New investment is key to increasing export contribution to GDP, with diversification of products by promoting high value and potential export-oriented sector is a must Despite an impressive growth of our Gross Domestic Product over two decades, the contribution of exports to GDP remains disappointing low, and is on a declining trend for a few years now.Trade analysts and businessmen have said higher dependence on certain products, lack of business diversification, slow growth of export compared to the economic growth, and sluggish private investments are the major causes of export decline in Bangladesh.According to the latest data of Bangladesh Bureau of Statistic (BBS), the contribution of exports of goods and services to the country’s gross domestic product (GDP) decreased to 15.05% in the fiscal year 2016-17 from 16.65% in FY2015-16.In the last fiscal year, Bangladesh’s GDP stood at Tk1,975,815.40 crore, of which Tk301,255.18 crore came from exports of goods and services, while the domestic service sector contributed 56.50%.The RMG sector contributed the most, adding Tk222,721.20 crore to GDP, by earning the country $28.15 billion of the total export earnings of $34.65 billion from goods and products.Data released by Export Promotion Bureau (EPB) shows that in the last fiscal year, Bangladesh exported 750 different types of products under 31 categories.Speaking to the Dhaka Tribune, ABM Azizul Islam, former finance advisor of the caretaker government, said: “Our export earnings are highly dependent on the apparel industry, as 82% of total export earnings come from this sector. Its contribution to GDP stands at around 10%.“On the other hand, earnings from other export-oriented sectors, except only leather and leather goods, are yet to touch the mark of $1 billion.”Export-oriented sectors including the apparel industry witnessed a sluggish growth in the last fiscal year, which indicates that contribution of export earnings to GDP is not increasing in parallel with economic growth, he added.According to Export Promotion Bureau (EPB) data, in FY 2016-17, the overall export earnings and earnings from the apparel industry posted only 1.68% and 0.20% rise respectively, the lowest on record in the last one and a half decades.On the other hand, exports’ contribution to GDP shows a declining trend as they are not increasing in line with the country’s economic growth, said the former finance advisor.In FY 2016-17, Bangladesh witnessed a 7.28% GDP growth. But the export earnings posted only a 1.68% increase.New investment is key to increasing export contribution to GDP, with diversification of products by promoting high value and potential export-oriented sector.“We need more production to earn more from exports. For more production, private sector investment, which is currently stagnant, should be increased,” Exporters Association of Bangladesh (EAB) President Abdus Salam Murshedy told the Dhaka Tribune.In attaining the goal, the government should create a business-friendly investment climate to attract investment from home and abroad, he added.According to Bangladesh Bureau Statistic (BBS) data, total investment to GDP was 30.51%, 23.10% coming from private investment and 7.41% from public investment.“Private sector investment is key to increasing contributions to the GDP as it helps to increase production capacity. Sectors with potential such as pharmaceutical, furniture, jute products, value-added services and products can play an important role,” said ABM Azizul Islam.“RMG sector, the largest contributor to the economy in terms of job creation and export earnings, mostly manufacture basic and low-value products. The government has to concentrate on product diversification and value addition along with market diversification,” BGMEA Senior Vice-President Faruque Hassan told the Dhaka Tribune.Information technology is a promising sector in enlarging export contribution as the government has a set target of $5 billion in earnings from the sector by 2021.“Information and Communication Technology industry can help in enlarging export contribution to GDP as it has enormous opportunities. The government should take steps to train and develop a skilled workforce, which is what the sector needs,”Mustafa Jabbar, president of Bangladesh Association of Software and Information Services (BASIS) told the Dhaka Tribune.He urged Bangladesh Bank to take necessary steps so people can benefit from the fund from central bank’s Export Development Fund (EDF), as well as receive payments as soon as possible without any difficulties.
