Declining export growth, falling remittance inflow and a consequent deficit in current account balance along with dwindling foreign aid disbursement are likely to exert pressure on the country’s balance of payments, says a private think-tank.The private think-tank, Unnayan Onneshan (UO), came up with the observation in its monthly publication ‘Bangladesh Economic Update’. It called for a thorough re-examination of the current trade and industrial policies in order to address structural bottlenecks and create a stable business climate that will attract increased private investment including foreign direct investment (FDI).The UO has suggested adoption of new strategies to expand the country’s productive capacities that will enhance utilisation of available resources through efficient entrepreneurial capabilities and increased production linkages.Referring to declining rate of growth in inflow of wage earners’ remittance, the think-tank shows that the inflow declined by 14.48 per cent and stood at US$ 12,769 million in FY 2016-17 compared to the previous fiscal year.On monthly basis, the remittance inflow fell by 4.18 per cent in June 2017 compared to May 2017 and stood at $ 1,214.61 million, which further declined by 8.15 per cent to $ 1,115.57 million in July 2017.Decline in the inflow of remittance is likely to pose threat to the social infrastructure of rural Bangladesh since the remittance-recipient households in rural areas spend a significant portion of their income on consumption, health and education.Given the informal system for transferring money, induced by large gap in rates of US dollar in banks and curb market, it is imperative that a conducive atmosphere for higher inflow of remittances be maintained through effective regulatory measures and diplomatic negotiations.With increasing export concentration of readymade garments (RMG), growth in total export earnings exhibits a significant decline by 8.08 percentage points in FY 2016-17 compared to FY 2015-16. Rate of growth in export earnings stood at 9.77 per cent in FY 2015-16, whereas at the end of June 2017, export growth declined to 1.69 per cent in the last fiscal year resulting in a shortfall in the year’s target ($ 37,000 million) by $ 2,165 million. Non-diversification of export markets and lack of export competitive products may pose serious challenge to the performance of the external sector. Fresh opening of letter of credits (LCs) for import of industrial raw materials has, however, registered a growth of 6.11 per cent during July-May period of FY 2016-17 compared to the corresponding period of FY 2015-16. This growth in opening of LCs for industrial raw materials cannot be capitalised until lack of entrepreneurship and productive capacities in the economy are dealt with accordingly.With decline in inflow of remittances and export growth, rise in import payments along with shortfall in primary income and income from services sector, the current account balance exhibits a monumental deficit of $ 2,103 million during July-May period of FY 2016-17 compared to a surplus of $ 3,193 million during the same period of the previous fiscal year. Deficit in current account balance has been continuing since the third month of the last fiscal year. As a consequence, the total balance of payment declined to $ 2,682 million in July-May period of FY 2016-17 compared to $ 4,143 million in the corresponding period of FY 2015-16.Both total and net receipt of foreign aid declined in FY 2016-17, disbursement of total foreign aid decreased by 7.11 percent and stood at $ 2,728.20 million during July-May period of FY 2016-17 compared to a 7.71 per cent increase during the corresponding period of the previous fiscal year. The net receipt of foreign aid, on the other hand, also declined by 11.16 per cent and stood at $1,896.16 million in July-May period of FY 2016-17 compared to an increase of 14.74 per cent during the corresponding period of FY 2015-16.A country’s economy becomes stable and gets growing when its exports surpass its imports. There are many small countries that export various items, both raw materials and finished goods, and earn foreign currency to sustain their economy.The story in Bangladesh is, however, different. We import more items spending valuable foreign currency than what we export. Increasing exports as well as exploring, simultaneously, new markets abroad is an important issue for policy planners of the country. In a recent meeting with leading industrialists of the country, Prime Minister Sheikh Hasina gave utmost importance to exploring new export markets, especially because worldwide the existing markets for traditional items is not enough for our economy. The imperative, therefore, is to search for markets where we will be able to export many of our non-traditional items and earn foreign exchange. The Prime Minister rightly observed that the recent condition of the traditional markets is not good and as a result, the country’s exports in some cases have not been satisfactory. Our traditional items are limited to jute, hide, tea and readymade garments. Hence there is no alternative but to become innovative and produce new non-traditional goods. In this respect, to encourage the business community, she declared that exporters of non-traditional items will be given special incentives by the government. It may be mentioned that soft loans with only 3 per cent interest rate are being given as special incentive to find new markets abroad.In her words, “We have to find out in which countries we can export our items in future and what type of items they actually need.” She also hinted at our neighbouring countries where there are huge markets. The domestic market can also be expanded for Bangladeshi products to survive in the tough competitive global market. The small entrepreneurs should seize the opportunity of the low bank interest and come up with more and more non-traditional items to attract foreign buyers.The government has initiated a move to boost competitiveness of the country’s major exportable items and enhance export earnings addressing various problems in three major sectors leather, leather goods and footwear, light engineering and plastics. The Executive Committee of the National Economic Council (ECNEC) recently approved a project to this end titled ‘Export Competitiveness for Jobs’ to be implemented by June 2023 at an estimated cost of Tk 9,410 million.The main objectives of the project are to remove the problems in getting access to the export market and boost export competitiveness of three major sectors like leather and leather goods and footwear sector, light engineering (including electronics and machinery) sector, and plastics sector.Once the project is implemented the export of new sector-wise products will get a boost. It will also help resolve all the problems in getting greater access to the international market.According to Export Promotion Bureau (EPB) data, out of the overall export items in fiscal year (2015-16), only six items accounted for 93.58 per cent of the total export income of which the readymade garment sector represents the bulk of 82 per cent of the overall export earnings. Besides, around 54.58 percent of the country’s exportable items went to the European Union market followed by 22.71 per cent in the US market. The export target for fiscal 2017-18 has been set at $37.5 billion — 8.23 per cent higher than the last fiscal year’s receipts.
