containerization in Chittagong and Mongla ports
which is lack of adequate infrastructure.

Bureaucracy: Sometimes exporter face some difficulties because of some government rules and
some control of activities. This is just because of bureaucracy issue. The face some complication
of law and regulation.2

Recommendations

 Financing facilities for send out situated businesses that make accessible on precedency.
Satisfactory fund is main limitations for expansion of export. Small exporters are
influenced by imperative. Therefore, giving budgetary bolster may be a beat priority.
 Banks may be induced to deliver credits to exporters at fixed rates of interest settled by
the government.
 Present appropriation for trade ought to be proceeded. Unused things within the need list
may be considered for giving subsidy.

2
http://country.eiu.com/article.aspx?
articleid=948500478&Country=Bangladesh&topic=Economy
  Govt. may permit obligation of capital for free import of products for export situated
businesses. Those taken after in numerous of many other countries.
 Private division ought to take total facility of the motivating forces advertised by the
govt. These facilities ought to be uses for advance of exporters. Government may try to
implement of these structure.
 Both the government and private division ought to do as accomplices in advancing export
diversification. Execution of government approaches for send out expansion may give
priority.
 Overwhelming endeavors ought to make an extension and broadening of labor export.
Much preparing offices are created for overhauling expertise of manpower.
 Potential financial specialists from exterior ought to be empowered to contribute in send
out oriented industries.
 Incentives given to the exporters may compared with neighboring region. This may
introduced by Dhaka Chamber of Commerce and Industry.
 Private segment may delegate their possess agents in key areas outside Bangladesh for
encouraging export diversification.

Conclusion

Diversification of export may be a tall need region within the government’s advancement
procedure. It is perceived that quickened improvement, enhancement of exports is required for
facilitating the weight on adjust of installment circumstance and increase of more reasonable and
productive rural, mechanical divisions for improvement of country. Bangladesh contains a big
size of foreign debt and pressing of foreign remittance assets for obligation overhauling and
financing of extended advancement department. Employment openings ought to be made
through development of sends out for easing of poverty. This will energize reserve funds and
increase the investment.

Export diversification is vital for compelling cooperation within the worldwide exchanging
process. Supply of countries is central hub of any techniques. Whereas withdrawal of
incommodity and enhancements within the stimulant structure improve the execution of the
nation within the brief to medium condition, extension of generation across firm with
adjustment, improvement and broadening of items to compare within the overseas markets
consist of a medium to long term need. The implementation intends to turn the export driven
growth into a financial development. The trade division should be energetic to meet the needs of
expanded outside trade earnings. 3

References

 (Mirdha, 2013)https://www.thedailystar.net/opinion/perspective/news/bottlenecks-facing-
bangladeshs-export-sector-1838533
 (Raihan, Export diversification - Myths and realities, 2015)
 https://www.google.com/search?
q=export+promotion+bureau&source=lmns&bih=591&biw=1346&hl=en&sa=X&ved=2
ahUKEwiX3uWkhYzrAhXCYH0KHaDnCxkQ_AUoAHoECAEQAA

Appendix

Table-1

https://www.thedailystar.net/op-ed/economics/export-diversification-myths-and-realities-
3

168553
Table-2