The office of Korean Export Processing Zone remained closed yesterday after local protesters backed by influential quarters besieged all key entry points to the zone.At a rally on Sunday, the demonstrators, comprising some sacked and incumbent workers of the country’s lone private economic zone, aided by outsiders, declared that they would prevent any KEPZ official from entering the office. “We did not go to the office, as the demonstrators have threatened to stop us at any cost,” Mohammad Hasan Nasir, managing director of the EPZ, said yesterday.The authorities declared the office closed for the day, according to Muktadir Islam, security manager of the zone.Saiful Islam, media officer of KEPZ, said: “We had tried several times in the morning to enter the EPZ but failed.”

An aerial view of Korean Export Processing Zone (KEPZ) in Chittagong.
However, factories inside the EPZ were operating normally, an official said, asking not to be named.The agitated people under the banner of Anwara-Karnaphuli Janasartho Sangrakkhan Sangram Parishad, a grouping that claims to “safeguard the interests of the local people”, organised the rally at Gate No. 1 of the KEPZ.During the rally, they threatened to block all the three entry points of the KEPZ until their demands, including the removal of KEPZ managing director, are met.Since February 21, the demonstrators had mainly gathered around the first gate. But yesterday, they occupied the second gate as well as the river route leading to the economic zone.The problem began on February 21 after some 200 people stormed into the premises of KEPZ, uprooted some of its boundary pillars and erected new ones to take control of 5.95 acres of land.Sources in the area said, in a bid to grab the KEPZ land, the influential quarters instigated local people by spreading rumours that the KEPZ authorities were grabbing a graveyard and preventing local people to bury the dead — charges the EPZ authorities categorically deny.A group of businessmen, politicians and local public representatives are playing a role behind the unrest in KEPZ, sources said.The demonstrators particularly singled out the MD of KEPZ.Contacted, Tauhidul Haque Chowdhury, chairman of Anwara Upazila Parishad, who led the protests, said they did not have any objection to any official of KEPZ, other than its MD.“He [Nasir] doesn’t allow the local people to bury the dead bodies in the graveyard. He also suspended at least 150 local employees of KEPZ on trifling issues in the last two years.”“Our demonstration will continue until Nasir is removed,” he said.Chowdhury said their demonstration has been peaceful and has not prevented anybody from entering the EPZ. “But we will by no means allow Nasir to get in.”Nasir said the demonstrators are up against him because he did not allow any irregularity in the zone since he took over as its managing director in 2011.He expressed frustration as the local administration and the police are not taking any step to keep the outsiders at bay.We have informed all relevant agencies about the situation. We are updating them about everyday development,” he said.In the last two years, the local police station has not received any case or general diary from the EPZ authorities, said Nasir. “We have had to go to court for the cases.”“It is really tough to work in this situation. We are looking to the administration for help.”The inaction from the administration prompted Jahangir Saadat, president of KEPZ, to write a letter to the Prime Minister’s Office last week, seeking immediate action.Nasir blamed the trouble on two union council chairmen and the upazila vice chairman and their supporters. “They are all trying to grab the land in the name of graveyards.”He said the workers who have been fired since he took office were suspended for breaking discipline. Many of them are day labourers, he said.
Mohiuddin Ahmed, officer-in-charge of Karnaphuli Police Station, said the demonstrators did not stop any official entering the KEPZ.“They were demonstrating peacefully. I don’t know why the KEPZ authorities declared the office closed for Monday.”Protests halted the development work of the zone. KEPZ was developed by Youngone Corporation, a South Korean company engaged in the manufacture and distribution of sportswear and shoes.More than 70 foreigners, mostly Korean, reside in the KEPZ, which employs about 10,000 workers and staff members.

A growing global demand for local home textile products lures entrepreneurs into making more investments in the sector despite challenges like European Union’s GSP facility to Pakistan and current political turmoil, industry insiders said. A good number of home textile manufacturers such as Unilliance Textile, Mom Tex, Fariha Group, Pakiza Group and Sad Musa have already invested millions of taka in new factories and expansion of their existing capacity, they added. Even though local manufacturers are hopeful of facing the challenge of Pakistan’s duty-free facility in the EU market, some of them have termed the country’s ongoing political stalemate an impediment to the sector’s growth. China, India, Pakistan and Turkey which are traditional producers of home textiles have earned reputation for their product ranges. But Bangladesh’s home textile industry is also growing fast, making it a promising contender among these competing countries. Newer opportunities are emerging ahead as buyers from China are shifting to Bangladesh. Good quality, commitments, low production cost, cheaper wages, duty-free access to some developed countries are the factors that weigh in favour of Bangladesh for the retailers to source from here. Unilliance Textiles Ltd has undertaken a Tk 3.0 billion project to double its production capacity in stitching and weaving segments mainly to grab international demand for quality cost-competitive hometex products, said its International Account Manager Sabbir Chowdhury. “Our production will reach 50,000 sets per day from existing 22,000 sets on completion of the project,” he told the FE. Explaining the details about the company’s expansion plan, Mr Chowdhury said despite the rising global demand, there are a small number of supply companies in the country that encourages his company to make more investments. Pakiza Group that produces sari and salwar kameez and mainly focuses on the local market,  now plans to enter the global arena with its new unit -Mom Tex that is expected to produce home textile products soon. “The project has been launched last year aiming to diversify our product range and market,” said Md Mogahid Hossain Bulbul, Manager (Admin) of Mom Tex, adding that they are expecting to start production at the end of this year. Another company Sad Musa has come up with a huge investment plan worth Tk 25 billion (Tk 2,500 crore) to take hold of the growing demand for hometex products with a strong backward linkage support. Eight factories would be set up on 100 acres of land in Chittagong, said Shaikh Hasan Zaman, director of Sad Musa Fabrics, adding that four units have already been set up with the production capacity of 30 tonnes of yarn and 50,000 metres of fabrics per day. “Fifty per cent of the yarn and fabrics is locally consumed while the rest are sold to the exporters. We will need to stop outsourcing once all our units go into production,” he said. European Union GSP facility for Pakistan, appreciation of the local currency against the US dollar and depreciation of EU currency against US dollar and lingering political turmoil are seen as major factors blocking the growth of the country’s potential home textile exports, industry insiders said. According to a recent study conducted by Bangladesh Foreign Trade Institute (BFTI), Bangladesh is likely to face strong competitive pressure from Pakistan in home textile trade. Pakistan has used the new GSP scheme more effectively than Bangladesh did, the study said. “Due to the EU’s new GSP scheme, Pakistan will become the main competitor of Bangladesh on the EU market. Our country may face pressure in the days to come,” BFTI director Dr Mostafa Abid Khan said. Home textile products will be the main victim of the new system, he lamented. “Pakistan is a cotton-growing country now enjoying the new generalised system of preferences (GSP) on the EU market,” said Nurul Islam, Chairman of Noman Group, one of the country’s largest hometex product exporters. So, Bangladeshi-made home textiles are lagging behind Pakistan in terms of cost-competitiveness, he said, adding that the appreciation of taka and depreciation of EU currency against the dollar also eat up the competitive edge of locally made hometex products. “Political instability cast a negative impact on the overall export growth in this sector. Buyers are not coming to Dhaka to negotiate the future orders while call the local counterparts to a third destinations like Hong Kong and Singapore.”   A stable political situation is a must to keep the business running, Mr Islam said. Echoing Mr Islam, Sad Musa Director Mr Zaman said, “We could face the challenge of Pakistan GSP facility to EU only provided with a stable political situation.” Despite all the odds, Bangladesh has still some advantages against Pakistan, said Belayet Hossain, Managing Director of RTT Textile Industries Ltd. “The yarn Bangladesh produces is better than that of Pakistan.” The sector could not flourish to the expected level due to lack of the government policy support while financial institutions like banks did not come up with funds as did for the garment sector, he pointed out. “But Bangladesh has potentiality of earning $2.0 billion in next couple of years,” said Belayet, also former vice chairman of Bangladesh Terry Towel and Linen Manufacturers and Exporters Association. The industry now needs capacity building to capitalise on the upcoming opportunities to take a sizeable part of the world home textile market, according to businesspeople. They also sought government policy support, including cash incentives and reduction in bank interest rate. Bangladesh exports home textiles such as bed sheets, bedcovers, pillow and cushion covers, curtains, rugs, quilts, kitchen aprons, gloves, napkins and tablecloths to European Union countries, the USA, Canada, Mexico, Australia, Japan and Dubai. The country fetched $792.53 million by exporting home textiles in the fiscal year 2013-14 which was only $402.49 million in FY 2009-10. According to BTMA, some 17 mills produce about 556.39 million metres of home textiles a year. Industry insiders said the number of such mills is much higher, although their export volume is scanty.

Garment makers are dreading a significant drop in work orders from June as retailers refuse to travel to Bangladesh for the political turmoil since January 6.The retailers or their representatives were due in January and February to have a look at the factories and put in work orders for the summer but they did not come, said Shahidullah Azim, vice-president of Bangladesh Garment Manufacturers and Exporters Association.Although the internal situation like transportation of goods from factories to Chittagong port and from the port to the factories has improved, the retailers are still shying away from the country. Rather, they are calling the garment makers to a third country like Thailand, Hong Kong or India to hold meetings, he said.In the monthly buyers’ forum meeting, held in Dhaka on March 2, the retailers said they are not placing the full order volumes fearing further volatility of the political situation.In some cases, they are slashing the orders by more than 30 percent and diverting them to Vietnam, Cambodia and India.The retailers who attended the meeting account for $22 billion of the sector’s $25 billion annual exports, according to Azim.“So, we will face an order shortage after June,” the BGMEA vice-president added.David Hasanat, managing director of Viyellatex, a leading garment group, said the retailers that have full-fledged offices in Dhaka are placing orders in high volumes though. But the majority of the retailers do not have such arrangements and they are the ones that are slashing the orders, he added.Bakhtiar Uddin Ahmed, general manager of Fakir Apparels Ltd, a Narayanganj-based garment manufacturer, said he had a meeting in Hong Kong last week that was supposed to be held in Dhaka, as the retailer refused to travel to Bangladesh.Ahmed also agreed that the internal situation has improved a lot as they can carry goods easily from one place to another. For instance, he can now ship three lakh pieces of garment products from Narayanganj to Chittagong port a day without any problem.But, the foreign retailers are still cancelling their trips to Bangladesh for apprehension of arson attacks and violence — and using that as an excuse to cut down their orders, he said.The blockade and shutdowns imposed by the BNP-led alliance have already crossed the two-month mark.

Life has never been easy for the sponsor-the Seoul-based Youngone Corporation- of the Korean Export Processing Zone (KEPZ), since the signing of a memorandum of understanding (MoU) in 1995 to establish the first private EPZ in Bangladesh. The government allotted land and promised all the facilities and incentives to the EPZ, now situated on the bank of the river Karaphuli in Anwara of Chittagong. Sheikh Hasina as the Prime Minister of the then Awami League government in 1999 attended the ground-breaking inauguration of the KPEZ and pledged all support for the private EPZ. But the government agencies concerned did the opposite later. The company, allegedly, faced hurdles at every step, from getting the clearance from the department of environment (DoE) to power and water supply. It may sound bizarre that the KPEZ authorities got operational licence during the rule of the military-backed caretaker government – eight years after that inaugural function. The DoE in March 2012 had cancelled environmental clearance alleging that the KEPZ was cutting the hills and causing damage to environment. However, the clearance was restored later when the allegation was found to be false. It did not also get the supply of the promised volume of gas and power.  Rather once in 2012, the authorities concerned had cut off power supply to the EPZ. The supply was restored after more than a year following an order passed by the Supreme Court. It is widely believed that the land allotted to the KPEZ has been the main source of troubles for the Korean company. Some influential quarters, having political links, have been trying hard to make things difficult for the private EPZ with a view to grabbing a part of its land. The KPEZ was originally allotted nearly 2,500 acres of land. But it could not develop the land in time for not getting the ownership title to the same. All sorts of delay were being caused under different pretexts. Due to the non-completion of the land transfer deal, the KEPZ could not lease out industrial plots to foreign investors willing to set up factories there. Being instructed by the Prime Minister’s Office, the KPEZ in 2012 submitted details plans covering an area of 500 acres of the allotted land. But the zone authorities have developed more than 1,000 acres of land. It is widely believed that after the development, the land in question has become very lucrative which has lured the local crooks to grab a part of the same. Only very recently, some influential people, allegedly, have grabbed a portion of the KEPZ land, storming into its premises and uprooting the boundary pillars. They have, in fact, taken possession of six acres of land. The grabbers have done the mischief in the name of saving the land of a graveyard. The KPEZ authorities have drawn the attention of the PMO and lodged complaints with the local police. The police, it is alleged, have been non-reactive to the issue. The Anwara Police has reportedly not even recorded the incident as a regular case. All the developments have raised strong suspicion among the KPEZ honchos that some very powerful quarters are active behind-the-scene to grab a part of their land. If one follows the incidents involving the KPEZ, which now employs more than 10,000 workers and staff and has the potential to create employment opportunities for nearly 200,000 people, right from the beginning, one would smell something wrong with the government’s intention. The government’s enthusiasm about getting a private EPZ was found somewhat diluted, apparently, out of the realization that it had not been proper to allot such a large area of precious land for the establishment of one private EPZ. The reason for delay in signing the land transfer deal could be due to such realization or opposition from influential people coming from the same locality. The mistake, if there was any, was committed by the government, none else. But the negative developments centring the KPEZ are unlikely to go well with prospective sponsors from some other countries wanting to set up private export processing zones in Bangladesh. The message they are getting through the troubles being encountered by the KPEZ remains a demoralising one. Against this backdrop the government has recently invited investors from a couple of countries to set up their own export processing zones. But the investors concerned are expected to think twice before coming to a country where official incentives are aplenty and the cost of labour one of the cheapest but business environment on the ground remains somewhat hostile. The authorities concerned should try to change the situation, make moves that are necessary and bring an end to sufferings, if there is any, of the KPEZ and send positive signals to prospective foreign investors.

The Korean EPZ authority has suspended the drainage management work in and around the export processing zone due to obstruction from what it called miscreants, land grabbers and influential quarters. The authority said that it was constructing drainage system in a bid to save the KEPZ and local people from the onrush of hills and flood water during the upcoming monsoon. “We have already completed the drainage system in the jetty area adjacent to Chittagong Marine Academy and KEPZ Bandar area so that additional water from the hills is drained out and cannot do harm during the rainy season,” a statement of the KEPZ said. The authority has also constructed an artificial lake on the east of the historic Chand Sawdagar Dighi to preserve at least 25,000 gallons of water. When the drainage work was going on in full swing the land grabbers, who were active in the area since February 28, have forced the authority to stop drainage construction work, it said. “In the face of their aggressive attitude the workers of the KEPZ were forced to discontinue work of canal, culvert and lake digging beside the port link road of the KEPZ,” the statement said. It did not get any help from the local administration despite repeated requests, it added.

The Alliance for Bangladesh Worker Safety, a platform of North-American retailers, has set a plan to create a credit facility of $20-35m to extend low-cost loans to its sourcing factories, especially the small and medium enterprises for remediation works. The Alliance mentioned the plan in its 18-month report highlighting progress and improvement in factory safety since it was formed in 2013.  “Our goal is to create a credit facility of $20-35m via five local banks. The facility would be in US dollar denominated currency, enabling lower interest rates,” said Alliance in a statement on Monday. “The aim of the plan is to encourage these banks to extend loans to Alliance factories, especially small and medium enterprises.” The Alliance will provide technical assistance to the financing organisations on remediation progress and also cover administrative and startup costs and up to $2m in a first-loss guarantee, it added. Four Alliance members have launched innovative supplier financing arrangements while the low-cost remediation loans have been issued to an initial group of suppliers. According to Bangladesh Garment Manufacturers and Exporters Association (BGMEA), a factory needs about half a million US dollar to complete remediation works. The Alliance said 10% of factories’ final inspection would be completed by July 9, 2015, while 100% would be done by July 2017. “I am extremely proud of the efforts undertaken by the Alliance and member companies to improve the safety of RMG factories, ensuring every garment factory is inspected, every employee is trained and empowered, and remediation is undertaken by every factory owner,” said Ellen O Tauscher, Independent Chair, Board of Directors of the Alliance in the statement. The retailers initiative also conducted follow-up remediation verification visits to 124 factories and finalised Corrective Action Plan (CAP) of 300 factories. “We hold meeting with the factory owners and technical expertise to make clear about the CAP and set ways how to remediate it,” M Rabin, Managing Director of Alliance told the Dhaka Tribune. The Alliance had completed inspection of 587 factories and 19 factories had been closed partially or fully following the inspection on fire, electrical and building safety. The issue of finance for remediation works came after the inspection by the global retailers’ platform as it prescribed CAPs to make the RMG sector safe and compliant. Safety issues in the RMG sector came under spotlight following the Rana Plaza factory building collapse, which killed 1,135 workers and injured over 2,500 people in April 2013.

We are concerned that the Korean Export Processing Zone (KEPZ) in Chittagong is being undermined by land-grabbers and that this is hampering investment at the site. The government must act firmly to support the KEPZ in evicting the local influential people who have grabbed parts of its site. There is no excuse for the long delays by the district administration and police in helping KEPZ retrieve land which has been encroached and occupied by land-grabbers. The delays are deterring investors and holding back the zone from developing further. Since 1999, the KEPZ has fully developed around a third of the 2,500 acre site. There are now 22 different factory buildings and industries supported by 24km of roads, employing many thousands of local workers. Under the master-plan, the zone expects to be able to provide jobs to at least 100,000 local people when fully implemented. The next crucial stage of development, which plans to take employment levels over 50,000 within two years, is being put in jeopardy by the failure to sort out the land-grabbing problem. Major manufacturers with factories at the site, such as Youngone, are unable to expand or invest further without legal settlement of land issues. The government has not helped matters by raising speculation last year that it might transfer some of the yet-to-be developed land. EPZs are a vital plank of national policies to attract investment and create industrial jobs. They must be supported in their efforts to expand free from bureaucratic interference and the activities of land-grabbers.

Terming the Korean EPZ the Neo-East India Company a local public interest forum headed by the Anwara Upazila chairman demanded removal of the KEPZ managing director within next five days. They said that the erstwhile management of the KEPZ had committed that as per government land acquisition rules graveyards, crematoriums, mosques, Mazars, Mandirs, Eidgah, public walkways etc within the KEPZ-acquired area would be kept outside the land use plan of the export processing zone keeping those for use by the local people. There is also a circular from the deputy commissioner of Chittagong in this regard as well. But Brigadier General (retired) Hasan Nasir, who joined the KEPZ as MD in July 2011, has refused to set aside the religious sites for local villagers and has been working against interest of the commoners. Anwara Upazila chairman and convenor of Anwara-Karnaphuli Public Interest Protection Action Council Tauhidul Haque Chowdhury said this at a press conference at the Chittagong Press Club on Tuesday. Boirag Union chairman Nowab Ali, Baro Uthan Union chairman Didarul Alam and over a dozen sacked workers of the KEPZ and local villagers were present on the occasion. Chowdhury in his written statement said villagers of Anwara, Karnaphuli and West Patiya areas have been passing their days in discontent since arrival of Brigadier Hasan Nasir as MD of the company in mid-2011. He alleged that Hasan Nasir had broken up the Shahid Minar of Deyang School and foundation stone laid by Prime Minister Sheikh Hasina and State Minister for Land Saifuzzaman Chowdhury Javed in the area.

The government has decided to issue certificates to small garment makers, allowing them to export to south Asian countries at lower duty, a senior official said. According to the existing export policy, Export Promotion Bureau (EPB) under the ministry of commerce issues SAFTA certificates only to the member factories of BGMEA and BKMEA. SAFTA certificates allow exporters to get duty benefits while shipping products in eight south Asian countries. The EPB, at a recent meeting, has decided to issue such certificates in favour of smaller apparel makers, helping them to foray into the neighbouring countries, where demand of low-cost Bangladeshi garment items is growing. “Our study shows that there is a huge demand for low-cost Bangladeshi garments in our neighbouring countries, especially in India.  Currently, smaller factories can’t export because they don’t have the SAFTA certificate. This is a big hurdle,” a director of EPB told the FE preferring anonymity. “We hope our exports to the neighbouring countries will increase manifold if we can begin issuing the certificate,” he added. According to the official, the smaller garment factories mainly produce their garment by using wastage and cut pieces of big garment factories, which make those items less-expensive. The smaller factories mainly make vest, T-shirt, shorts, shirt, bottom and other low cost basic garment products. Small garment factory owners have hailed the government’s decision, saying that the decision has emerged as “lifeline” for them. “There are huge demands of our low cost items mainly to Nepal, Bhutan and more than ten to twelve estates of India but for lack of certification we could not do well so far. Present decision of the government would boost our export significantly,” Lokman Hakim, who owns Bizli Fashion at Narayanganj, told the FE Monday. “As our raw materials are mostly wastage and cut-piece, we can sell at the lowest price,” he added. While production cost in smaller factories is cheaper, they cannot take the advantage due to lack of strong financial footing and logistic support, said Abu Abdulla, an owner of Bangla Fashion. “We’re not eligible for becoming members of BGMEA or BKMEA. We’re not financially well off. So, we can’t utilise our potential,” he said. “Our raw materials are mostly wastage and excess fabrics of big garment factories and workers also contractual. Our establishment is also not so strong which bars our factories to be a compliant one,” he added. However, BGMEA and BKMEA leaders expressed their concern over the compliance situation in such small garment units. “It’s good that the government has come forward to providing policy support to the small entrepreneurs but the government cannot ignore the issue of minimum compliance in these factories,” president of Exporters’ Association of Bangladesh Abdus Salam Murshedy told the FE. “If an accident occurs in these factories, none will take the responsibility. If these factories are members of the BGMEA or BKMEA then the associations would follow-up their activities and safety issues would taken care of,” he added. President of BKMEA A.K.M. Salim Osman also voiced same concern and said the government could provide policy support to these factories in making them members of the associations rather than only providing clearance to export by passing the existing practice. He also urged the government to make strict follow-up to these factories so that the units can maintain minimum compliance in their factories.

Bangladesh has come a long way in terms of its exports. With an export of only $0.36 billion in fiscal 1973, the country has managed to increase it to $30.2 billion by the end of fiscal 2014. Comprising a share of 20 percent in the GDP, the importance of exports remains critical to the overall economic growth of the country.Firstly, let us take a quick look at some of the facts regarding exports of Bangladesh. The exports are largely dominated by readymade garments, whose share was 81.2 percent in FY2014. Around 96 percent of all exported goods are manufactured commodities. If we look at the table of top five manufactured goods, what we can perceive is that Bangladesh’s export basket is heavily concentrated on one product that is the readymade garments.With about four million workers and 81.2 percent of total export earnings, a lot of the country’s fate depends on a single sector. High export concentration on the garment sector can make the economy vulnerable to shocks.Shocks stemming from international financial crises, however, are likely to have minimal effects on Bangladeshi exports. This is because the share of Bangladeshi exports in world trade is extremely small. To put this in perspective, let us take a look at our largest export partner — the USA. Total import of goods and services into the USA was $2,766 billion in 2013 and the share of Bangladesh is only a meager 0.2 percent of total US imports. This depicts that Bangladesh has a vast world market for selling its products.However, possible threats that Bangladesh’s garment exports may face mostly stem from domestic inadequacies and rival countries.Currently, our garment industry has a comparative advantage in two areas namely high capacity and low wages. With 5,600 factories, Bangladesh’s apparel industry is ahead of countries like Indonesia (2,450 factories), Vietnam (2,000 factories) and Cambodia (260 factories) in terms of capacity.However, the other prime factor, low wage, may not be a sustainable comparative advantage for Bangladesh. The minimum wage in the industry has already increased by 77 percent to $66.25 since December 2013. Though it is lower than in countries like India, Pakistan, Indonesia and Vietnam, an increase in Bangladeshi wages will lead to a change in its comparative advantage. Not only can a wage hike in the domestic industry create a problem but countries emerging with lower wages may pose threats to our industry as well. For instance in the case of African nations such as Ethiopia, minimum wages can be as low as $23 a month. In addition, African countries receive a zero duty benefit for their exports to the US under the African Growth and Opportunity Act, whereas Bangladesh has to pay duty of 15.6 percent. African garment exports to the US were $0.9 billion in contrast to Bangladesh’s $5 billion in 2013. It should not come as a big surprise if African garment exports to the US gallop in the next few years.Nevertheless, the effects of rising wages can be negated with the help of higher productivity. But in terms of Standard Allowed Minutes (SAM), Bangladesh has a productivity score of 40 percent in contrast to its competitors Vietnam, India and Pakistan with a score of 80 percent in garment production.The question remains as to what can be done to increase Bangladesh’s exports, especially since a vast world market lingers out there.One way to do this is by diversification of products. Along with introducing new products to the export basket, the country can also focus on increasing exports from the existing industries that can prove to be lucrative.For instance, if we look at the exports of leather and footwear industry, we will see that they have been growing at an average annual rate of 31 percent and 25 percent respectively during the last five years. Scope exists for these industries to increase their exports further with the help of correct policies.One thing to realise is that the protection system that currently prevails in Bangladesh favours production for the domestic market rather than exporting. This creates an anti-export bias which makes domestically produced import competing goods more profitable to sell in the country rather than exporting. Garments on the other hand have been able to overcome this bias with the help of several measures such as back-to-back LC for import finance and bonded warehouse system for duty-free imported inputs.Another way to increase exports is through diversification of markets. In fiscal 2009, 93 percent of Bangladeshi garment exports went to the traditional markets, namely the USA, the EU and Canada. This has declined to 85 percent in fiscal 2014. The government gave cash incentives to the garment industry (5 percent, 4 percent and 2 percent for 2009-10, 2010-11 and 2011-12, respectively) for exporting to new destinations. This has increased exports and helped trigger the process of market diversification.We have seen that Bangladesh has a vast market for its exports and fluctuations in world demand due to international financial crises are likely to have minimal effect. However, such crises may affect export earnings in the short run. This is because Bangladesh is considered to be a price-taker in the international market and a fall in output price may result in some decline in export earnings, despite total quantity of garment exports being unaffected. Geographical diversification of exports can also help in this regard.