Diversifying products for economic prosperity

Efficiency in production and export can enhance competitiveness in the market, which may lead to success. Photo: Noor-A-Alam

Bangladesh, after coming out as an independent and sovereign country, started its external trade in the year 1972-73 with export earnings of $348.42 million. Major importing partners of the country were the USA, UK, Germany, France, Belgium, Italy, the Netherlands, Canada and Japan. 

After crossing many hurdles, Bangladeshi exports have achieved global recognition by supplying a wide range of high-quality products. Our accomplishments are numerous, but our export business must achieve long-term viability. It is time for us to establish a stable position in the global trading environment.

Besides making profits, all business entities aim to create a stable position in the international market. During the last five decades, the exporting sector of the country has experienced many ups and downs. In FY 2021–2022, the total export earnings of Bangladesh reached almost $61 billion, representing 34.40% growth over the previous year. 

Last year, a number of products, namely knitwear, home textiles, frozen and live fish, agricultural products, jute and jute goods, leather products and footwear, and light engineering products, were leading the export scene.   

These sectors contributed a total of $49.09 billion, accounting for 94.27% of total exports. On one side, the overall export was promoted, but on the other, it revealed a picture of dependency on a small number of products.

A business flourishes following a logical sequence of returns on investment. If there is no profit, there may be no business. Existing products must be continuously developed on a global scale to compete.

Furthermore, entrepreneurs should plan and innovate new products just to keep pace with the ever-changing and growing demands of the market.

Once upon a time, jute and jute-based goods led the export sectors. It lost its market share due to different reasons. Farmers were losing motivation to grow jute as they were not getting fair prices or profits. They began to focus on the cultivation of rice and other food grains. 

The export basket began to expand considerably between 1981 and the 1990s. During this time, exports of apparel from Bangladesh were booming rapidly. 

This industry has enormous potential for earning large amounts of foreign currency and providing job opportunities for unskilled or semi-skilled workers. As a single destination, the primary market was the USA, which offered quotas for products (ready-made garments) made in Bangladesh.

The table shows that the country has been enjoying a remarkable and repeated upward trend in exports.

As a member of the WTO since 1995, Bangladeshi export products were allowed duty-free access to the European Union (EU) under the EBA Arrangement. Our export market expanded all the way to the EU thanks to a massive surge in demand. The EU has the lion's share of our exports, almost 45% of the overall export earnings.

Due to the ever-changing trend in the highly competitive international market, business diversification is necessary to ensure long-term viability. 

Demand-driven manufacturers are remodelling or reconfiguring their products and manufacturing facilities. However, some products may fall short of meeting consumer and market demands. 

Some small enterprises in Bangladesh were established to deal in bidi (a kind of cigarette). Factors like modern rules on public health, environmental impact, and mass consciousness have compelled the business of this sector to experience a significant decline. 

Some other companies were producing pharmaceutical or toiletry products only. They could realise that depending on a small number of products, they might not be able to face the challenges of the 21st century. They have diversified their businesses into groups of companies, or 'clusters'. 

Now, they are the manufacturers of products in different sectors and are successfully going on with their businesses. Such businesspeople are now leading the total export trade.

Once upon a time, our traders could not think of any products to export. Gradually, agarwood, cattle stomachs, bones, organs, and intestines, fish scales, human hair, synthetic hair, IT and IT-enabled services, sea vessels, diversified jute products, crocodile leather, cashew nuts, sesame oil, charcoal from jute sticks, toys, home appliances, processed foods, etc were added to the list of export items. 

Although it is known that Bangladesh is not rich in mineral resources like gold, our country can become a dependable source for supplying jewellery, ornaments, and halal meats and foods. The latter will be one of the 'high-value' products to fetch foreign currency. 

30 years ago, people in this country could hardly think of buying processed and ready-to-eat food products from stores. But times have changed and the government has been providing support to these sectors with appropriate policy, technology, and infrastructural facilities. 

In order to create a congenial and competitive environment, the exporters and business leaders are being motivated by receiving CIP (Commercially Important Person) Cards and National Export trophies for their outstanding performances.

Boundaries between the physical, digital, and biological worlds are now being blurred by making progress in Artificial Intelligence (AI), robotics, the Internet of Things (IoT), 3D printing, genetic engineering, quantum computing, and other technologies. And these will bring success in the form of the 4th Industrial Revolution (IR 4.0). 

So, our entrepreneurs, researchers, scientists, and IT experts must come up with the best ways to invest their physical and intellectual resources.

Diversification or transformation in business is being made almost everywhere in the world. Toyota, the well-known Japanese brand, began with automatic looms. 

This company now produces vehicles of different types and has received recognition both in the east and west. With a revenue of $258.70 billion, this company now ranks second in the world. 

Another globally established brand Samsung was founded as a grocery trading store in Korea. In 2022, this company had a 21.20% global market share in smartphones. It is now a popular name for everything from light engineering to heavy industrial production, electronics to automobiles, and many more. 

The age of globalisation is almost borderless but not free from obstructions. A businessperson must constantly consider competition regarding product and service cost, target market, technological adaptation, quick response, quick production, timely shipment, and so on. 

Competitiveness is of utmost importance in international marketing. It is possible to keep it going by producing at a lower cost and selling at a lower price. 

Efficiency in production and export can enhance competitiveness in the market, which may lead to success. Of course, balancing quality and price shows the prudence of the marketer for a certain product or service.

Diversification creates more buyers/customers, greater income security, and more consistent demand. It also lowers the cost of production and broadens brand recognition. It changes in the form of business support, the establishment of backward linkage industries, the creation of brand loyalty, and the creation of massive employment and investment opportunities.

The government of Bangladesh is determined to achieve the targets of Vision 2041. For this purpose, we are to increase export earnings to $300 billion, increase life expectancy by up to 80 years, and extend universal health care to 75% of the population. 

These may appear as gigantic tasks, but expanding the export basket through diversification of products and services may act as important tools to make these targets a reality.

The business community of Bangladesh should come forward to invest more in the diversification of products. In this regard, steps to attract expatriate citizens should include encouraging product diversification. 

In this regard, steps to attract expatriate citizens are to be encouraged. Products should be diversified as much as possible and as early as possible. 

In case of any difficulty, the doors of government agencies are always open. The exchange of ideas and mutual consultation will go a long way toward overcoming challenges on the way to a rapid diversification process. 

It may be mentioned that during the Covid-19 pandemic, the government's stimulus package in the form of liquidity support, totalling Tk97,950 crore for various sectors (of which Tk5,000 crore was designated for export-oriented manufacturing industries) was effective in keeping production and exportation from collapsing. 

Production and shipments were not delayed, which resulted in 34.40% growth in FY 2021-22 compared to the export income of the previous FY 2020-21. The most labour-intensive sectors were subsidised under the stimulus package.

Bangladesh has overcome uncertainties and odds by keeping all the export-support agencies in operation for the convenience of a smooth external trading system. 

The service-providing organisations are being strengthened with modern technology and sophisticated services. There may be no denying the fact that government organisations are now providing more prompt services than ever before. 

The wheels in mills and factories are running smoothly towards achieving the export target of $80 billion in 2024 and $100 billion in 2026. Cooperative efforts by both the public and private sectors can make it possible.

Illustration: TBS

Mohammed Shahjalal is the Director of Export Promotion Bureau

Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the opinions and views of The Business Standard.