The Prime Minister’s directive to extend similar support to other industries like the garment industry reflects a strategic approach toward achieving multifaceted export growth and fostering economic resilience, innovation, and sustainability in the global market
The decision has been made to prioritize the enhancement of exports in the leather and jute sectors, with Prime Minister’s Private Industry and Investment Adviser Salman F Rahman emphasizing the potential for diversified exports if similar support is extended to other sectors like the garment industry. Speaking after the exchange meeting at the Bangladesh Investment Development Authority building at Agargaon in the capital on Monday (January 29, 2024), he noted the increasing versatility of Bangladesh’s exports, citing the emergence of new export products such as flowers, fruits, and agro-processed goods.
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Salman F Rahman highlighted the recent initiation of exports in sectors like furniture, refrigerators, and air conditioners, expressing optimism about Bangladesh’s expanding export capabilities. He underscored the Prime Minister’s directive to extend comparable benefits to other sectors to achieve multifaceted export growth, announcing the commencement of such support for the leather and jute industries.
Current Export Scenario: Leather and Jute Sector
Leather And Leather Products
Bangladesh’s leather industry, ranking second in export earnings, has been designated a top priority sector due to its substantial value addition, remarkable growth trajectory, and employment prospects. With approximately 600,000 direct employees and an additional 300,000 in indirect roles, it remains a major contributor to employment.
Bangladesh holds a 3% share in the global leather and products market, with nearly 60% of its annual output being exported. Over the past decades, the export of leather and leather products has surged, transitioning from finished leather to a diverse array of finished goods.
The footwear industry’s share of total sectorial export earnings has risen from 36.64% in FY’2007-08 to 60.90% in FY’2017-18.
Driven by steady economic growth and an expanding middle-income class, domestic demand for leather products in Bangladesh continues to rise.
By 2025, an estimated 30 to 40 million individuals are projected to enter the entry-level middle-income bracket, while an additional 30 million may attain aspirational or emerging middle-class status.
Notably, the domestic footwear market has been expanding at a rate of 10-15% annually, with per capita footwear consumption increasing from 1.7 pairs to 3 pairs over recent years.
The global leather goods market was valued at USD 241 billion in 2020 and is anticipated to reach USD 306.1 billion by 2027. It has seen significant investment in recent years due to its abundant labor force and domestic availability of sustainable raw materials.
Jute And Jute Products
Jute, known as the ‘golden fiber’ of Bangladesh, has been used for centuries for its affordability, biodegradability, and eco-friendliness. According to the IMARC Group, the market for jute bags is projected to reach $3.84 billion by 2027, with a growth rate of 10.4%. In Bangladesh, the jute industry contributes 1% to GDP and 3% to export earnings, exporting to over 100 countries.
Bangladesh exports various jute products, including raw jute, bags, sacks, ropes, carpets, mats, and more. Jute stick charcoal, a byproduct, has export potential worth $3.0 to 3.5 billion.
Additionally, jute tin, developed by Bangladeshi scientists, is considered more durable and stronger than metallic tin.
The most recent data provided by the Export Promotion Bureau (EPB) indicates a 19 percent decline in export earnings of jute and jute goods, totaling $912 million in FY23, in contrast to the $1.12 billion reported in FY22.
Specifically, within this category, export earnings of jute yarn and twine experienced the most significant drop, plummeting by 28.64 percent to approximately $498 million in FY23, compared to around $698 million in FY22. Conversely, export income from jute sacks and bags saw an uptick of nearly 8 percent to $109 million in FY23, in contrast to the previous fiscal year. However, raw jute export income decreased by 5.5 percent to $204 million in FY23.
Despite the potential inherent in jute and its varied products, the latest data showcases a notable decline in export figures. Several notable factors contribute to this decline.
The ongoing Russia-Ukraine conflict significantly impacts jute export figures, as both countries are significant economic markets for Bangladesh. Additionally, the war in Sudan, another major market for Bangladesh’s jute products, has disrupted shipments, leading to volatile market prices and increased costs. Furthermore, inadequate production capacity poses challenges in meeting buyers’ requirements within specified timelines. Jute millers also attribute the country’s high production costs to soaring energy prices, driven by increases in gas and electricity tariffs.
The Emergence of New Export Products
The beginning of exports in industries like furniture, refrigerators, and air conditioners, as well as the appearance of new export goods including fruits, flowers, and agro-processed goods, indicated excitement about Bangladesh’s growing export potential. The Prime Minister also gave the direction to extend comparable benefits to these sectors to achieve multifaceted export growth like the garment industries.
New Export Products Outcomes
The emergence of new export products can yield several outcomes, profoundly impacting economies and industries.
- Firstly, it can stimulate economic growth by diversifying export portfolios, reducing reliance on a limited range of products, and opening new markets. This diversification enhances resilience against market fluctuations and geopolitical risks.
- Secondly, it fosters innovation and competitiveness as businesses strive to develop unique offerings to meet global demand, driving technological advancements and efficiency gains.
- Additionally, it can improve trade balances by increasing exports, thereby generating revenue and creating employment opportunities.
- Furthermore, the introduction of new export products may facilitate international collaboration and partnerships, fostering cultural exchange and knowledge transfer.
However, challenges such as market saturation, regulatory barriers, and geopolitical tensions may hinder the full realization of these outcomes, necessitating proactive strategies and cooperation among stakeholders to maximize the benefits of new export opportunities.
Recommendations to Boost Export in Bangladesh
Diversify Export Portfolios:
To follow through on the Prime Minister’s directive to extend support to various sectors beyond leather and jute, particularly focusing on industries like garments, furniture, refrigerators, and air conditioners. Diversification reduces dependency on specific markets and enhances resilience against economic fluctuations.
Invest in Innovation and Technology:
To encourage businesses to invest in innovation to develop unique products that cater to global demand. To emphasize technological advancements to increase efficiency and competitiveness in the international market.
Address Market Challenges:
To tackle market challenges such as regulatory barriers and geopolitical tensions through proactive strategies and diplomatic efforts. To Seek to mitigate the impact of conflicts in significant markets like Russia, Ukraine, and Sudan on Bangladesh’s export figures.
Enhance Production Capacity:
To address shortcomings in production capacity to meet buyers’ requirements promptly. To invest in infrastructure and technology to streamline production processes and improve overall efficiency.
Promote Sustainability:
To leverage Bangladesh’s abundant raw materials sustainably to meet international standards of eco-friendliness. To encourage the adoption of sustainable practices across industries to appeal to environmentally-conscious consumers worldwide.
Facilitate Trade Partnerships:
To foster international collaboration and partnerships to expand export markets and facilitate knowledge transfer. Strengthen diplomatic ties with key trading partners to ensure favorable trade conditions for Bangladeshi exports.
Support Small and Medium Enterprises (SMEs):
To provide tailored support and incentives to SMEs to facilitate their participation in export activities. To enhance access to finance, market information, and training programs to empower SMEs to compete effectively in the global market.
By implementing these recommendations, Bangladesh can unlock its export potential across various sectors, driving economic growth, creating employment opportunities, and fostering sustainable development.
Conclusion
Prioritizing the enhancement of exports in Bangladesh’s leather and jute sectors underscores the nation’s commitment to diversifying its export portfolio. The Prime Minister’s directive to extend similar support to other industries reflects a strategic approach toward achieving multifaceted export growth and fostering economic resilience, innovation, and sustainability in the global market.
