Bangladesh has added only nine new products for export from 2006 to 2021, whereas Vietnam has introduced 41 products and has earned exponentially more.
Bangladesh's export earnings in 2021 from the newly added products stands at only USD 823 million, whereas Vietnam’s earning stands at a USD 145,000 million.
Bangladesh lags in this crucial aspect with competing countries like Vietnam, India and Thailand.
South Asian Network on Economic Modeling (SANEM) executive director Dr Selim Raihan said this during a panel discussion on ‘Challenges of Export Diversification and Structural Transformation in Bangladesh’ held at the BRAC Centre Inn Auditorium in the capital on Sunday.
The former Lead Economist of
World Bank Dhaka Office Dr Zahid Hussain chaired the session while SANEM executive director Dr Selim Raihan gave a presentation. Among the distinguished Panelists present were the Chairman and Chief Executive of Policy Research Institute (PRI)Dr. Zaidi Sattar, Former Lead Private Sector Specialist of the World Bank Group Dr Syed Akhtar Mahmood, and Apex Footwear Managing Director Syed Nasim Manzur.
Dr Raihan said that while the Ready-Made Garments (RMG) sector is a champion, Bangladesh’s success in export diversification is unsatisfactory. Bangladesh’s export basket appears to be an outlier. Countries that are making progress in industrialization are reducing their dependence on RMG. Vietnam is experiencing a very escalating trend, while we are still struggling.
Highlighting the impediments towards export diversification, Dr Raihan said, “Bangladesh’s artificially maintained exchange rate had a harsh effect on the recent economic crisis. And ineffective monetary policy to contain inflation further exacerbated it.”
Highlighting the detrimental impact of high import tariffs on both export diversification and food security, Dr Raihan articulated concerns regarding the country’s tariff policies.
One of the major impediments identified by Dr Raihan was Bangladesh's exchange rate policy, which he argued had a detrimental effect on the economy during recent economic crises. He also criticized ineffective monetary policies and highlighted the country's underperformance in logistics compared to global standards.
Moreover, high import tariffs were identified as another barrier to export diversification and food security. Dr Raihan emphasized the urgent need for reforms in tariff policies and comprehensive fiscal reforms to enhance revenue generation.
Former Lead Private Sector Specialist of the World Bank Group Dr Syed Akhtar Mahmood said, “If we go back 30 years, Bangladesh actually ranked higher than Vietnam in the economic complexity index.”
He highlighted the dynamic shift observed in the trajectory of the electronics sector, signalling potential opportunities for Bangladesh's economic diversification. Drawing parallels between Bangladesh and Vietnam's developmental trajectories over the past three decades, he emphasized the significant gap in FDI inflows between the two nations, underscoring the need for strategic measures to attract greater investment.
Syed Nasim Manzur, the Managing Director of Apex Footwear, pointed out the significant share of non-RMG industries in Export Processing Zones (EPZs), indicating the potential for diversification beyond the RMG sector.
He emphasized the importance of reforming export regulations to facilitate innovation and simplification, which are crucial for increasing exports.
Dr Zaidi Sattar, Chairman and Chief Executive of the Policy Research Institute (PRI), underscored the need to address policy frameworks that hinder economic diversification. He highlighted the existence of an "anti-export bias" in tariffs and called for tariff reduction and the elimination of policy barriers to facilitate export diversification.
