Earning foreign currency through international trade is of vital importance to the economic development of Bangladesh. A developing country like Bangladesh needs foreign currency for further advancement of the domestic economy. The country’s import needs are large and a strict emergence of infrastructure development, like industrialization, roads and highways etc, is high. In order to finance those imports, building infrastructure and to reduce the country’s dependence on foreign aid grants, the government needs to enhance foreign exchange earnings through planned and increased exports.
Exporting goods are divided into (1) Traditional Commodities, alarmingly which is a short list and (2) Non-traditional Commodities, which requires attention. In terms of foreign earnings, the dependence on the traditional commodities is significant and it is high time to create a diversification in foreign earnings, through increase exports of non-traditional commodities. Why should we choose non-traditional commodities? Since more investment in the TC will increase the foreign earnings of the country at a decreasing rate but on the other hand steps taken for the NTC will accelerate the foreign earnings at an increasing rate.
To increase the export of non-traditional commodities – government, banks and the industrialist/entrepreneurs need to take responsibilities and perform their duties. Each of them has to play a vital role in this regard; as without any of them it will be a cripple’s journey. The government needs to play a very important role regarding the laws, rules and regulations and export policies. They can enhance the opportunities by expediting the following tasks – Simplification of export procedures and strengthening export-led co-operation through reducing regulatory role of the government ? Providing fiscal incentives, like, Duty drawback, Income tax rebate on export earnings, Tax holiday, etc. ?Encouraging establishment of backward linkage industries through utilization of locally available raw materials ? Participating in international trade fairs ?Using the embassies and send business delegations abroad, for expansion and consolidation of existing markets and creation of new markets ?
Taking measures to ensure quality and introduce strict quality testing & certification. ?Developing and expanding infrastructural facilities ?Creating product-development councils for important Non-traditional commodities. In fact, Commerce ministry of Bangladesh has such a council named Business Promotion Council (BPC), which takes capacity building initiatives leading to productivity enhancement, improvement of quality and standards of products and addressing other issues related to environment and compliance for developing export potentiality of five sectors.
The sectors are ICT (? ), Leather, Light Engineering, Medical Plants & Herbal Products and Fishery. The important NTC(s) can be enlisted under the BPC program. The government can relax the regulation(s), deliver policy support and provide incentive, but it is the industrialist/entrepreneurs who have to execute the export business and take steps to increase the foreign earnings. The industrialist/entrepreneurs will take necessary steps for production, supply and export.
They need to perform the following steps in order to earn a handsome amount of foreign currency for Bangladesh: ?Research the foreign market. ?Build the backward linkage and develop an established supply chain. ?Ensure quality. ?Address the compliance issues, like suitable factory location, hygienic working environment, hazardous free chemical/raw materials, health of the worker, child labor, safety measures, etc. ?Contract Farming: It is a new concept in Bangladesh, which needs to approach area and clustering.
A businessman will go for contract with the producers and provide inputs, along with a guarantee to buy back the produced goods in a fair price. It has been proved useful for the non traditional commodities. The producers will thus be encouraged to produce if there is a guaranteed sale. It saves the investments of the investor. The attractive points of contract farming are – •Guaranteed production, •Established supply line, •Quality product ?Technical training for the workers. The banks already have established financing policy for the exporters.
All sorts of exports are financed at a low interest rate of 7%. The state-owned banks are developing “Balloon repayment” for the small loan, which can be highly beneficial for the NTCs. The continued improvement in export trade can also be accompanied by the structural shift in the composition of exports with non traditional commodities. With the fresh items added to the non-traditional basket of exports, earnings of foreign currency will get wider with the passage of a considerable time period.