May be 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 appears hopeless.
And looking at the $41 billion export target the government announced yesterday for the existing fiscal year, one gets a sense of futility.
In announcing the mark, the government appears to have ignored the elephant in the area: the global coronavirus pandemic, which continues to be raging on and without end in sight.
Unless a vaccine is designed for the rogue pathogen, the global economical locomotive wouldn't normally be chugging along as before.
Which means this begs the question, would there be demand for such volumes of goods between July this season and June next year.
The mark is 21.75 per cent greater 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 trunk foot and how long this continues is completely uncertain.
As usual, the federal government would count on apparel, which typically makes up about 85 % of the country's yearly export earnings, to accomplish the goal, which is $5.5 billion less than fiscal 2019-20's target of $45.5 billion.
Commerce Minister Tipu Munshi announced the new goal throughout a virtual meeting featuring senior government officials, lawmakers, trade body heads and exporters.
According to Munshi, the reduction in global demand for various products following the coronavirus outbreak was taken into account while setting the mark.
"The target is achievable since it isn't overly ambitious."
Since stores in america and the EU have began to reopen, export orders, specifically for garments, are on the rebound, Munshi added.
Export earnings in the apparel industry witnessed a year-on-year decline 18.29 % in March, 82.85 % 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 circumstances 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 % less than what it had been through the same period the previous year.
Besides, following 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 demonstrated 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 % higher at $6.39 billion.
"So, our target for the ongoing fiscal year is $48 billion, which is 19.79 % higher than the full total real export value of the entire 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 % from the true 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 contemplate it to become a challenging prospect. We likewise 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 an undeniable fact that can't be denied, making the diversification of the country's export basket an essential task.
In this regard, the government continues to incentivise the shipments of new and progressive products.
Rahman went on to suggest that exporters should utilize potential markets like China, adding that the IT, pharmaceuticals and light engineering sectors are good options to diversify.
The adviser also informed that he'd hold discussions with the central bank governor on another stimulus package for the workers of export-oriented industries.
Up to now, Tk 8,000 crore has been disbursed from the Tk 30,000 crore stimulus package targeted at facilitating recovery for large units that contain been adversely influenced by the coronavirus fallout.
"If needed, the federal government can improve the amount," Rahman said.
The government can be considering whether to create aside Tk 5,000 crore from the Tk 20,000 crore stimulus package to create a credit guarantee insurance scheme for loans likely 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 % as a result of pandemic and this could be an opportunity for Bangladesh to seize 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 enterprise 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 positioning new orders, buyers are offering prices that are at least 15 per cent lower than days gone by 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 money," said FBCCI Vice-President Siddiqur Rahman.
Almas Kabir Khan, president of the Bangladesh Association of Software and Information Services, said his organisation is spending so much time to improve exports of IT products.
Earnings from the export of general merchandise in the recent past fiscal year fell 16.93 % year-on-year to $33.67 billion following a coronavirus outbreak, which severely influenced production levels and caused the demand for numerous commodities to collapse.
Export receipts in fiscal 2019-20 were 25.99 % lower than the annual target of $45.50 billion, according to data from the Export Promotion Bureau (EPB). The item 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 % from the monthly target of $3.94 billion.
The fall mainly stemmed from the drastic reduction in apparel shipments. The garment industry contributes 84 % to the national export annually.
In fiscal 2019-20, garment exports fell 18.12 % 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 %.
