Experts warn of middle-income trap

The top 10 traditional items continue to account for the majority of export revenues, and their contributions to overall exports are essentially stable, even though experts and the government are working on diversifying the readymade garment industry.

According to figures from the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), the top 10 clothing exports, which made up 68.38% of all RMG export revenues in 2021, brought in $24.49 billion for the nation. Nonetheless, BGMEA asserted that they had already started to reap the rewards of creating high-value goods. The sector can increase earnings from various products if the government keeps implementing supportive policies.

Additionally, they stated that as a result of the activities, the top ten apparel export ratio fell marginally to 67.70% in 2022 when compared to the total RMG exports for the year.

The Customs Intelligence and Investigation Directorate (CIID) has discovered that four garment exporters with offices in Dhaka used phony paperwork to launder Tk 382 crore. In 1,762 consignments between 2017 and February 2023, Asia Trade, Sabiha Saiki Fashion, Emu Trading Company, and Ilham sent ready-made clothing worth Tk 382 crore to a number of nations. Despite exporting 18,355 tonnes of commodities, no US dollars were exchanged for the consignments, according to the results of a CIID investigation.

The findings were made at a period when allegations of money laundering and smuggling cash abroad through false trade invoices were rampant. In 2021, the Global Financial Integrity said Bangladesh lost $8.27 billion on average annually between 2009 and 2018 to mis-invoices of the values of import-export goods by traders. The attempts aimed at evading taxes and moving money across international borders illegally.

Source for more details:

The Daily Star

Bangladesh’s foreign minister, AK Abdul Momen,  firmly disregarded the danger of getting into a Chinese debt trap because the return on its investments far outweighs the cost of the funds. Many people, he claimed, have the false impression that Bangladesh will fall victim to the Chinese debt trap.

Bangladesh has borrowed extensively from numerous nations, particularly China, in recent years to achieve its growth ambitions, raising the question of whether it is in a debt trap. The concerns have been confirmed by the impending bankruptcy of Sri Lanka in 2022, whose biggest creditors include China. Momen, however, said that Japan was the biggest bilateral lender and that Bangladesh had received numerous loans from international organizations.

Source for more details:

The Daily Star

The Export Promotion Bureau (EPB) reports that between July and February of fiscal 2022–23, the EU’s imports of clothing from Bangladesh increased by 14.29% to $15.72 billion. Germany, the biggest market in Europe, brought in $4.62 billion, an increase of just 1.03% over the same time last year.

Exports climbed by 27.65% ($1.89 billion) and 18.79% ($2.35 billion) to France and Spain, respectively. On the other hand, year over year (YoY) increase for exports to Poland and Bulgaria has been negative. Exports to the USA fell by 2.87% YoY during the aforementioned time period. The export of clothing to Canada and the UK grew by 20.05% and 14.52% YoY, respectively, at the same time.

Exports to the United States, the United Kingdom, and Canada totaled $5.68 billion, $3.36 billion, and $980 million, respectively, during the first eight months of FY2022-23. Bangladesh’s garment export to non-traditional markets increased by 35.02% and amounted to $5.69 billion in the period July to February of FY2022-23.

In terms of non-traditional markets, Bangladesh exported goods worth $1.07 billion, $767.75 million, $753.92 million, and $387.63 million to countries including Japan, Australia, India, and South Korea.

Source for more details:

The Business Standard

When export proceeds are not realized within the required timeframe, the Bangladesh Bank has taken action to “introduce discipline”.

The central bank stated in a notification on Monday that in circumstances of delayed realization, banks will apply the current exchange rate for encashment into taka but pay exporters at the rate on the date when the proceeds should have been realized.

According to central bank spokesman Sarwar Hossain, the decision will be applicable if there is an unfavorable currency rate difference between the due date and the realized date within the term. An official from the central bank claimed that many exporters are asking for extensions without following the guidelines for bringing in their export revenues in order to benefit from a higher dollar exchange rate.

Source for more insights:

BD News 24

Bangladesh’s exports increased 7.81%  year on year to $4.63 billion in February, supported by strong garment shipments. However, according to a source from bdnews24.com, monthly exports dropped below $5.0 billion after reaching the milestone for the first time in November 2022.

According to the most recent figures released by the Export Promotion Bureau, February’s exports again fell short of the goal by 3.68 percent. In the months of July through February, exports climbed by 9.56% to $37.07 billion from the same time last year.

Source for more details:

Financial Express